Balfour Beatty Regional Construction Ltd v Grove Developments Ltd

A contractual schedule specifying interim payments only until the contractual completion date does not confer a continuing entitlement after its final listed payment where the dates for later applications, notices and payments remain unagreed. Commercial common sense cannot supply essential terms or rescue a party from a clear but disadvantageous bargain.

Sections 109 and 110 of the Housing Grants, Construction and Regeneration Act 1996 allow substantial freedom in designing an interim-payment regime. A good-faith regime extending to the expected completion date can comply even though delays cause work to continue beyond that date. The statutory Scheme then does not supplement the contract.

A contractor and employer entered a substantially amended JCT Design and Build Contract 2011. Although they initially selected stage payments, they later agreed a schedule containing 23 monthly interim valuations and payments ending on the contractual date for practical completion. The works overran, but the parties did not agree the dates governing later applications, notices and payments.

The Technology and Construction Court declared that the contractor had no contractual right to make application 24 or any subsequent interim application. The contractor appealed, contending that continuing payments arose by construction or implication, under sections 109 and 110 of the Housing Grants, Construction and Regeneration Act 1996 and the statutory Scheme, or through a fresh agreement inferred from the parties’ later dealings.

1. Appeal dismissed by a majority. Jackson LJ, with whom Longmore LJ agreed, held that the parties’ later schedule created a hybrid payment arrangement comprising valuation under the periodic-payment provisions and a bespoke timetable. It covered 23 payments and ended on the contractual completion date. It did not prescribe any payment machinery thereafter: [2016] EWCA Civ 990, paras 30–42, 47–48 and 88–92.

2. No continuing entitlement could be obtained through contractual construction. Dates for valuations, payment notices, pay less notices and payment were essential because default could have serious consequences. The court could not choose between extrapolating the schedule and reverting to the standard contractual timetable. Clear contractual language cannot be rewritten merely because the bargain has worked badly for one party.

3. No term could be implied. The proposed term could not be stated with sufficient clarity because the critical dates remained uncertain. It was neither obvious nor necessary for business efficacy, and the contract retained commercial and practical coherence without it. The contractor remained entitled to payment at the contractual final-payment stage.

4. Sections 109 and 110 of the Housing Grants, Construction and Regeneration Act 1996 did not incorporate the statutory Scheme. Section 109(1) establishes a general requirement for an interim-payment regime; “any work” does not mean every individual piece of work. Section 109(2) gives parties wide freedom over payment amounts and intervals. The 23-payment regime, agreed in good faith and extending to the expected completion date, complied with section 109, while the contractual valuation machinery complied with section 110. Whether a cynical provision for one insignificant payment would comply was left undecided.

5. The parties’ later correspondence and conduct created no fresh contract. They never agreed the essential dates and the employer did not waive that requirement by issuing a protective payment notice.

6. Vos LJ dissented. He considered that the schedule reinstated the periodic-payment provisions and was ambiguous. Applying commercial common sense, he would have construed it as providing equivalent monthly interim payments until actual practical completion.

1. Court of Appeal (Civil Division): By a majority, dismissed the contractor’s appeal and upheld the declaration that it had no right to make interim application 24 or subsequent interim applications.

2. Technology and Construction Court: Stuart-Smith J declared that the contractor had no contractual right to make interim application 24 or any subsequent application and no right to payment upon them. No citation is stated in the judgment.