Kilker Projects Ltd v Purton (t/a Richwood Interiors)

The statutory payment regime under the Housing Grants, Construction and Regeneration Act 1996 regulates cash flow. It does not ordinarily determine the ultimate value of the contractual bargain.

A notified sum relating to an interim payment cannot generally be reopened on valuation grounds in a later adjudication concerning the same payment. A notified sum relating to a final payment is different. Unless the contract makes the final payment conclusive, either party may later seek determination of the final contract value by adjudication, litigation or another agreed process.

The claimant sought enforcement of an adjudicator’s decision requiring the defendant to repay £55,676.84 plus VAT and to pay adjudicator’s fees. An earlier adjudication had required the claimant to pay the defendant £147,223 following the claimant’s failure to serve valid payment or pay less notices in respect of the defendant’s final account application.

The defendant argued that the first adjudication had finally determined the value of the final account, so that the second adjudicator lacked jurisdiction. The central issue was whether the statutory notified sum became final and conclusive as to the contractual sum due.

1. Statutory scheme. The payment provisions in the Housing Grants, Construction and Regeneration Act 1996 and the Scheme establish a regime for stage, interim and final payments. They concern cash flow and do not ordinarily determine the ultimate value of the contract sum. Clear statutory words would be required before the legislation could interfere with the commercial value of the parties’ bargain.
2. Interim payments. Subject to the express contract, a notified sum relating to an interim payment normally cannot be reopened on valuation grounds in a subsequent adjudication. Errors may be corrected in later interim or final valuations. The approach in ISG Construction Ltd v Seevic College [2014] EWHC 4007 (TCC) and Galliford Try Building Ltd v Estura Ltd [2015] EWHC 412 (TCC) was confined accordingly.
3. Final payments. Where the notified sum concerns a final payment, and the contract does not make that payment conclusive as to the contract sum, either party may later have the ultimate value of the contract determined by adjudication, litigation or another dispute-resolution process. No specific contractual accounting mechanism is required for that final determination.
4. Application. The first adjudicator determined the notified sum payable on the final account application, but did not determine the proper value of the final account. The claimant was required to pay the notified sum, but the statutory provisions did not make it conclusive. The second adjudicator therefore had jurisdiction and his decision was valid.
5. Summary judgment was entered for the claimant for £55,676.84 plus VAT, £13,140 in adjudicator’s fees and expenses, interest and costs, with further interest and costs submissions to be dealt with on paper.