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All standard form construction contracts require contractors to submit a notice of any event which they anticipate will impact completion of the works, and for which they want to claim an extension of time or additional costs. Such notice is usually quite limited and is followed by a more complete substantiation of the claim, often with subsequent updates and revisions. In these circumstances, it is not uncommon for the employer to challenge the contractor’s claim on the basis of jurisdiction, arguing that the update or revision has changed the claim so much that it is in fact a new claim which is not yet disputed and/or which has not yet been through all the tiers of the agreed dispute resolution process. So when does a claim become a dispute? And to what extent can it be revised or updated before it becomes a new claim? A recent judgment in the English courts provides helpful guidance on these questions.

Authors: Shareena Edmonds Vincent Rowan Martina Antosova

All standard form construction contracts require contractors to submit a notice of any event which they anticipate will impact completion of the works, and for which they want to claim an extension of time or additional costs. If the employer disagrees with the notice, or the claim, many construction contracts provide for a tiered dispute resolution process, comprising a number of mandatory steps, such as management meetings, mediation, adjudication, DAB, etc., before the dispute can be finally resolved by proceeding to court or arbitration.

The initial notice is often quite limited, for a number of reasons: contracts are increasingly calling for the notice to be submitted within a very short period after the event occurs; the impact of the relevant event may not yet be known at that time or may change as the works progress; and/or, even if the impact is known, the contractor’s assessment of it, including its delay analysis, may not be complete at the time the notice must be issued.  

The notice is therefore usually followed by a more complete substantiation of the claim, and the claim is often later revised and updated by the contractor with further supporting particulars and documents. In fact, some contracts require the contractor to submit an update to its claims at specific intervals. As the parties then progress through the tiered dispute resolution process, contractors will typically further refine and develop their claims, and the evidence supporting the same, to maximise the prospect of securing a favourable outcome at the next stage of the disputes process.

In these circumstances, it is not uncommon for the employer to challenge the contractor’s claim on the basis of jurisdiction, arguing that the update or revision has changed the claim so much that it is in fact a new claim and: 

  1. since the employer has not yet had a chance to respond to that claim, there can be no dispute; and/or
  2. since the new claim has not yet been through all the tiers of the agreed dispute resolution process (perhaps because the update came during or after the first mandatory step), the whole process must re-start.

The English case of MW High Tech Projects UK Limited v. Balfour Beatty Kilpatrick Limited1 touches on both these issues.

MW High Tech Projects UK Limited v. Balfour Beatty Kilpatrick Limited

The facts of the case can be briefly summarised as follows:

  • MW High Tech Projects UK Limited (MW) engaged Balfour Beatty Kilpatrick Limited (BBK) to carry out mechanical and electrical services in relation to the construction of a new laboratory in the UK. The parties entered into a JCT Design and Build Sub-Contract 2011 with bespoke amendments.
  • The contract required BBK to notify MW if it became apparent that progress or completion of the services was likely to be delayed. Such notice was to contain particulars of the expected effects of the relevant event, including the extent of the delay. If the expected effects materially changed, BBK was required to promptly notify and update MW.
  • During the course of the services, BBK notified MW of a delay caused by late completion of the preceding works that were being carried out by MW. BBK subsequently issued a number of notices (and particulars) revising the length of delay claimed. MW did not respond to any of the notices, even though it was required to do so under the contract within 16 weeks of receiving particulars of the claim.
  • BBK then issued a delay expert report that set out a critical path analysis and slightly extended the length of delay and extension of time claimed. BBK informed MW that it would start an adjudication if it did not receive a response within seven days.
  • MW again did not respond and BBK therefore proceeded to an adjudication where it was successful in obtaining the full extension of time claimed. MW then referred the case to the courts, arguing that the expert report amounted to a new claim, which meant that a dispute had not yet crystallised (since the 16-week period for its response had not passed) and the adjudicator therefore had no jurisdiction. 

The court held that the expert report did not amount to a fresh claim, because it was not materially different to the previous notices issued by BBK. While it did contain a detailed critical path analysis and a marginally longer extension of time (neither of which MW had seen before), the cause of delay and relevant event (i.e., preceding works by MW) remained the same. The report was simply evidence by way of expert analysis in respect of an extension of time claim that had previously been notified and in respect of which a dispute had already crystallised. This was because MW failed to respond to the earlier notices which had been issued by BBK, within the 16-week period, and it could be inferred from its silence that the extension of time was disputed.

While the decision on the dispute between MW and BBK primarily turned on the facts, it is of relevance to all contractors and employers because it dealt with two issues that regularly arise on construction projects – crystallisation of a dispute and evolution of a claim throughout the claim and dispute resolution processes.