London Eco Homes Limited v Raise Now Ealing Limited

A settlement agreement may vary an earlier construction contract without replacing it. An adjudication clause in the earlier contract can therefore survive, depending on the agreement’s proper construction. A settlement agreement may also be a construction contract, but the statutory right to adjudicate applies only to a dispute relating to construction operations. Where the dispute concerns settlement payments or the acceptability of a warranty, rather than the performance of construction operations, the statutory right is not engaged. Standard governing-law and jurisdiction clauses do not, without more, exclude adjudication or other forms of ADR.

The claimant contractor sought summary judgment to enforce an adjudicator’s decision requiring payment of £95,000 and interest under a settlement agreement. The defendant challenged the adjudicator’s jurisdiction, arguing that the settlement agreement was a free-standing contract containing no adjudication clause and that the original JCT contract had been terminated.

The central issues were whether the settlement agreement itself was a construction contract engaging the statutory right to adjudication under the Housing Grants, Construction and Regeneration Act 1996, and whether the adjudication provisions in the original contract survived because the settlement agreement varied rather than replaced it.

1. Summary judgment granted. The defendant’s jurisdictional challenge did not provide a real prospect of success. The claimant was entitled to enforce the adjudicator’s decision.
2. Clause 2.7 of the settlement agreement made provision for possible construction operations, namely works or modifications required to obtain sign-off on the basement warranty. The agreement also concerned substantial non-construction matters, including the settlement of the parties’ rights. Under sections 104(1) and 104(5) of the Housing Grants, Construction and Regeneration Act 1996, the statutory regime applied only so far as the agreement related to construction operations.
3. The dispute referred to adjudication concerned the timing or acceptability of the basement warranty and the parties’ entitlement to settlement payments. It did not arise from the provision of the possible works or modifications. Section 108 was therefore not engaged and no statutory adjudication clause was implied.
4. The settlement agreement nevertheless constituted a variation of the original contract. It used the original termination mechanism, treated the default and termination notices as valid under the JCT contract, and varied the final-account mechanism by fixing an agreed termination payment in full and final settlement. The agreement preserved claims to enforce its own terms.
5. The entire-agreement clause was construed in that context. It related to the termination of the original JCT contract and the project, rather than substituting the settlement agreement for the original contract in every respect. The governing-law and jurisdiction clauses were standard provisions and did not exclude ADR.
6. The court therefore held that the original adjudication provisions survived for the relevant dispute. It was unnecessary to decide conclusively whether the statutory phrase “under the contract” required the broader construction advanced by the claimant.