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Construction Risks Newsletter- June 2023

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Published 29 June 2023

Overview

DAC Beachcroft's Construction Risks Newsletter features topical issues in construction

Building Safety is a the forefront of this quarter's newsletter, with a roundup of the latest guidance and draft regulations issued by the Government.

We also review the latest caselaw arising from efforts to resist enforcement of an adjudicator's decision, another topic which always features highly in our newsletter. Unsurprisingly, arguments centring on breaches of natural justice and jurisdiction remain extremely difficult to demonstrate and the Courts have only been willing to depart from the "pay now, argue later" principle of adjudication in the narrowest of circumstances.

For those concerned about the cost of pursuing an adjudication for disputes at the low-value end of the scale, particularly in today's economic climate, we review the second edition of the Low Value Disputes Model Adjudication Procedure ("the LV Model Procedure"). The LV Model Procedure aims to provide a flexible and simplified approach to the key elements of the adjudication process, and caps the fees of the adjudicator for disputes up to a value of £100,000.

Finally, we report on the latest TCC decision regarding an application to replace a named expert, part way through proceedings, and the consequences in terms of the documents that will have to be disclosed, should the application be granted.

The latest on the Building Safety Act 2022 ("BSA")


Guidance and legislation on building safety is developing at pace since the BSA came into force. Here's a roundup of what's been published by the Government in the last month or two.

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Take note: The Adjudicator's decision will be enforced

This case relates to a dispute between Northumbrian Water Ltd ('NWL') and Doosan Enpure Ltd ('Doosan') and others regarding the enforcement of an adjudicator's decision for the sum of circa £22.5m. 

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Directions from the Court of Appeal on use of Part 8 proceedings in adjudication

This Court of Appeal judgment raises issues arising out of the parallel jurisdictions of an adjudicator, on the one hand, and the courts, on the other. The Court also made some useful comments regarding a party's obligation to provide prompt notice if they dispute the validity of a payment application.

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The ability to set off in Adjudication is extremely limited

In FK Construction v ISG Retail [2023] EWHC 1042 (TCC) the Court considered whether it was permissible for a party to set-off the sums owed to it from a sum it owed to the other party as a result of competing adjudication decisions.

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The correct approach: where parallel Part 7 enforcement proceedings and Part 8 proceedings are afoot

Sleaford commenced an adjudication to recover sums, it said, had been overpaid to Isoplus. Sleaford also requested that the Adjudicator provide advice as to whether Isoplus had complied with a particular payment term in the contract which it said amounted to a strict precondition to payment ('the Payment Term').

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A robust approach to adjudication enforcement

The Scottish courts have confirmed a robust approach to adjudication enforcement and reinforced the high evidential bar required to make a successful natural justice challenge.

In Atalian Servest AMK Ltd v B W (Electrical Contractors) Ltd [2023] CSIH 18 the Inner House of the Court of Session (CSIH) confirmed the previous decision of the Outer House, rejecting a series of challenges to enforcement of an adjudication decision based on (i) jurisdictional and natural justice grounds, and (ii) the effect of a final account statement on the adjudication.

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Limitation can be used to resist enforcement of an adjudicator's decision

In 2014 LJR Interiors Limited (LJR) undertook dry lining, plastering and screed works for Cooper Construction Limited (Cooper), under a written contract for approximately £19,000 plus VAT. 

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Second edition of the Low Value Disputes Model Adjudication Procedure is out now

The Construction Industry Council (CIC) has published the second edition the Low Value Disputes Model Adjudication Procedure (LVD MAP).

While adjudication has recently been recognised by Coulson L.J. in the Court of Appeal as "the only game in town" for most construction disputes, many parties find themselves deterred from referring disputes to adjudication as a result of the costs involved and the perceived procedural complexity ill-suited to low-value disputes.

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Required or Desired - A review of (1) Avantage (Cheshire) Ltd (2) Cheshire East Borough Council (3) Your Housing Ltd v (1) GB Building Solutions Ltd (in administration) (2) PRP Architects Holdings Ltd (4) Prestoplan Ltd (5) WSP UK Ltd (6) Mascot Management Ltd [2023] EWHC 802 (TCC)

This TCC case provides guidance on what the disclosure requirements would be if a party were granted leave to replace Part 35 named and appointed experts.

This case relates to a fire that took place at a care home in 2019, which destroyed almost the entire village. The Claimants sought damages in respect of deficiencies in design and construction including the lack of compartmentation, cavity barriers and sprinklers to the tune of circa £40 million. 

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