Cornerstone - Serving fresh evidence: has a dispute crystallised?


06 July 2020

In order to exercise the right to adjudicate, a dispute needs to have crystallised. In broad terms, a dispute can be said to have crystallised when one party notifies the other party of a claim that is subsequently disputed.

Where the contract provides that a party has to provide a notice of a claim and the other party has a contractual time limit to respond, does the subsequent provision of evidence supporting the claim restart the time limit, requiring a further rejection and thereby affecting whether the dispute has crystallised?

The recent case of MW High Tech Projects v. Balfour Beatty considered that question.

Facts

MW engaged BBK to carry out M&E services in relation to the construction of a new laboratory at Dansom Lane, Hull. BBK was entitled to apply for an extension of time, and MW was bound to respond to applications within 16 weeks of receipt of a given notice and particulars. BBK gave notices of delay with particulars of its expected effects on five dates, the final being 27 February 2019. MW did not request further particulars nor did it send any reply to the notices.

On 30 July 2019, BBK sent a copy of an expert report (the Goodman Report) that contained a detailed critical path analysis to MK concerning some of the previous notices and particulars. In the covering letter, BBK threatened to commence adjudication if MW did not agree to extend the date for completion within seven days. MW did not respond.

On 8 August 2019, BBK served a notice of adjudication on MW and relied on the Goodman Report in those proceedings. MW alleged that differences in the Goodman Report to the previous claims meant that no dispute had crystallised. It argued that the Goodman Report amounted to a new notice that required 16 weeks to response before MK could be deemed to have disputed its contents, and therefore that no dispute had crystallised and the adjudicator lacked jurisdiction.

The adjudicator published his decision on 4 October 2019, rejected the jurisdiction argument, and accepted the conclusions of the Goodman Report to award the full EOT requested by BBK. MK issued Part 8 proceedings alleging the award was of no effect.

The Court’s decision

The Court said that together with the provisions requiring a notice and particulars, BBK was obliged by clause 17.3 to supply “such further information as [MW] may at any time reasonably require”. The Court found that this clause envisaged that any additional information will be supplementary to the notice and particulars already supplied, having regard to subsequent developments.

While it was accepted that the obligation under clause 17.3 arises once there has been a material change, the Court found that it was not inevitable that such notification would re-start the 16 week period. It was, however, accepted that there may be cases where a notification of a material change produced a change so different to the originally notified claim that it amounted to a new notice and thereby restarted the period for MW to consider the claim.

In the circumstances, the Court decided that the Goodman Report did not amount to a fresh notification. It contained a detailed critical path analysis and the total extension of time claimed was marginally longer than the previous cumulative extension claimed but it was not materially different. Accordingly, the Court found that the Adjudicator did have jurisdiction to decide the dispute.

Comment

In practical terms, the decision of the Court is welcomed as it confirms that the provision of evidence, expert reports in particular, will not automatically be deemed to be a fresh claim unless that evidence presents a materially different claim. A balance needs to be struck in order to comply with the statutory right to refer a dispute to adjudication as otherwise – taken to its extreme - parties would raise jurisdictional arguments on the basis that any fresh evidence would need to be rejected or not admitted before a dispute can be said to have crystallised.

This case was decided on its facts, and there may be a situation where new evidence or an expert report is materially different and consequently results in a new notice. But provided parties sensibly put claims to the other party before starting an adjudication, this case yet again confirms the court will support the adjudication process and enforce where it can.

This article is from the July 2020 issue of Cornerstone, our monthly newsletter for those working in the construction industry. To download the latest issue, please visit the newsletter section of our website. For further information please contact Steven Williams or another member of Birketts' Construction Team.

The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at July 2020.