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TCC dismisses “no dispute” jurisdictional challenge to adjudicator’s decision

The TCC is continuing to pump out a large number of judgments despite hearings being conducted remotely due to the COVID-19 pandemic and, in May, no less than 13 judgments were published on BAILII.  By my reckoning you have to go back to October 2015 for such a number of judgments in one month. Perhaps remote hearings are working so well (for the judges at least) that we’ll see them continuing even after the lockdown restrictions are eased.

However, it’s a more recent judgment I want to focus on this week, namely the very clear and well written judgment by the new Judge in Charge, Mrs Justice O’Farrell DBE, in MW High Tech Projects UK Ltd v Balfour Beatty Kilpatrick Ltd. This was a Part 8 claim commenced by MW seeking a declaration that an adjudicator did not have jurisdiction to due to the dispute in question not having crystallised.

The “no crystallised dispute” jurisdictional challenge is one that I see quite frequently in adjudications, but it’s normally as a bolt-on to another challenge and not one that we often see reported in judgments from the TCC. My view is that this is because it is so difficult to make out a “no crystallised dispute” challenge, and this was one of the reasons the case caught my eye. The other reason is that it concerned new submissions concerning an extension of time, and this adds an interesting twist to the “no crystallised dispute” challenge under JCT contracts.

MW High Tech Projects UK Ltd v Balfour Beatty Kilpatrick Ltd

MW employed BBK under a JCT Design and Build Sub-Contract, 2011 Edition, with bespoke amendments, to carry out mechanical and electrical works in relation to the construction of a new laboratory in Hull.

Between March 2018 and February 2019, BBK served five notices of delay as required by clause 2.17 of the sub-contract. MW did not respond to those notices or request further particulars to support the extension of time claimed within the 16-week period for consideration of such claims specified in clause 2.18. In July 2019, BBK served an expert’s report (the Goodman report) and sought a response to its claim within seven days. As none was forthcoming, the dispute was referred to adjudication.

In the adjudication MK argued that the Goodman Report introduced a new relevant event and a new critical path analysis and that, under the sub-contract, it was entitled to 16 weeks to assess such a claim. As MK had only been provided with seven days to review the Goodman Report, it contended that no dispute had crystallised when BBK commenced the adjudication. The adjudicator rejected MK’s challenge and awarded BBK the full extension of time claimed.

Part 8 proceedings

The reason that the “no crystallised dispute” jurisdictional challenge is so rarely successful is, in my view, thanks to two of O’Farrell J’s predecessors as Judge in Charge of the TCC, Sir Rupert Jackson and Sir Robert Akenhead:

  • In his very first TCC judgment in 2004 (in AMEC Civil Engineering Ltd v Secretary of State for Transport), Jackson J (as he was then) set out the seven principles to be applied when considering whether a dispute has crystallised. These clear principles are now so well understood that no-one should start an adjudication without taking them into account.
  • In Cantillon v Urvasco, Akenhead J (as he was then), set out additional guidelines concerning disputes and importantly said that the claiming party “is not limited to the arguments, contentions and evidence put forward by it before the dispute crystallised”.

As a consequence of Akenhead J’s additional guidelines, the submission of new evidence, even a substantial expert report, will rarely give rise to a successful argument that it constitutes a new dispute that has not yet crystallised. The difference in the present case was the contract provided for a 16-week extension of time review period.

O’Farrell referred to both of these cases in her review of the applicable law, and she then went on to consider the parties’ submissions. Interestingly, with the exception of the addition of a concurrency clause, the extension of time provisions in the sub-contract appear to me to be unamended from the JCT standard forms, and so many of O’Farrell J’s comments will be of interest to all those parties operating the extension of time provisions under the JCT contracts. For example, at paragraph 47 she accepted a submission that:

“… absolute precision and certainty is not required in the contractor’s assessment, or in the sub-contractor’s notice and particulars.”

The key issue

The key issue in this case turned on clause 2.17.3, which 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.”

BBK argued that the notification of a change under clause 2.17.3 would not give the contractor a fresh period within which to make a decision, but O’Farrell J said that this put the case too high, and that it was a matter of fact and degree as to whether information provided under clause 2.17.3 supplements a notified claim or gives rise to a new claim.  She went on to say 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 set out in clause 2.18. However, if the additional information, objectively assessed, gave rise to a new claim, the contractor would be entitled to a fresh sixteen-week period to consider such new claim before there could be any dispute.”

Pausing there for a second, I’m quite surprised that R Durtnell and Sons Ltd v Kaduna Ltd was not mentioned by the parties because, to coin a phrase I see regularly in pleadings, it is “on all fours” with the present case. In that case HHJ Seymour QC found that there could be no dispute concerning an extension of time in circumstances where it had been referred to the architect, but the time for the architect to make a determination had not yet expired.

Returning to the case in hand, O’Farrell J concluded that the Goodman Report did not amount to a fresh notification because it was not materially different to the delay claim advanced in the earlier notices, and constituted expert analysis to support BBK’s previous extension of time claims. The judge therefore rejected MK’s challenge and gave a declaration that the adjudicator’s decision was valid and binding.

My take aways

It is clear from this case that in circumstances where a party to a JCT contract applies for an extension of time, if the period for consideration by the contractor (under a sub-contract) or contract administrator or the like (under a main contract) has not expired and the contractor or contract administrator has not indicated whether they accept or reject the claim, then no dispute will have arisen regarding that claim. However, there may be other related issues in dispute such as whether the correct notices have been served, etc.

The case is also a useful reminder that where fresh evidence is served, including a substantial expert report, unless that constitutes a new extension of time claim, the party resisting the claim will not be able to rely on the JCT extension of time review provisions as a “get out of jail free” card.

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