BDW Trading Ltd v Ardmore Construction Ltd [2024] EWHC 3235 (TCC) Mrs Justice Joanna Smith DBE (judgment 16 December 2024)

BDW applied for summary judgment to enforce an adjudicator’s award that Ardmore pay £14,454,914.45 by way of damages plus adjudicator’s costs and expenses. The adjudicator had held that Ardmore had breached its duties under a construction contract (and that limitation did not apply by reason of deliberate concealment) and, separately, that Ardmore was liable under the Defective Premises Act 1972 ("the DPA 1972"). Ardmore raised four grounds of objection to enforcement:

• that the dispute referred to in the decision had not crystallised ("Ground 1");
• that the adjudicator had no jurisdiction to determine a tortious claim for breach of the DPA 1972 ("Ground 2");
• that the adjudication was inherently unfair owing to the inequality of arms in terms of documentation ("Ground 3"); and
• that the adjudicator intentionally failed to consider a material defence relevant to the allegation of deliberate concealment against Ardmore ("Ground 4").

The judge referred to Grounds 3 and 4 together as "the Natural Justice Challenges".  If Ardmore succeeded on either Ground 1 or 3, it would defeat the application. Should it fail on both Grounds 1 and 3, Ardmore accepted that it would have to show it had real prospects of success on both Grounds 2 and 4 to defeat the application.

Ground 2 raised a point of general importance and broad interest to the construction industry as a whole, given the current number of disputes in the industry relating to the fire safety of dwellings. Specifically it required the court to consider whether the reasoning of the House of Lords in Fiona Trust & Holding Corp v Privalov [1] ("Fiona Trust"), in which the court considered the true interpretation of an arbitration clause, also applied to an adjudication provision: i.e. did a dispute arise “under the contract” so as to confer jurisdiction on the adjudicator if the liability was imposed by statute rather than the obligations under the contract; and, specifically in this case, when it was a liability imposed by the DPA. It was also worthy of note that claims under the DPA were now subject to an extended limitation period of 30 years under the Building Safety Act 2022 (“BSA”), whilst adjudication was mostly used for current disputes with ongoing liabilities and where cash-flow was involved.

The Building Contract in this case for the design, erection and completion of the shell and core, primary services and partial fitting out of apartments at Crown Heights, Basingstoke, Hampshire was entered into in 2002 and assigned in 2004 by the original employer to BDW. Thus it was that Ardmore had a limitation defence to any claim based on a limitation period of 6 years until the period under the DPA 1972 was extended by the BSA to 30 years, a legislative change which lead to a letter of claim being sent by BDW in July 2022. Correspondence then ensued, culminating in adjudication proceedings being started in March 2024.

The issues

Ground 1: Had the dispute crystallised?

Because the claim was described as stale and was undoubtedly old, there were difficulties in obtaining all relevant documentation. In the pre-adjudication correspondence, BDW said it provided what it could including some expert evidence and offered inspection facilities in advance of works being carried out. Ardmore’s attitude was to ask for further particularisation, and to claim it could not respond constructively after such a long time without more information. It did not take advantage of the offer of inspection. The court described this position as prevarication. Upon reviewing the relevant case law, particularly the observations of Coulson J (as he then was) as to crystallisation of disputes in AMD Environmental Ltd v Cumberland Construction Company Ltd[2]and having regard to the facts, the court had little hesitation in concluding that a dispute had crystalised by the time the notice of adjudication was given (just 3 months short of two years after the letter of claim). This was because the claim as advanced in the letter of claim was not admitted; and, as the adjudicator also concluded, it was essentially the same claim as the dispute referred.  

Ground 2: Jurisdiction over the DPA claim

The adjudication provisions of the Building Contract at Article 5 mirrored the wording of section 108(1) of the Act, limiting adjudication to disputes “under the contract”.  In contrast, Article 6A relating to arbitration covered disputes “arising under this contract or in connection therewith”. Similar linguistic differences in arbitration provisions were considered and deprecated in the leading case of Fiona Trust.  The rationale was that business people would expect all disputes between them as to the subject matter of a contract to be determined by the same tribunal. The court considered a number of subsequent cases and consulted the leading textbooks in which the question of whether the same Fiona Trust approach should also apply to adjudication was considered. The court declined to follow Hillcrest Homes Ltd v Beresford & Curbishley Ltd[3]  and following Aspect Contracts (Asbestos) Ltd v Higgins Construction Plc[4],  and fortified by the remarks of Lord Briggs in Bresco Electrical Service Ltd v Michael J Lonsdale (Electrical) Ltd[5], concluded there was no justification for, nor sense in, departing from the approach in Fiona Trust. Further the Act was mandatory and could not be contracted out of, which reinforced the argument that it must cover all disputes.

Grounds 3 and 4: The Natural Justice Challenges

It was common ground that adjudication is inherently a rough and ready process and that the threshold for a valid natural justice challenge was high. Any breach of the rules of natural justice must be material. There was a difference between the parties as to whether ‘material’ meant that the breach must have an actual as opposed to only a potential impact on the outcome. The court was content to adopt the lower threshold. In this case, Ardmore based its Ground 3 challenge on the age of the case, and the lack of available documentation meaning that there was an ‘inequality of arms’. Not only (said Ardmore) did it not have access to its own documents after such a lapse of time, but there was no means by which either it or the adjudicator could compel BDW to give full disclosure of its documents or even know what documents it might have or have withheld. The court pointed to the fact that both parties had agreed the adjudicator could fairly determine the dispute. The lapse of time was not of itself a bar, as Ardmore had accepted. The adjudicator had power to require parties to provide additional information and did so in the adjudication, and BDW did give disclosure and further disclosure as requested or required. There was no request for specific documents and no complaint by Ardmore in the adjudication of failure to provide any particular document. Ardmore’s inability to access its own documents could not be visited on BDW.  There was nothing in Ground 3 to prevent enforcement.

As Ground 3 failed it was unnecessary to consider Ground 4. The complaint here was that the adjudicator had failed to consider a particular defence (namely that BDW’s predecessor knew the position on cavity barriers which fixed BDW with that knowledge). Since it was argued, the court did consider Ground 4, finding that this ground of defence had not been sufficiently and clearly relied on and put forward in the adjudication.

As all 4 grounds failed, the court granted BDW judgment for the full sum claimed, with interest and costs.

[1] [2007] UKHL 40, [2007] 4 All ER 951, HL

[2] [2016] EWHC 285 (TCC), 165 ConLR 191 

[3] [2014] EWHC 280

[4] [2015] UKSC 38 [2015] 1 WLR 2961

[5] [2020] UKSC 25, [2021] 1 All ER 697 

See Malin Industrial Concrete Floors Ltd v VolkerFitzpatrick Ltd [2024] EWHC 2890 (TCC) District Judge Baldwin (judgment 22 October 2024)

The respondent VolkerFitzpatrick (VF) opposed an application for summary judgment to enforce an adjudicator’s award by the claimant (Malin) on the basis that it (VF) had a substantial cross claim, and that Malin, being a company in administration, had not offered sufficient guarantees in respect of warranties against defects or payment in the event of recovery by VF in future proceedings. 

The adjudication arose from a payment dispute over the retention under a subcontract between VF as employer and Malin as contractor for concrete flooring works in Doncaster. The questions for the adjudicator were:

• Is the retention due?
• What is the net final position under the subcontract?
• What is the amount due to Malin?

The answer to the second question involved considering a counterclaim, or set-off, by VF against the retention. VF claimed that it would incur costs of procuring insurance-backed warranties to replace the now worthless warranties given by Malin; and would incur costs of £50,000 to repair cracks in the concrete floor due to defects in Malin’s work. The adjudicator decided that VF's claimed set-off and alleged counter claims failed and did not entitle VF to withhold payment of retention due to Malin. His reasons were that VF did not provide any detail or evidence in support of its claims, had not established that any defects existed at the retention release date, or that there was any amount which VF was entitled to set-off against sums due under the subcontract. He decided the net final position and that the sum due was £59,550 plus VAT.

The court said it was important to note that Malin did not seek immediate payment on any judgment. It sought to establish its entitlement to the sum awarded and would be content for the judgment to be stayed pending a Part 7 determination of any counterclaim and for the judgment to be subject to any set-off that might be established. It said that VF had tried to subvert the effect of the adjudication by lightly trailing a cross claim without properly engaging with the issues within the adjudication and then reviving them to avoid enforcement. Malin also contended that the mandatory set-off provisions of the Insolvency Act did not take effect at this stage as this was an administration and not a liquidation.  Malin invoked the obiter remarks of Lord Briggs in Bresco Electrical Services Ltd (in liquidation) v Michael J Lonsdale (Electrical) Ltd [1], in particular at paragraphs 64 – 67, as the starting point. Malin then moved on to consider the observations of Coulson LJ in the post Bresco case of John Doyle Construction Ltd v Erith Contractors Ltd [2] and to take issue with them. Malin contended that Lord Briggs had created an exception and should not be taken as having intended (as Coulson LJ had suggested) that summary judgment should be refused where the adjudicator had determined the cross claim in the adjudication albeit provisionally pending a final determination. In effect, as Lord Briggs had said, there could be utility in such a finding and thus Malin contended it was a proper exercise of discretion to enter judgment subject to a stay to determine the cross claim.  In further support, Malin relied on the approach to enforcement which would have been adopted in JA Ball Ltd (in administration) v St Philips Homes (Courthaulds) Ltd[3], (but for a natural justice objection); i.e. judgment with a stay. Malin claimed it was for the defendant (VF) to establish a cross claim not for the Malin as claimant to seek to avoid it.

For VF, it was first said there was clear evidence of a more than arguable cross claim for £66,000, and the ‘guarantee’ offered by Malin by way of security was inadequate as it did not extend to security for VF’s costs of the cross claim as well as the sum claimed itself, as identified by Adam Constable QC (as he then was) in Meadowside Building Developments Ltd v 12-18 Hill Street Management Company Ltd[4].  Next, VF said that this case was not within Lord Briggs’ “exception”, but was precisely a Doyle situation (see paragraph 94 of Coulson LJ's judgment). There had been no adjudication on the net balance, and the insolvency set-off should apply to disentitle judgment on a sum only provisionally found due under the subcontract by the adjudicator.

The court made the following findings.

1. Based on two experts’ reports produced to the court, there was enough to support the existence of a cross claim that was more than ‘fanciful’.
2. Despite some controversy as to what Lord Briggs was meaning overall, as considered by Coulson LJ in Doyle, the court concluded that the adjudicator in his decision was not deciding the net balance between the parties after consideration of any cross claim. Therefore the potential circumstance for summary enforcement without conditions, fell away in any event.
3. There was scant evidence as to the financial position of Malin. It might be rescued going forward. The spectre of insolvency statutory set-off perhaps loomed, meaning that VF was no longer in the standard "pay now, argue later" position which would apply as a matter of course to an unimpeachable decision in favour of a solvent claimant.
4. It was appropriate to infer from the lack of offer of any security and the lack of evidence in support of any contention that Malin was not significantly insolvent. Also, that there was a likely level of insolvency, such as to carry a risk that unfettered summary enforcement would deprive VF of recourse to the retention monies as security for any cross claim.
5. The court was concerned to give no encouragement to any party to attempt to use insolvency tactically as a shield to avoid proper payment of an adjudicator's award. If a statutory set-off crystallised then little more could be done, as the insolvency regime would trump enforcement. In the absence of a statutory set-off intervening, regard was to be had to the evidence of the counterclaim. Here, VF had failed to assert a prima facie likelihood(the court’s emphasis) that the damage complained of was caused by postulated potential failings of Malin as opposed to extraneous factors or the default of others. Given the underlying "pay now, argue later" purpose of the adjudication regime as a whole, there should be a further requirement imposed upon a defendant in order to avoid enforcement in these circumstances.

In the result, the court granted summary judgment, but stayed the judgment pending further order. There would be permission for Malin to apply to lift the stay unless satisfied by VF within 3 months (of the date of the Order) that there was a prima facie evidenced case supportive of a likelihood of establishing a sufficient degree of liability on the part of Malin to give rise to a cross claim for a level of damages with the potential of extinguishing the amount awarded by the decision.

[1] [2020] UKSC 25

[2] [2021] EWCA Civ 1452

[3] [2022] EWHC 3690 (TCC)

[4] [2019] EWHC 2651 (TCC)

Essential Living (Greenwich) Ltd v Conneely Facades Ltd [2024] EWHC 2629 (TCC) Mr Adrian Williamson KC (17 September 2024) 

The claimant, Essential, sought summary judgment to enforce the adjudication decision of Mr Peter Aeberli dated 19 April 2024. Conneely objected on the grounds that Mr Aeberli had breached the rules of natural justice in that he pre-determined the strength of Conneely’s case when ruling against them earlier in the adjudication on its disclosure application.

Essential started an adjudication in which it claimed declarations to the effect that a ‘Corium’ brick slip cladding system, designed and installed by Conneely, was defective. It sought recovery of costs of circa £1 million. In the adjudication, Conneely asked for disclosure of expert reports and documents which had been used in a previous adjudication between Essential and another trade contractor which Conneely claimed would show that the alleged damaged was caused by others and that Essential was seeking ‘double recovery’. Mr Aeberli refused the disclosure application ruling that the defects complained of in the current adjudication were different from those in the earlier adjudication and that the “suggestion of double recovery is fanciful”. 

HHJ Williamson noted that the adjudicator had given careful consideration to the grounds of the application and the materials sought to be disclosed as well as the defects complained of. The ruling itself and subsequent consideration of the issue in his decision made clear that Mr Aeberli had left the door open to Conneely to fully advance its case. There was no pre-determination of the issues to be decided to resolve the dispute. Nor could it have been said that there was any substantial injustice, not least because Conneely had abandoned the double recovery point.

Essential had paid the adjudicator's fees without reservation of their position. The relevant law in this respect had recently been summarised by Mr ter Haar QC (as he then was) in Platform Interior Solutions Ltd v ISG Construction Ltd[1]. In short, payment of an adjudicator's fees by a losing party may amount to an election to treat the decision as valid. As a matter of policy, the court should do nothing to discourage payments to adjudicators for their work. However, in this case, Conneely was well aware of its natural justice objection before the decision was made and published, and well able to reserve its position when making payment. Thus, it had waived its right to object.

Because the points taken were unmeritorious, unfairly criticised an experienced adjudicator, took up one and a half days of court time, and delayed the payment of the sum awarded, Essential was entitled to its costs on the indemnity basis.  

See BDW Trading Ltd v Ardmore Construction Ltd [2024] EWHC 3235 (TCC) under Dispute (above)

[1] [2020] EWHC 945 (TCC), 90 ConLR 212 at [49]-[56]

Placefirst Construction Ltd v Car Construction (North East) Ltd [2025] (TCC) HHJ Stephen Davies (judgment 24 January 2025)

On 26 October 2022 Placefirst as Contractor and CAR as subcontractor, entered into a JCT design and build 2016 form of subcontract as amended. The relevant subcontract payment provisions substantially followed the Act. Thus, interim payments became due 16 days after the interim valuation date, which was the last calendar date of each month, with the final date for payment being 12 days after the due date. CAR’s interim payment application had to be sent no later the 25th day of each month. Placefirst had to give a payment notice not later than 5 days after the due date. Any pay less notice was to be given not later than 2 days before the final date for payment.

On 24 July 2024 CAR emailed its interim payment application for month ended 31 July 2024 to Placefirst.

On 31 July 2024 Placefirst sent an email which, together with its attachments, was  at the heart of this case. The subject line of the email stated: "CAR Construction Payless Notice and Valuation 30". The two attachments were identified as "Valuation 30 - Payless Notice.pdf" and "Valuation 3O.xlsm".

The email read: "Please find the attached Payless Notice and Valuation 30 to support, in relation to your AFP 30 received on 24th July 2024. In consideration of the delays to the sub-contact works there is a balance due in the sum of (£22,812.15)".

The attached letter of 31 July read: "We write further to your application for payment email dated 24 July 2024. We provide our Pay less notice under paragraph 10 of Part II of the Scheme for Construction Contracts (England and Wales) Regulations 1998 (SI 1998/649) (as amended) and section 111 of the Housing Grants, Construction and Regeneration Act 1996 (as amended). We consider that the gross amount due on the date this notice is served to be £2,769,275.56 (excluding retention and VAT) in accordance with our assessment of the works reference Esh Winning - Car Construction - Valuation 30 which has been enclosed for your information."

The workbook attachment contained a detailed valuation of the works, detailed the deductions being made and the calculation of the sum considered to be due, being the negative balance.

At the same date and time, Placefirst also gave a pay less notice showing the same valuation, the same deduction and the same negative balance as the sum considered to be due.

The adjudicator, in what the court said was a careful and fully reasoned decision, found that Placefirst’s  notice of 31 July was not a valid payment notice and the pay less notice was served before the date when it could validly have been served under the Act and/or the subcontract and was also invalid.

Placefirst applied for a Part 8 determination as to the question of the validity of both its payment notice and pay less notice. CAR sought enforcement of the adjudicator’s decision in its favour.

There were two issues: (1) was the payment notice valid? (2) was the pay less notice valid? These were suitable issues to be decided summarily under Part 8. Placefirst only needed to succeed on one not both issues to defeat the application for summary judgment. The court took the second issue first.

Issue (2): Was the pay less notice valid?

CAR submitted that because subsection 110B(2) of the Act only permitted a payee notice to be given "at any time after the date on which" the payer's payment notice must be given (i.e. five days after the payment due date), it follows that the "deemed" notice under subsection 110B(4) must be regarded as having been given no earlier than after five days after the payment due date. Thus, since unless and until that date arrives and the payer fails to serve a valid payment notice, it is unknown as to whether or not the interim payment application will or will not become a deemed payee notice, it must follow that it is only on that date that it can become an effective pay less notice. Therefore it was premature and invalid. This was CAR’s main submission and one on which there was no previous authority.

In the judgment of the court the submission must fail for two reasons. First, nothing in the wording of the clauses in the Act or subcontract dictated such a conclusion. The clauses did not say that the notice was either deemed to have become a payment notice or treated as having been given six days after the payment due date. They simply said that the notice was to be regarded as being a section 110A(3) notice and that a pay less notice must not be given before the date of such notice. As a matter of literal interpretation this did not state that the interim payment application given on [X] date was to be later transmuted into a payee payment notice given on [Y] date; it simply: (a) provided that the interim payment application given on [X] date was to be regarded as a payee payment notice; and (b) required that any pay less notice was not to be given before the same [X] date. Second, there was no compelling reason requiring the provision to be read in the way contended for by CAR, when the court’s reading was plainly consistent with the Act’s intended purpose whereas CAR’s literal reading was not.

By contrast, there was no logical reason why a pay less notice should not be given before the time for giving a payment notice had elapsed. There was no difference of substance between the content of a payment notice and a pay less notice. Thus, the decision whether or not to serve a payment notice and a pay less notice, or just to serve only one or the other, rested entirely with the payer. Its choice did not prejudice the payee one way or another.

The court was satisfied that Placefirst's pay less notice given on 31 July 2024 was valid.

Issue (1): Was the payment notice valid?

Before the court, CAR submitted the worksheet could not objectively have been intended and understood as a payment notice for a number of reasons:

(a) it did not describe itself as a payment notice (unlike the pay less notice, which did describe itself as such) nor did it refer to the relevant section of the Act or clause of the subcontract providing for the giving of a payment notice (or the relevant paragraph of the Scheme - as the pay less notice did, albeit incorrectly as the Scheme did not in fact apply);

(b) instead, it described itself as a subcontract payment certificate, in circumstances where there was no such provision in the subcontract;

(c) it did not read as a payment notice, because it did not state the sum that Placefirst considered due at the payment due date;

(d) it was not objectively intended to have an existence or function independent of the pay less notice, since it was expressly described in the email as "valuation 30 to support" the pay less notice and since it was expressly identified in the pay less notice as being "enclosed for your information".

There were other later ‘supplemental’ objections (with apologies to the parties and the judgment for not having set them all out in this digest).

None prevailed.

The court observed that it was a curious feature of the Act that the requirement for a payment and pay less notice were precisely the same. If, as commonly occurred, they both included the valuation of the works at the relevant date and any deductions to be made from that valuation, they could be precisely the same in their content. In short, under the Act as amended there was no need to serve both a payment notice and a pay less notice. Nonetheless, it appeared to be the case that one notice could not operate as a payment notice and as a pay less notice (see Sir Peter Coulson (writing extra-judicially) in Construction Adjudication at paragraph 3.28 where he said: "The original provisions, which entitled a payer to serve a notice, operating as both a payment notice and a withholding notice, have been deleted in their entirety. Thus the payer must serve both the payer's notice and a payless notice in accordance with the new s111 in the periods identified".

In referring to serving both a payer's notice and a pay less notice the court did not read him as saying that the payer must serve both, only that both must be served within the identified period if they are to be relied upon. There appeared to be no judicial determination on this point. However the extra-judicial observations commanded respect and, in the court’s respectful view, were correct.

The court was satisfied that both a payment notice and pay less notice could be sent at the same time. On balance in this case, the court decided that (i) sending a pay less notice and a separate document which was described as a valuation and a subcontract payment certificate, (ii) which was plainly intended to have a formal effect separate from the pay less notice, (iii) which amounted in substance to a payment notice, and (iv) which was not obviously purely subsidiary to the pay less notice, did, in the judgment of the court, make sufficiently clear on an objective analysis that it was intended to be a payment notice, separate and distinct from the pay less notice with which it was sent.

In conclusion, the court observed: 

“….. it seems to me that it would be an unfortunate outcome in a case such as this if a contractor who sent two communications, both of which were in substance effective as payment notices or payless notices, had to be treated as ineffective, because one was not properly described and the other was sent too late, due to the complexity of the Act and (in my view) an unduly legalistic interpretation of its requirements. I am happy to be able to reach a conclusion which does not have that effect.”