1. Can an Adjudicator’s Decision Qualify as a “Relevant Liability” under the Building Safety Act 2022?

Crest Nicholson Regeneration Ltd & Ors v Ardmore Construction Ltd (in administration) & Ors

What do you need to know?

This decision is the first fully contested authority on building liability orders (“BLOs“) under the Building Safety Act 2022 (“BSA”). Of particular importance for developers, contractors and those advising them, the TCC has confirmed that an adjudicator’s decision is capable of constituting a “relevant liability” for the purposes of section 130 BSA.

In doing so, the TCC has clarified and expanded the potential interaction between adjudication and statutory recovery mechanisms, particularly where the original contracting party is insolvent.

Background

Crest pursued claims arising from fire safety defects at a residential development in Portsmouth. Those defects had already been the subject of adjudication, in which Crest obtained an award of approximately £14.9 million against ACL.

ACL subsequently entered administration and did not pay the adjudicator’s decision.

Crest sought to use the BSA to recover that liability from other companies within the Ardmore group, advancing two applications:

1. an anticipatory BLO, attaching any future liability of ACL to its associated companies; and
2. a BLO in respect of the adjudicator’s decision, effectively seeking to pass the £14.9 million award up the corporate chain.

Both applications were resisted by ACL on the basis that it was premature and unjust to impose a liability in those circumstances.

Can an adjudicator’s decision establish a “relevant liability”?

The central issue for adjudication purposes was whether a temporarily binding adjudicator’s decision could qualify as a “relevant liability” under section 130.

The TCC answered that question clearly: yes.

Constable J emphasised that an adjudicator’s decision is binding unless and until finally determined by the court. That interim status does not deprive it of legal effect. It creates a present liability, and nothing in the statutory scheme suggests that such liabilities fall outside the scope of the BSA.

The TCC rejected the argument that BLOs should be confined to finally determined liabilities. There is no inherent incompatibility between the adjudication regime and the BSA. On the contrary, the two regimes are capable of operating alongside each other.

The TCC also made two practical points of real importance. First, it is not necessary to obtain summary judgment enforcing an adjudicator’s decision before seeking a BLO. Secondly, the TCC is entitled to determine the existence of the relevant liability within the BLO application itself.

Taken together, these findings represent an important procedural clarification for parties seeking to rely on adjudication decisions.

Jurisdiction and enforceability

ACL advanced jurisdictional objections, including that the adjudicator lacked jurisdiction to determine claims under the Defective Premises Act 1972 (“DPA“) and had awarded sums to a party who was not a party to the contract.

Those arguments were rejected. The TCC endorsed earlier authority confirming that DPA claims are capable of falling within adjudication provisions. It also found that, on the facts, the adjudicator had jurisdiction in any event.

The TCC also noted that, where appropriate, severance may be available. This further limits the extent to which a responding party can rely on partial jurisdictional challenges to undermine the effect of an adjudication decision in a BLO context.

The “just and equitable” test

As with all BLO applications, the critical question was whether it was just and equitable to impose liability on the associated companies.

The TCC confirmed that the test is deliberately broad and fact sensitive, and not constrained by any rigid framework. A BLO can be made before liability has been finally determined, including where issues remain to be resolved at trial.

A number of factors influenced the TCC’s decision in granting relief:

• ACL was in administration and lacked the means to satisfy any judgment;
• the Ardmore group had been restructured in a way which effectively ring-fenced liabilities within ACL;
• the relevant companies were under common control; and
• There was a substantial and unpaid adjudicator’s decision in relation to serious fire safety defects.

In those circumstances, the TCC concluded that it was just and equitable to grant both the anticipatory BLO and the BLO based on the adjudicator’s decision.

Why this matters for adjudication

The decision confirms that an adjudicator’s award may serve not only as a tool to secure interim cashflow, but also as a potential route to wider recovery under the BSA. Where the paying party is insolvent or asset-poor, a successful adjudication may be leveraged into a claim against associated entities via a BLO.

The TCC here also demonstrated a pragmatic and flexible approach to procedure confirming that summary judgment is not required before pursuing a BLO based on an adjudicator’s decision. Instead, the adjudication outcome can form part of a wider statutory claim.

The judgment also reinforces the limits of jurisdictional challenges as a defensive strategy. Unless such challenges go to the core of the adjudicator’s authority, they are unlikely, in themselves, to prevent the Court from attaching weight to the decision in a BLO application.

For contractors and those advising them, the case highlights the risk that liability may not be confined to the contracting entity. Group structures designed to isolate risk will be subject to scrutiny, and may not withstand a BLO application where the overall picture points towards the avoidance of liability.

More broadly, the Court’s approach reflects the underlying policy of the BSA, ensuring that those responsible for building safety defects ultimately bear the cost. Adjudication, rather than sitting outside that regime, is capable of operating alongside it.

2. ICE’s new Payment Notice Dispute Model Adjudication Procedure

The Institution of Civil Engineers (“ICE“) has introduced a new Payment Notice Dispute Model Adjudication Procedure (the “ICE PND MAP“), designed specifically to address “smash and grab” adjudications. The procedure seeks to provide a streamlined, cost-effective mechanism for resolving disputes where it is alleged that a paying party has failed to serve a valid payment notice or pay less notice, thereby entitling the receiving party to payment of the notified sum.

Scope

This new procedure is intended to address straightforward disputes concerning payment notices and pay less notice disputes under construction contracts. It does not apply to disputes regarding the underlying value of the sum claimed, set-offs or issues relating to contract interpretation.

The ICE PND MAP is therefore best suited to clear-cut “smash and grab” claims where the contractual provisions are not in dispute and the issues are limited to compliance with the statutory payment regime.

Procedure

In addition to the standard requirements for adjudication, in order to engage with the ICE PND MAP, the Referring Party must:

1. Give notice that it intends to use this procedure in the Notice of Adjudication;
2. Include within its Referral Notice the relevant payment notice, pay less notice and any other documents required (as applicable); and
3. Agree to be responsible for the adjudicator’s fees in the event that the adjudicator determines the dispute is unsuitable for determination under the ICE PND MAP;

In the event of a conflict in the adjudication provisions in the underlying contract and the ICE PND MAP, then the contract provisions will prevail.

The adjudication is conducted entirely electronically, with submissions limited to documentary evidence only.

Adjudicator fees

A notable feature of the ICE PND MAP is that the adjudicator’s fees are linked to the value of the claim and are subject to capped limits starting at just £2,000 plus VAT. This provides greater certainty as to costs at the outset of the process and reinforces the procedure’s objective of delivering a proportionate and efficient resolution mechanism.

Where the Adjudicator is required to deal with a jurisdictional challenge an additional £1,500 will be added to the fee.

Key takeaways

In summary, the ICE PND MAP offers a practical and streamlined approach to resolving clear-cut payment notice and pay less notice disputes, while introducing greater cost certainty for parties. For suitable cases, it provides a focused and efficient alternative to traditional adjudication, supporting the underlying objective of maintaining cash flow within the construction industry

3. Can “Subject to Contract” negotiations give rise to a binding agreement?

GMC Utilities Group Ltd v Sumitomo Electric Industries Ltd [2026] EWHC 885 (TCC)

Background

This decision arises from the construction of an undersea electricity interconnector between Wales and Ireland. SEI acted as main contractor, and GMC was engaged under a Subcontract to carry out onshore cable installation works. The Subcontract provided for the parties to refer any dispute to adjudication and to be finally resolved in LCIA arbitration.

SEI alleged that GMC had failed to meet the contractual taking-over date and was therefore liable for delay damages. SEI made a demand for €3,936,366 under a performance bond.

To avoid immediate payment under the bond, the parties entered into negotiations to find an interim commercial solution. It was agreed that GMC would pay the disputed sum into an escrow account, pending resolution of the underlying delay dispute.

The parties’ solicitors exchanged correspondence on the matter and these were initially marked “without prejudice” and “subject to contract”. The key exchanges took place on 07 and 08 November 2024:

1. The 07 November email was sent from GMC’s solicitors and headed “without prejudice save as to costs and subject to contract”. The email attached a letter containing a counteroffer and this was also headed “without prejudice save as to costs and subject to contract”.
2. SEI’s solicitors replied on 08 November in an email marked “without prejudice save as to costs” which accepted the counteroffer.
3. The correspondence culminated with an open letter from GMC’s solicitors that confirmed the terms of the parties’ agreement regarding payment of the agreed escrow sum into the escrow account in consideration of SEI withdrawing its claim for payment under the performance bond. The letter confirmed that the escrow sum would only be released by the parties’ agreement or pursuant to the decision of an adjudicator or arbitral tribunal or a competent court.

A formal escrow agreement was later executed on 19 December 2024.

The parties subsequently disagreed on whether SEI was entitled to payment of the sums held in escrow with the central issue focusing on the 07 and 08 November correspondences:

• GMC argued that the 08 November open letter was simply part of ongoing “subject to contract” negotiations and not legally binding.
• SEI contended that the open letter contained all essential terms and reflected a concluded agreement.

GMC sought declaratory relief under Part 8 proceedings and the dispute therefore turned on a familiar but often contentious question in construction contracts: when (if at all) do “subject to contract” negotiations give rise to a binding agreement?

The decision

The TCC found in favour of SEI and held that the 08 November 2024 letter did constitute a binding agreement.

The Court applied the principles established in RTS Flexible Systems Ltd v Müller [1] emphasising that whether a contract has been concluded depends on an objective assessment of the parties’ words and conduct.

It was decided that:

1. “Subject to contract” is not determinative: While negotiations had initially been conducted on a “subject to contract” basis, that qualification can be waived. The Court found that the parties had moved beyond the stage of the negotiations being “subject to contract”.
2. The 08 November letter contained all essential terms: The letter set out the core elements of the escrow arrangement (including payment into escrow and the mechanism governing release of funds).
3. Absence of “subject to contract” wording was significant: Unlike earlier correspondence, the 08 November letter was not expressed to be “subject to contract”, pointing towards an intention to be bound.
4. Subsequent formalisation did not negate the earlier agreement: The fact that a fuller escrow agreement was later executed in December did not prevent the earlier letter from being binding. It merely formalised what had already been agreed.
5. Commercial context mattered: The arrangement involved clear commercial consideration – GMC would pay into escrow, and SEI would refrain from enforcing the bond—which supported the existence of a binding contract.

Takeaway points

For those operating in the construction and infrastructure sectors, this decision underlines the importance of careful drafting and disciplined negotiation practices, particularly where parties are under commercial pressure to reach quick interim solutions. This case provides a clear and practical reminder of the legal risks that can arise during fast-moving commercial negotiations which are summarised below:

1. If parties intend for negotiations to remain non-binding, “subject to contract” wording must be maintained throughout as without this it can lead to a binding agreement being found.
2. A binding contract can arise before formal documents are signed – a sufficiently complete interim document may already be legally binding.
3. The Court will look at whether all essential terms have been agreed and whether there is commercial consideration – not whether the document is labelled as a “draft” or “proposal”.
4. Parties should be cautious in urgent commercial solutions. Escrow arrangements, standstill agreements and interim payment mechanisms are common in construction disputes but they can inadvertently create enforceable obligations if not carefully structured.
5. The Court’s approach reinforces that related agreements may be drawn into the dispute resolution framework of the underlying contract even if they are documented separately.

In short: if you do not intend to be bound yet, make sure that intention is clearly and consistently expressed – otherwise, the Court may decide that you already are.

References

[1] RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG (UK Production) [2010] UKSC 14.

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