Putting off the evil day: contractual response periods and the crystallisation of construction disputes 

United Kingdom

A recent TCC decision has considered the effect of contractual response periods on the crystallisation of a construction dispute for the purpose of adjudication. This case considers the response period applicable to extension of time claims under the JCT and SBCC forms of contract and is therefore of wide application. The case also considers the extent to which an expert delay report provided in support of a delay claim affects the crystallisation of a dispute referred to adjudication, an issue commonly encountered in practice.

MW High Tech Projects UK Ltd v Balfour Beatty Kilpatrick Ltd

MW engaged Balfour Beatty as a sub-contractor to carry out mechanical and electrical services for a new laboratory. The sub-contract was an amended form of the JCT DB 2011 Sub-contract, however, the standard provisions as to extension of time were preserved. These required Balfour Beatty to notify MW of any delays to the work said to arise from Relevant Events, together with particulars as to the expected effects of the delay and any impact on the contractual date for completion. Under clause 2.18.2, MW was then to notify Balfour Beatty of its decision as to an extension of time “as soon as is reasonably practicable and in any event within 16 weeks of receipt of the required particulars”. Balfour Beatty was also required to notify MW of any material change in the estimated delay or any other particulars.

Following delays to the works, Balfour Beatty served five delay notices on MW between March 2018 and February 2019 seeking a lengthy extension of time. MW did not respond to any of the notices. More than 16 weeks later, Balfour Beatty provided an expert delay report to MW in support of its claims to extension of time and sought a decision within 7 days. MW did not respond and Balfour Beatty commenced an adjudication immediately thereafter.

The adjudicator awarded Balfour Beatty the full extension of time claimed for. MW subsequently brought court proceedings contending that the adjudicator did not have jurisdiction as the dispute decided by him had not crystallised prior to the adjudication. This was on the basis that the delay report relied on by Balfour Beatty introduced a new relevant event and a new critical path analysis. MW relied on the 16-week response period provided for in clause 2.18.2 on the basis that the expert delay report amounted to a notification of a material change in particulars.

No material change

The court accepted the premise of MW’s argument that, in the absence of an express rejection, a dispute could not crystallise in relation to a delay notice until the passing of the 16-week response period in clause 2.18.2. However, this period had already passed at the time the expert report was provided by Balfour Beatty. That report did not restart the 16-week period for two reasons:

  • The report did not advance a delay claim materially different from the previous delay notices. Although a new critical path assessment had been provided, the causes of the delays remained delays to MW’s preceding works.
  • Even if the report had amounted to a material change in particulars requiring a notification under the sub-contract, not all such notifications would restart the response period. Only changes which produced a claim that was so different to the original notified claim that it amounted to a new delay notice would start a further 16-week response period.

Consequently, the expert report did not affect the dispute which had already crystallised and the adjudicator had the necessary jurisdiction.

Conclusions and implications

The JCT sub-contract conditions considered by the court have materially the same provisions as the JCT and SBCC Standard Building Contract and Design and Build Contract, although the time period for responding in these main contracts is 12 weeks. Therefore, the reasoning in this decision is likely to be widely applicable to contracts let under the JCT / SBCC form (subject to any relevant amendments).

The decision appears to be the first in which it has been stated that a contractual response period would prevent the crystallisation of a dispute for the purpose of adjudication until the end of that period, in the absence of a response. This will provide comfort to employers or main contractors with the benefit of such periods that the threat of an adjudication can be kept at bay pending a considered response. Contractors and sub-contractors, on the other hand, should consider carefully the restriction on their ability to crystallise a dispute and thereby bring adjudications posed by these provisions.

The decision is also significant in finding that the delivery of an expert delay report with a new critical path analysis did not affect the prior crystallisation of a dispute in relation to the delay claims in respect of which it was prepared. Such reports are often procured by Referring Parties in the lead up to the commencement of an adjudication, with Responding Parties complaining of impermissible ambush and raising “no dispute” objections if a sufficient opportunity to review and comment on the report is not provided ahead of time.

References:

MW High Tech Projects UK Ltd v Balfour Beatty Kilpatrick Ltd [2020] EWHC 1413 (TCC).