Bellway Homes Ltd v Surgo Construction Ltd
| Jurisdiction | England & Wales |
| Judge | Stephen Davies |
| Judgment Date | 12 February 2024 |
| Neutral Citation | [2024] EWHC 269 (TCC) |
| Court | King's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2023-000073 |
[2024] EWHC 269 (TCC)
His Honour Judge Stephen Davies sitting as a High Court Judge
Case No: HT-2023-000073
Case No: HT-2023-000190
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (KB)
Rolls Building,
London, EC4A 1NL
Nicholas Kaplan (instructed by Gateley Legal, Birmingham) for Bellway Homes Limited
Brenna Conroy (instructed by Hay & Kilner LLP, Newcastle upon Tyne) for Surgo Construction Limited
Hearing dates: 15 – 16 January 2024
Supplemental written submissions: 19 January 2024
Draft judgment circulated: 31 January 2024
APPROVED JUDGMENT
Remote hand-down:
This judgment was handed down remotely at 10am on 12 February 2024 by circulation to the parties or their representatives by email and by release to The National Archives.
I direct that pursuant to CPR PD 39A paragraph 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
His Honour Judge Stephen Davies
| A | Introduction and Summary | 1 – 7 |
| B | Facts | 7 – 38 |
| C | The Part 7 summary enforcement claim | 39 – 76 |
| D | The Part 8 declarations claim | 77 – 113 |
Introduction
In this case the Part 7 Claimant (Bellway) seeks summary judgment to enforce the decision of an adjudicator, Mr Jonathan Cope, who decided that the Part 7 Defendant (Surgo) should pay it the principal sum of £1,076,220.82, whereas Surgo seeks various declarations on its Part 8 claim with a view to establishing that the adjudicator's decision was wrong in law so that, even if enforceable, it is not liable to pay the sum due under the decision.
The Part 7 enforcement claim raises the issue as to whether or not Mr Cope was validly appointed. Surgo contends that he was not, because the contractual adjudication terms (including those permitting Bellway to select Mr Cope from a panel of 3 named adjudicators) contravened the Housing Grants, Construction and Regeneration Act 1996 (“the HGCRA”) in a number of respects, with the result that the contractual adjudication terms fell away and the provisions of the Scheme for Construction Contracts (England and Wales) Regulations 1998 (“the Scheme”) applied instead. The consequence, says Surgo, is that Bellway ought to have, but did not, refer the dispute to an adjudicator nominating body (“ANB”) pursuant to paragraph 2(1)(c) of the Scheme, rather than to Mr Cope as a member of the panel list
The Part 8 claim raises the issue as to whether or not there was a proper legal basis for Mr Cope to decide, in a true value adjudication in respect of the current interim payment cycle, that Surgo: (a) had been overpaid on a previous interim payment cycle; and (b) should repay Bellway the amount of the overpayment.
The respective cases have been very well argued by counsel for both parties, over the 1 1/2 days provided for in the directions made for the determination of both issues and in their supplementary written submissions, which addressed two particular questions of law raised by me during the course of and after the hearing.
In summary, my decision is first that Mr Cope was validly appointed, so that his decision should be enforced, and second that Surgo is not entitled to the declaratory relief which it seeks, so that Bellway is entitled to be paid the amount decided by Mr Cope.
The end result is that Bellway is entitled to judgment on both the Part 7 and the Part 8 claims.
I will summarise the key facts, before dealing first with the Part 7 enforcement claim and second with the Part 8 claim.
Facts
It is common ground that Bellway as employer employed Surgo as contractor to undertake construction works on a site near Newcastle under a JCT Intermediate Building Contract with Contractor's Design 2016 (“JCT ICD”) dated 9 October 2019, which contained a series of bespoke amendments. Thus, the signed contract provided that the standard JCT ICD conditions and the contract particulars should have effect as modified by the Schedule.
The relevant contract terms
Of relevance to this case are the amended provisions for adjudication and the amended provisions for interim and final payments.
Adjudication provisions
As to the former, Article 8 provided that: “If any dispute or difference arises under the Contract, either Party may refer it to adjudication in accordance with clause 9.2”.
Part 1 of the Schedule, headed “amendments to the contract particulars” contained a table with the first column identifying the relevant clause, the second identifying the relevant subject and the third containing the relevant entry. The relevant entry read:
| Clause etc | Subject | |
| 9.2.1 | Adjudication Nominating Body (to apply in the event that none of the Adjudicators on the Bellway Panel of Adjudicators indicate willingness to act) | The adjudicator is to be chosen from the Bellway Panel of Adjudicators (current as at the date of this contract, a copy of which is available for inspection on request) If none of the adjudicators on the Panel are available to act, the nominating body is RICS.” |
Part 2 of the Schedule, headed “amendments to the conditions”, included the following: “Delete clause 9.2 and replace with the following:
9.2.1. If a dispute or difference arises under this Contract which either Party wishes to refer to adjudication, the Scheme shall apply, subject to the following:
1 for the purposes of the Scheme, the Adjudicator shall be chosen by the referring party from the Employer's Panel of Adjudicators current as at the date of this Contract (a copy of which is available for inspection at the Employer's registered office address or on request). Where the chosen adjudicator does not indicate his willingness to act within 2 days of such Notice, then the referring party shall choose a second Adjudicator from the Panel and so on through the list. In the event that none of the Adjudicators on the Panel is able to act then the Adjudication Nominating Body shall be as provided for in the Contract Particulars; and
2 Paragraph 7(1) of the Scheme shall be amended by deleting ‘shall, not later than 7 days from’ and replacing with ‘shall, as soon as reasonably possible after’….
3 New paragraph 27 shall be included in the Scheme as follows: 1 The Adjudicator shall have power to determine more than one dispute at the same time and, if requested to do so by a party, shall determine any matter raised by such party in the nature of set-off, abatement or counterclaim at the same time as it determines any other matter referred to him.”
Bellway's evidence, which is not disputed by Surgo in this respect, is that the Bellway panel of adjudicators current at the contract date contained three adjudicators, Mr Cope and two others, both of whom are equally well-known and well-respected adjudicators. Unsurprisingly, and entirely properly, Surgo does not suggest that there is any evidence to suggest that any of the three would, by virtue of being on the panel or otherwise, have any tendency to act with anything other than complete impartiality if appointed to act as adjudicator in a dispute involving Bellway. When Mr Cope decided that he did not have jurisdiction in the second adjudication (as to which see below), he very properly volunteered, having checked his records, that he had only acted as adjudicator on two previous occasions through being on the Bellway panel, the first being in 2013 and the second in 2019. However, Surgo contends that the fact that a referring party is first obliged to choose from Bellway's panel introduces a perception of bias which offends against the policy of the HGCRA of having actually and ostensibly impartial adjudicators. This is a point which I shall need to determine.
I should also record at this point that the amendment to paragraph 27 of the Scheme is not said to be relevant in this case, since Bellway did not purport to refer more than one dispute and nor did any point about set-off, abatement or counterclaim arise.
Payment terms
As to the latter, Ms Conroy produced as an attachment to her written submissions a very helpful summary of the relevant payment provisions, with the bespoke amendments underlined and the deleted text shown struck through, which Mr Kaplan agreed as accurate and which I summarise as relevant as follows.
Clause 4.8 was headed: “interim payments – due dates and certificates” and contained standard provisions for interim payments to be made pursuant to interim certificates issued by the contract administrator, which were to state “the sum that he considers to be or have been due to the Contractor at the due date, calculated in accordance with clause 4.9, and the basis upon which that sum has been calculated”.
Clause 4.9 contained standard provisions for the ascertainment of the interim payment to be certified, so that in the usual way it was to: (a) include the total value of the work properly executed by the contractor but also to be subject to any deductions for specified items such as rectification and non-compliance with instructions; but (b) to have deducted the amount of sums stated in previous interim certificates and paid in respect of payment notices.
It is common ground that it did not expressly permit an interim certificate from being in a negative amount, but neither did it expressly prohibit it.
Clause 4.9A, added by amendment, is the subject of argument as to its construction and effect. It provided that: “For the avoidance of doubt, the Employer shall be entitled to recover from the Contactor any overpayments made at any time. All interim payments made to the contractor are payments on account...
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