Bellway Homes Limited v Surgo Construction Limited
[2024] EWHC 10 (TCC)
Bellway Homes Ltd v Surgo Construction Ltd
12 February 2024
[2024] EWHC 269 (TCC)
High Court
Two construction companies argued over money. A judge decided that the way they chose their dispute resolver was fair and that one company had to repay money it had wrongly received. The judge clarified the rules about resolving construction disputes and how to deal with mistakes in payments.
Key Facts
- •Bellway Homes Ltd (Bellway) and Surgo Construction Ltd (Surgo) entered into a JCT Intermediate Building Contract with Contractor’s Design 2016 (JCT ICD) containing bespoke amendments.
- •A dispute arose concerning interim payment cycle 36, where the contract administrator issued a payment certificate showing a negative amount due to Surgo.
- •Bellway referred the dispute to adjudication, appointing Mr. Jonathan Cope as adjudicator.
- •Surgo challenged Mr. Cope's appointment, arguing that the contractual adjudication terms contravened the Housing Grants, Construction and Regeneration Act 1996 (HGCRA).
- •Bellway also brought a Part 7 claim for summary judgment to enforce Mr. Cope's decision, and Surgo brought a Part 8 claim seeking declarations that Mr. Cope's decision was wrong in law.
Legal Principles
A contract must include written provisions enabling a party to give notice of intention to refer a dispute to adjudication and providing a timetable to secure adjudicator appointment within 7 days.
Housing Grants, Construction and Regeneration Act 1996 (HGCRA), s. 108(2)(a) and (b)
If a contract does not comply with HGCRA requirements, the adjudication provisions of the Scheme for Construction Contracts apply.
HGCRA, s. 108(5)
An adjudicator must act impartially.
HGCRA, s. 108(2)(e)
Any clause discouraging a party from referring a dispute to adjudication breaches the HGCRA.
Pioneer Cladding Ltd v John Graham Construction Ltd [2013] EWHC 2954 (TCC)
The contractual timescale must have the object of securing referral within seven days of the adjudication notice, but this is an objective, not a rigid requirement.
William Verry Ltd v North West London Communal Mikvah [2004] EWHC 1300 (TCC)
The adjudicator's jurisdiction derives from the agreement of the parties, as reflected in the contract. An adjudicator cannot be validly appointed under a non-existent contractual provision.
Twintec Ltd v Volkerfitzpatrick Ltd [2014] EWHC 10 (TCC)
If the identification of the correct contractual provisions makes no substantial difference to the adjudicator's jurisdiction, appointment, or procedure, a defence on this ground should be rejected.
Various cases discussed in sections 62-76
An adjudicator can order repayment of an overpayment as a dispositive remedy flowing from a re-evaluation of the true value of work.
S&T (UK) Ltd v Grove Developments Ltd [2018] EWCA Civ 2448
Outcomes
Mr. Cope was validly appointed, and his decision should be enforced.
The contractual adjudication terms did not contravene the HGCRA. The timetable for appointment, while potentially exceeding 7 days, had the object of securing appointment within that timeframe. The selection of an adjudicator from a pre-determined panel did not create a perception of bias.
Surgo is not entitled to the declaratory relief sought.
Bellway had a contractual right to recover the overpayment, supported by the construction of clause 4.9A, and general principles allowing for correction of overpayments in interim certificates. The adjudicator's decision to order repayment was within his jurisdiction.