When addressing disputes, significant issues arise, often including parties’ lack of contemporary records. Mark Hamber examines a recent case which examined the importance of records.
The recent decision in BDW Trading Limited v Ardmore Construction Limited1 highlights the importance of maintaining and archiving contemporary records as a matter of course.
This case concerned alleged fire safety defects within a development completed by Ardmore (the contractor) between December 2003 to June 2004. The claimant, BDW Trading, was then assigned the contract from the original employer.
BDW issued a notice of adjudication in March 2024, 20 years after practical completion was achieved. It was able to do so for two reasons. Firstly, it claimed deliberate concealment of a breach, extending the normal 6 or 12 year limitation set by the Limitation Act 1980. Secondly, a new provision of the Building Safety Act 2022 increased limitation periods for claims brought under Section 1(1) of the DPA2 from 6 to 30 years.
BDW was successful and awarded £14,454,914.45 in damages plus adjudicator’s costs – as the adjudicator found Ardmore was liable for breaches of under the Defective Premises Act 1972.
Ardmore then raised the following grounds of defence against BDW’s application for a summary judgement.
- A dispute had not crystallised (Ardmore had not disputed liability but only sought further information prior to any response).
- That the adjudicator had no jurisdiction to determine a claim for breach under the Defective Premises Act. The contract only stated disputes ‘under this contract’ could be referred to adjudication.
- So much time (20 years) had passed between the practical completion and the adjudication being brought, that it represented a breach of natural justice. Ardmore being forced to rely on BDW’s records.
However, the courts upheld the adjudicator’s award which opens the possibility of defendants facing adjudication referrals relating to works completed up to 30 years ago.
Obligations for Key Records
Importantly, the decision confirms a defendant’s obligation to engage in any process which helps to establish liability, or avoids disputes crystallising. It also confirms their obligation to maintain contemporary records.
The threshold for any valid natural justice challenge has been set very high3, with an adjudicators decision being enforceable, provided the adjudicator has attempted to address the issues before them.
Here the court held that the adjudicator had met this test, and also there was no inequality of arms or unfairness due to a lack of information on Ardmore’s behalf, resulting from Ardmore’s own lack of record keeping. This confirms that a defence centring on a lack of contemporaneous records will likely fail.
There are various reasons why the creation and maintenance of what may seem rather run of the mill site records is not done. Problems may not be anticipated, other matters may be more pressing, or simply it may be a tiresome task on an average Friday afternoon. However, this case confirms that robust contemporary records are a cornerstone of successful claims. Therefore, the maintenance of contemporary records such as daily diaries, gate records, weekly photographic surveys, minutes of meetings, programme updates and correspondence must be maintained and safely stored for any future dispute(s) that may arise.
Indeed, parties often have contractual obligations to keep particular records. Many standard forms of contract either require parties to maintain contemporary records (JCT, FIDIC and ICE forms of contract) or notify other parties of delay events within prescribed periods. Furthermore, previous case law has established minimum requirements for record keeping when substantiating a successful claim.
Record Keeping and Successful Claims
Two such cases stand out.
AG for the Falklands v. Gordon Forbes Construction (Falklands) Ltd.4 concerned a contract which required the contractor to maintain contemporary records to substantiate any claim. The rule for contemporary records was considered as:
“original or primary documents, or copies thereof, produced or prepared at or about the time giving rise to a claim, whether by or for the contractor…”
Critically, it was found that contemporary records are most suitable for documenting events and circumstances. These are most effective when made at the time of (or around the time of) a claim.
The contractor failed to maintain contemporary records as required by the contract and fell back on secondary evidence such as witness statements when presenting its case. These witness statements, whilst a record of a person’s recollections, were no substitute for contemporary records (such as time sheets, daily diaries and invoices).
As such, the contractors claim failed. It was not possible to avoid the contractual requirement of producing contemporary records by latterly producing witness statements and the like after the event.
The case of City Inn Ltd. v. Shepherd Construction Ltd.5 also confirmed obligations regarding the maintenance and issue of contemporary records. Here, the contract required estimates of the claimed extension of time following a relevant event occurring.
The contractor was unable to produce original or contemporary construction programmes as evidence of delay. It could only produce basic as-built programme information produced retrospectively.
Both parties used this information to establish conflicting critical paths by differing methods. Despite City Inn’s expert conceding numerous errors within his analysis, Shepherd could not provide contemporary information to substantiate their analysis. This resulted in the court’s ruling that Shepherd could not claim an extension of time (and subsequently suffered liquidated damages).
Conclusions
Often disputes arise due to the cumulative impact of many events that seem inconsequential at the time. Where this occurs, it is even more likely that either robust contemporary records detailing these events will not be kept, or will omit details of such events.
Often a litany of “minor” events result in substantial issues for contractors at a later date, both in terms of a contractor raising its own claims and/or defending against the levying of penalties following planned milestones being missed.
The lesson is simple, claims fail solely because of a lack of contemporary records. Such records, when produced consistently, establish cause and effect regarding failures in planned progress and output without being tainted by accusations around lack of credibility.
It’s undeniably a pain to complete site diaries etc on a Friday afternoon. But it’s infinitely less painful than the alternative when things go wrong later. At Tudor Rose we work with clients to develop, manage and audit robust record keeping regimes and strategies during a project’s lifespan. This ensures clients can prove any claims made, or defend any made against them.
