Midland Expressway Ltd v Carillion Construction Ltd & Ors (No. 2)

A contractual mechanism which postpones a contractor’s access to adjudication cannot override the immediate statutory right conferred by section 108 of the Housing Grants Construction and Regeneration Act 1996. A disputed claim for interim payment arising under a construction contract is a construction dispute, even where the contract links payment to relief obtained under a separate upstream agreement.

Payment provisions which make the contractor dependent on the payer first receiving corresponding sums from a third party are ineffective under section 113. Contractual arguments concerning valuation, entitlement or conditions precedent may be advanced as defences in the adjudication, but cannot generally be used to prevent the adjudication from proceeding.

Midland Expressway Limited sought declarations and injunctions restraining CAMBBA Construction Group from pursuing an adjudication concerning additional payment for road-layout works known as the tiger tails. The claim arose under a design and construction contract connected with a concession agreement between Midland Expressway and the Secretary of State for Transport.

The contractual scheme linked certain contractor entitlements to equivalent relief obtained by Midland Expressway under the concession agreement. The Secretary of State declined to join the adjudication. The issues were whether a construction dispute existed, whether contractual provisions postponed CAMBBA’s right to adjudicate, whether CAMBBA could pursue interim payment before the upstream dispute-resolution procedure was completed, and whether Midland Expressway was entitled to injunctive relief.

1. Construction dispute. CAMBBA’s disputed claim for additional interim payment arose under and in connection with the design and construction contract. The broad definition of construction dispute was not cut down by the provisions concerning equivalent project relief or project-relevant events. The claim therefore fell within the contractual adjudication procedure and section 108 of the Housing Grants Construction and Regeneration Act 1996 (paras 53–61).
2. Immediate access to adjudication. Clause 7.1.3(a) could, at most, provide a defence in the adjudication; it did not prevent the contractor from commencing one. Clause 7.4 could not bar immediate adjudication. It either required a construction compatible with section 108 or was ineffective, with the Scheme for Construction Contracts applying. The same reasoning, following John Mowlem & Co Plc v Hydra-Tight Limited and R G Carter Limited v Edmund Nuttall Limited, applied to paragraph 11.3.3 of appendix 6 (paras 62–67, 75–78).
3. Payment provisions. Clause 39.6.2 operated in substance as a pay-when-paid provision. It prevented payment until Midland Expressway established and received corresponding sums under the concession agreement, including where the upstream valuation was wrong and required correction. That arrangement was precisely what section 113 prohibited. The wording referring to sums to which the employer was entitled, rather than sums actually received, did not avoid the statutory prohibition. Clause 7.1.3 reinforced the same result (paras 68–74).
4. Relief. Midland Expressway had not served a valid notice under paragraph 11.2. In any event, paragraph 11.3.3 could not prevent the adjudication. The contractual arguments remained available as defences before the adjudicator. Paragraph 9.5 also required the adjudication to be completed before court proceedings challenging its conduct or decision. The claim for declarations and injunctions was dismissed, and CAMBBA was entitled to proceed with the adjudication (paras 75–81, 83).