Bellway Homes Ltd v Surgo Construction Ltd

Contractual adjudication provisions satisfy the Housing Grants, Construction and Regeneration Act 1996 where, read at the time of contracting, they have the objective of securing appointment and referral within seven days, even though the contract allows some flexibility. A pre-identified panel of independent adjudicators does not offend the requirement of impartiality merely because one contracting party selected the panel. Interim payments are payments on account. Subject to contrary contractual terms, a court or validly appointed adjudicator may determine the true value of the works and order repayment of overpayments during a later interim cycle or before the final account.

Bellway Homes Limited and Surgo Construction Limited entered into a JCT Intermediate Building Contract with Contractor’s Design 2016 containing bespoke adjudication and payment provisions. After an earlier notified-sum adjudication, Bellway referred a later dispute concerning a negative interim certificate and the true value of the works to adjudication. It selected Jonathan Cope from Bellway’s panel. Cope determined the true value and ordered Surgo to pay £1,076,220.82.

Bellway sought summary enforcement under Part 7. Surgo challenged Cope’s appointment, arguing that the contractual machinery contravened the Housing Grants, Construction and Regeneration Act 1996 and that the Scheme applied instead. Surgo also sought Part 8 declarations that interim repayment could not be ordered before the final certificate. The central issues were the validity of the appointment and the substantive legal basis for interim recovery of overpayments.

1. Enforcement. Bellway was entitled to judgment on its Part 7 claim. Cope was validly appointed and his decision was enforceable.
2. Adjudication machinery. Section 108(2)(b) of the Housing Grants, Construction and Regeneration Act 1996 requires a contractual timetable to have the object of securing appointment and referral within seven days. It does not require an inflexible contractual prohibition on a period exceeding seven days. The relevant contract, read at formation and with the panel then in existence, met that objective. The implied duty of co-operation and the practical unlikelihood that all three adjudicators would refuse and take the full response period were relevant. The amendment requiring referral as soon as reasonably possible was unobjectionable.
3. Impartiality. Appointment from a panel identified when the contract was made did not create a justified perception of bias. The panel members were independent and respected adjudicators, with no relevant connection to Bellway or the employer/developer sector. This differed materially from a power to nominate an adjudicator after the dispute arose.
4. Alternative jurisdictional analysis. The judge observed that, if the bespoke clause had failed, the contract particulars would not independently survive; alternatively, the Scheme would replace the adjudication provisions wholesale. However, the contractual route and the route actually used led to the same appointment and jurisdiction. Rejecting enforcement on that basis would be inconsistent with the policy of providing quick, effective and accessible remedies.
5. Interim overpayments. The standard payment provisions were equivocal but did not exclude a negative interim payment. Clause 4.9A expressly confirmed a right to recover overpayments at any time, including during interim payment stages. More generally, interim payments are payments on account and, unless the contract or a particular feature of the case provides otherwise, an adjudicator or court may determine the true entitlement and order payment or repayment before final account stage, whether in the same or a later interim cycle. The basis may be express or implied contract, or restitution.
6. Declarations. Surgo was not entitled to the substantive declarations sought. Bellway obtained judgment on both claims.