If you have been involved in
adjudications, it is likely that at some stage the submission of new evidence
has arisen, and if you are the responding party, it can often feel like an
ambush. The responding party will often raise the argument that no dispute has
crystallised as they were unaware of the evidence before the adjudication was
commenced.
These types of jurisdictional
challenges usually follow the same path. For example, a contractor believes it
is entitled to an extension of time and submits the relevant application. The
main contactor fails to grant an extension of time and a dispute arises between
the parties. The contractor starts an adjudication but having sought advice
from a delay expert, a delay report is then produced for the first time to
support the contractor‘s position.
This is not a paywall. Registration allows us to enhance your experience across Construction Management and ensure we deliver you quality editorial content.
Registering also means you can manage your own CPDs, comments, newsletter sign-ups and privacy settings.
This was the exact scenario in the recent case of MW High Tech Project UK Limited -v- Balfour Beatty Kilpatrick Limited [2020].
The case
Balfour Beatty was engaged by the engineering outfit to carry out mechanical and electrical services under a JCT Design and Build Sub-contact 2011. Delays arose to the works and Balfour Beatty made numerous applications for an extension of time.
MW did not respond to the applications. Balfour Beatty served a delay report, including a new cause of delay, and asked for a response within seven days. No response was received, so eight days later, Balfour Beatty commenced an adjudication. Balfour Beatty was successful and the adjudicator awarded it the full extension of time.
MW took issue with the
adjudicator‘s decision on the basis that the contract allows MW up to 16 weeks
to consider an extension of time claim (clause 2.18.2). It argued that the
service of the delay report was a fresh notification of a claim under clause
2.18 and that no dispute could have crystallised until it had at least had a reasonable time
to consider it. In MW’s opinion, eight days fell short of what it believed to
be a reasonable period.
MW started legal proceedings seeking a declaration that the adjudicator did not have jurisdiction to decide this dispute.
Key issue
The key issue faced by Mrs Justice O’Farrell was whether the submission of an expert report was supplemental to an existing claim or whether it gave rise to a new claim. Under Clause 2.17.3 it states:
“The
Sub-Contractor shall forthwith notify the Contractor of any material change in
the estimated delay or any other particulars and supply such further
information as the Contractor may at any time reasonably require.”
Balfour Beatty submitted that
any change notified under clause 2.17.3 would not give rise to a fresh 16-week
consideration period. Interestingly, O’Farrell agreed to a certain extent but took
a more case specific approach in her judgment and said that:
"If the additional notification did not change the fundamental nature and basis of the claim, the contractor would remain under an obligation to respond within the timeframe in clause 2.18.
This obviously works both ways,
and O’Farrell went on to say:
“If the additional information, objectively assessed, gave rise to a new claim, the contractor would be entitled to a fresh 16-week period to consider such new claim before there could be any dispute”
The justice concluded that the expert report did not amount to a fresh notification as it was supplemental to the existing claim already known to MW.
Justice's declaration
The engineering firm’s
challenge was rejected and O’Farrell gave a declaration that the adjudicator’s
decision was valid and binding.
Overall, the judgment serves
as reminder to all those involved in adjudication that a last-minute expert
report, containing new information, will not necessarily deprive an adjudicator
of jurisdiction if it is supplemental to a dispute that has crystallised. Parties
to adjudication have become creative in the way they seek to resist enforcement.
However, the courts have been quick to support the adjudication process and continue to make it increasingly difficult for a ‘no crystallised dispute’ jurisdictional challenge to be successful.
Lawrence Pearce is an associate and Theresa Mohammed is a partner at Trowers & Hamlins.
