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Sun September 20 2020

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Time to take note

22 Jun Earlier this month the Technology & Construction Court ordered MW High Tech Projects UK to pay Balfour Beatty Kirkpatrick £37,251 to cover adjudication fees from a dispute. Here, the construction team at Irwin Mitchell share lessons from the case.

Balfour Beatty Kirkpatrick had the M&E package on RB's 'R&D Centre for Scientific Excellence' in Hull, where MW was main contractor
Balfour Beatty Kirkpatrick had the M&E package on RB's 'R&D Centre for Scientific Excellence' in Hull, where MW was main contractor

In MW High Tech Projects Limited v Balfour Beatty Kilpatrick Limited [2020] EWHC 1413 (TCC), the Technology & Construction Court provided a useful illustration of the circumstances in which a disclosure made under clause 2.17.3 of the JCT Design and Build Sub-Contract 2011 either:

i.          merely supplements a previously notified extension of time claim that had already crystallised into a dispute for the purposes of an adjudication; or

ii.         “amounted to a new claim, displacing the original claim”, which had not yet crystallised into a dispute.

Background

Balfour Beatty Kilpatrick Limited (BBK) was employed by MW High Tech Projects Limited to carry out a £23m mechanical and electrical services sub-contract on the construction of the new RB (Reckitt Benckiser) laboratory in Hull.

The sub-contract was based on the JCT Design and Build Sub-Contract 2011 and contained certain provisions:

• BBK was required to give a notice of delay (clause 2.17.1), and particulars of the expected effects (clause 2.17.2), to MW;

• MW was required to consider the request (clause 2.18.1), and notify BBK of its decision as soon as reasonably practicable, and in any event within 16 weeks of receipt of the required particulars (clause 2.18.2);

• BBK was required to notify MW of any material change in the estimated delay, or any other particulars relevant to the previous notifications under clauses 2.17.1 and 2.17.2 (clause 2.17.3).

During the project, BBK sent five notices of delay to MW between 2nd March 2018 and 27th February 2019. In the notices BBK cited two delay events, which were updated by subsequent notices in terms of the amount of delay caused to the project. MW did not respond or acknowledge any of notices.

On 30th July 2019, BBK sent MW a report detailing the critical path window analysis for the total extension of time claim across the five notices. In August 2019, BBK referred its global claim for an extension of time to adjudication, and the adjudicator awarded the full extension sought.

In response, MW sought a declaration there was “no crystallised dispute and therefore the adjudicator had no jurisdiction…”. The basis of MW’s argument was that the BBK’s report was only served eight days before BBK commenced the adjudication and as the report contained a “new, relevant sub-contract event” and “a new delay analysis”, the sub-contract (clause 2.18.2) allowed MW a further 16 weeks to review and respond to the report and as such, this left the dispute uncrystallised.

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Ruling

Finding in favour of BBK, the court ruled that on a natural interpretation of clause 2.17, “any additional information provided [for the notice] will be supplementary to the notice and particulars already supplied”.  It followed that for the report to constitute a fresh notice, there must have been a “material change” in the notice which altered the “fundamental nature and basis of the claim”.

The court found that:

• The five notices sent by BBK complied with the sub-contract.

• “MW's silence gave rise to an inference that the delay claim set out in the notices was not admitted” but MW had failed to respond to the notices as required by clause 2.18.

• As the delays claimed in BBK’s notices were cumulative, a dispute had crystallised at the end of the 16-week period after receipt of the latest notice.

• The report did not amount to a fresh notification under clause 2.17 and so MW was not entitled to a restart of the 16 week-period.

• Although the global delay claim had increased in the report from that claimed in the latest notice, this was only by nine days and the causes of the delay were the same. The report did not represent a “material change”; it was merely further evidence of an already crystallised dispute. The adjudicator had jurisdiction and his decision was valid.

Comment

The case is a reminder to all parties that contracts need to be administered in line with the contractual terms agreed. The result of the case makes it clear that the court will construe contractual terms in a sensible and commercial way and not provide a party which has failed to adhere to the terms with a retrospective and overly technical get out of jail free card.

(About the authors: Ben Couldrey is a solicitor and James Mapley a trainee in the engineering and construction team at law firm Irwin Mitchell LLP)

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