Summary
Contractual adjudication provisions which materially fetter a party’s statutory right to refer a dispute at any time, including by imposing liability for the other party’s costs, conflict with section 108 of the Housing Grants, Construction and Regeneration Act 1996. Where the adjudication provisions do not comply, Part I of the Scheme for Construction Contracts replaces them in their entirety.
A contract is made on written standard terms only where the terms of the contract actually concluded remain standard. Material negotiated alterations prevent that characterisation. A contractual late-payment rate of 0.5% above base did not provide a substantial remedy under the Late Payment of Commercial Debts (Interest) Act 1998; the statutory rate therefore applied.
Factual background
Yuanda supplied and installed curtain walling for a hotel project under a trade contract with Gear. The contract incorporated a JCT Trade Contract subject to a Schedule of Amendments.
Yuanda sought declarations concerning an adjudication clause requiring it to pay both parties’ adjudication costs, a contractual interest rate of 0.5% above base, and the application of section 3 of the Unfair Contract Terms Act 1977. The principal questions were whether Yuanda dealt on Gear’s written standard terms, whether the adjudication clause complied with section 108 of the Housing Grants, Construction and Regeneration Act 1996, what should replace any non-compliant provision, and whether the contractual interest rate was a substantial remedy.
Held
- Written standard terms. Yuanda did not deal on Gear’s written standard terms for section 3 of the Unfair Contract Terms Act 1977. Negotiations themselves were not decisive, but the material alterations obtained by Yuanda meant that the terms actually agreed were not Gear’s standard terms. The fact that nearly all trade contractors negotiated different amendments reinforced that conclusion.
- Adjudication costs. The second part of clause 9A required Yuanda to pay its own and Gear’s legal and professional costs, regardless of outcome. That obligation would deter referrals, particularly for smaller disputes, and could deprive Yuanda of an effective remedy. It therefore conflicted with the statutory entitlement to refer a dispute to adjudication at any time and with the requirement that adjudicators’ decisions be complied with pending final determination. The judge respectfully disagreed with Bridgeway Construction Ltd v Tolent Construction Ltd (2000) CILL1662 on the wording before him.
- Replacement mechanism. Under section 108(5), non-compliance with any requirement in subsections (1) to (4) caused the contractual adjudication provisions to be replaced wholesale by Part I of the Scheme for Construction Contracts. The position was regarded as settled. The judge expressed only a provisional view that payment provisions under Part II might ordinarily be replaced only to the extent necessary to fill contractual gaps.
- Joinder and certainty. Although not necessary to the result, the first part of clause 9A was capable of operation. It could permit joinder of a professional team member where an issue required resolution as between that member and the employer, without referring a separate dispute about the member’s liability.
- Late payment interest. The 0.5% rate was not a substantial remedy under sections 8 and 9 of the Late Payment of Commercial Debts (Interest) Act 1998. It had effectively been imposed, was materially below the rate in the standard JCT form, and no special circumstances justified relying on it. The clause was void to that extent and the statutory rate was substituted. Any remission under section 5 could be considered only after a qualifying debt and the supplier’s conduct were known.
- Declarations were granted accordingly. Gear was entitled in principle to a declaration that section 3 of UCTA did not apply. The parties were to address the precise relief and costs.
The court’s approach to earlier authorities
Available to signed-in members.
Key cases cited
14 authorities cited.
- Ruttle Plant Hire Ltd v Secretary of State for Environment Food & Rural Affairs [2009] EWCA Civ 97
- Bothma & Anor (t/a DAB Builders) v Mayhaven Healthcare Ltd [2007] EWCA Civ 527
- Banner Holdings Ltd v Colchester Borough Council [2010] EWHC 139 (TCC)
- Aveat Heating v Jerram Falkus Construction [2007] EWHC 131
- Banham Marshalls Services v Lincolnshire CC [2007] EWHC 402
- Hadley Design Associates Ltd. v The Lord Mayor and Citizens of the City of Westminster [2003] EWHC 1617 (TCC)
- Macob Civil Engineering Limited v Morrison Construction Limited [1999] CLC 739
- FERRYWAYS NV v ASSOCIATED BRITISH PORTS [2008] EWHC 225 (Comm) [2008] 1 Lloyd's Rep 639
- Hills Electrical & Mechanical plc v Dawn Construction Limited [2004] SLT 477
- John Mowlem v Hydratight [2002] 17 Const LJ 358
- Bridgeway Construction Ltd v Tolent Construction Ltd (2000) CILL1662
- Horace Holman Group Ltd v Sherwood International Group Ltd (2000) WL491372
- St Albans City and District Council v International Computers Ltd [1996] 4 All E R 481
- The Salvage Association v. CAP Financial Services Ltd. [1995] FSR 654
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Cases citing this case
16 later cases · 8 positive · 4 neutral · 4 caution
Most senior citing decisions:
- Kajima Construction Europe (UK) Limted & Anor v Children’s Ark Partnership Limited [2023] EWCA Civ 292 applied
- Bennett (Construction) Ltd v CMC MBS Ltd [2019] EWCA Civ 1515 explained
- African Export-Import Bank & Ors v Shebah Exploration & Production Company Ltd & Ors [2017] EWCA Civ 845 approved
- Jaevee Homes Limited v Steve Fincham [2025] EWHC 942 (TCC)
- Tata Consultancy Services Limited v Disclosure and Barring Service [2024] EWHC 2025 (TCC)
- Bellway Homes Ltd v Surgo Construction Ltd [2024] EWHC 269 (TCC)
- Pinewood Technologies Asia Pacific Limited v Pinewood Technologies PLC [2023] EWHC 2506 (TCC)
- Rochford Construction Ltd v Kilhan Construction Ltd [2020] EWHC 941 (TCC)
- The Kennel Club Ltd v Micro-ID Ltd [2019] EWHC 1639 (IPEC)
- J Murphy & Sons Ltd v W Maher and Sons Ltd [2016] EWHC 1148 (TCC)
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