Adjudication is a popular and widely used means of resolving disputes in the UK. The right of parties to construction contracts to refer disputes arising "under the contract" to adjudication, as mandated by section 108 of the Housing Grants, Construction and Regeneration Act 1996 (HGCRA), is well established.

But what is meant by the term "under" a contract? Is this limited to claims for breach of the contract in question? Or does it also encompass wider claims arising in connection with a contract, such as statutory claims under the Defective Premises Act 1972 (DPA)?

These questions have recently been determined by the Technology and Construction Court (TCC) in BDW Trading Ltd v Ardmore Construction Ltd 2024.

This is the first time that the TCC has had to determine the ability of a party to bring a claim under the DPA in adjudication. In light of the extension of the limitation period under the DPA from six to 30 years (as well as the widening of its scope) brought about by the Building Safety Act 2022 (BSA), the decision will have wider ramifications for how parties pursue historic fire and building safety claims.

Key background facts to this case:

  • BDW (as assignee of the original building contract) brought adjudication proceedings in 2024 against Ardmore in respect of a residential development in Hampshire.
  • The original building contract had been entered into in 2002 and practical completion was achieved in 2003/2004.
  • Nearly 20 years later, in 2022, BDW issued a letter of claim to Ardmore in respect of alleged fire safety defects at the development, and subsequently commenced adjudication.
  • The adjudicator found in BDW's favour and required Ardmore to pay over £14 million in damages.
  • Ardmore resisted enforcement and BDW consequently sought enforcement in the TCC, seeking summary judgment against Ardmore. Ardmore sought to resist enforcement on four grounds. We examine one of those grounds – the alleged lack of jurisdiction of the adjudicator over DPA claims – below.

Limitation – how could BDW bring a claim nearly 20 years after completion of the works?

BDW's claim had two alternate legal bases:

  1. For breach of the building contract, based on the alleged use of an inappropriate cladding system (rather than the product set out in the design intent) and on the alleged failure to install horizontal fire barriers; and
  2. For breach of Section 1(1) of the DPA, which imposes a duty on those "taking on work for or in connection with the provision of a dwelling" to see that the work is done in a workmanlike or professional manner, with proper materials, and "so that the dwelling will be fit for habitation when completed".

Breach of contract and deliberate concealment

For breach of contract claims, the limitation period is either six years (for simple contracts) or 12 years (for deeds) from the date on which the cause of action accrued. Once the limitation period has expired, a defendant will have a complete defence to the claim. Ardmore would therefore ordinarily have had a complete limitation defence to BDW's breach of contract claim, brought some 20 years after completion of the works.

However, BDW argued it was "in time" for limitation purposes due to deliberate concealment by Ardmore of the alleged breaches, including the failure to install fire barriers, meaning that an exception under the Limitation Act 1980 applied.

Claims under the DPA – extended limitation

Before enactment of the BSA, the limitation period in which a potential claimant could bring a claim under section 1 of the DPA was six years from completion of a dwelling.

However, section 135 of the BSA – which came into force on 28 June 2022 – inserted a new section into the Limitation Act 1980 which "had the effect, amongst other things, of increasing retrospectively the limitation period for a claim under section 1(1) of the DPA 1972 from six years to 30 years".

Until section 135 came into force, Ardmore therefore also had a complete limitation defence against claims by BDW under the DPA – but from June 2022, BDW's claims were no longer time-barred due to the extended limitation period provided by the BSA. We provide more detail on DPA claims in our earlier insight.

Did the adjudicator have jurisdiction over the DPA claim?

The contract expressly stated that disputes arising "under the contract" could be referred to adjudication, mirroring the wording of section 108 HGCRA.

The parties disagreed on the meaning of the words "under the contract":

  • Ardmore contended that they should be interpreted narrowly and were not capable of encompassing a claim under the DPA – meaning that the adjudicator had no jurisdiction to determine that claim. It relied upon the fact that different wording was used for the arbitration clause in the contract (which referred to disputes "arising under this Contract or in connection therewith".
  • BDW argued that the words "under the contract" should not be interpreted narrowly. It submitted that the weight of case law supports the view that the reasoning in the Fiona Trust case (which considered similar wording in the context of an arbitration clause) should apply equally to adjudication.

In Fiona Trust, the (then) House of Lords had considered the meaning of the phrases "arising under" and "arising out of" in an arbitration clause and held that there was no difference in substance between the two phrases. The starting point is a "strong presumption" that commercial parties intend all disputes to be determined in a single forum – and if they wished to exclude a particular type of claim from the scope of an arbitration agreement, they would need to do so expressly.

TCC decision

Jurisdiction

Mrs Justice Joanna Smith DBE agreed with BDW that the adjudicator had jurisdiction over its claims including the DPA claim. On an analysis of the authorities, she held that:

  • Fiona Trust "confirms a "strongly signposted" departure from previous linguistic distinctions between disputes arising on the one hand "under" and, on the other hand, "arising out of" or "in connection with" the underlying contract between the parties".
  • The "relevant "underpinnings" for adjudication are in many ways similar to those identified by Lord Hoffmann [in the Fiona Trust] for arbitration".
  • This therefore "strongly supports" the application of the Fiona Trust principle to adjudication provisions.

She further found that there was "no significance in the differing wording in the arbitration and adjudication provisions of this Building Contract". This did not "indicate a clear intention that the jurisdiction of the adjudicator would be narrower than that of the arbitrator (as opposed to, say, indicating merely that the draftsman was following the wording of section 108 HGCRA 1996 for the purposes of the adjudication provision)".

Key takeaways: what does this mean for you?

Although only a summary judgment application, this decision is significant. The parties' contract in this case was based on an older JCT form, but the wording of the adjudication clause is substantially the same as in the JCT 2016 and 2024 – and as noted above, is based on section 108 of the HGCRA.

The decision confirms that the reference to disputes "under the contract" in such clauses will include statutory claims such as those under the DPA.

It provides clarity to parties wishing to revive, or potentially facing, previously time-barred claims under the DPA, confirming that these claims can be referred to adjudication. Claimants will welcome the confirmation that adjudication may be used to pursue fire safety defect claims, without concerns about wasted time and cost due to potential jurisdictional challenges.

The Supreme Court has recently heard the appeal in URS v BDW (we previously reported on the Court of Appeal decision in our earlier insight). The Supreme Court decision, expected in Spring 2025, will bring the Defective Premises Act – legislation that until the BSA, was rarely used – further into the spotlight.

If you have any questions about this article or fire safety claims, including under the DPA, please contact Sue Ryan or Jessica Tresham.