Construction Law Journal: 2018 Vol. 34 No. 1

Construction Law Journal
Co nstruc ti o n
Law Journal
Inc. TCLR
INCORPORATING TECHNOLOGY AND CONSTRUCTION LAW REPORTS
2018 Vol. 34 No. 1
(2018) 34 Const. L.J. 1–84 T.C.L.R. T1–T20

Editorial
Articles
■■ Concurrent Delay: What is All the Fuss About?

Kim Rosenberg
■■ Strength from Diversity: A Refined Proposal for Unifying Australian Security of Payment Laws
in Light of the Murray Review
Jeremy Coggins and Stephen Donohoe
Cases
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Construction Law
Journal
INCORPORATING TECHNOLOGY AND
CONSTRUCTION LAW REPORTS
Volume 34 Issue 1 2018
Table of Contents
Editorial 1
Articles
Concurrent Delay: What is All the Fuss About?
Kim Rosenberg 3
Strength from Diversity: A Refined Proposal for Unifying Australian
Security of Payment Laws in Light of the Murray Review
Jeremy Coggins and Stephen Donohoe 19
Cases
Balfour Beatty Regional Construction Ltd v Grove Developments
Ltd 47
Beumer Group UK Ltd v Vinci Construction UK Ltd 68
Technology and Construction Law Reports
Ziggurat (Claremont Place) LLP v HCC International Insurance
Company Plc. T1
ISSN: 0267-2359
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Editorial
Our first article is based on a paper presented by Kim Rosenberg at the Istanbul
International Construction Law Conference. It deals with what concurrent delay
is, and how it is treated. The author expresses the view that while concurrent delay
is rare, it is a source of concern in the industry as its effect varies depending on
the jurisdiction. The article uses a helpful graphic technique to explain what
concurrent delay is. In looking at how it is treated the author compares the approach
to concurrent delay in England and other common law jurisdictions, civil law
jurisdictions and in Shari’a-based systems. The author concludes there is no uniform
approach, and also in some instances a lack of authorities, and suggests the best
course to achieve some certainty is to make appropriate contractual provision for
concurrent delay.
Our second article looks at moves in Australia to unify the security of payment
laws. Adjudication legislation in Australia varies across state and territory
jurisdictions. It can be broadly divided into the West Coast Model (which is similar
to the UK and New Zealand models) and the East Coast Model (which is generally
procedurally more restrictive, and only allows for “upstream” payment claims).
In 2016, the government appointed John Murray AM to review the fragmented
security of payment laws and identify possible improvements. Authors Jeremy
Coggins and Stephen Donohoe present an analysis of current adjudication practice
in Australia and consider the Murray Review proposals. The authors favour a
system that maintains the two adjudication models, but that moves to using the
East Coast system for smaller claims, and the West Coast system for larger claims.
In the cases section we include the Court of Appeal’s decision in Balfour Beatty
Regional Construction Ltd v Grove Developments in which the contractor appealed
a decision that it had no right to interim payments after the contractual completion
date, the parties having agreed a schedule of interim payment dates up to that stage.
The Court had to consider the construction of the contract and the application of
s.109 of the Housing Grants, Construction and Regeneration Act 1996 in these
circumstances. The Court dismissed the appeal by a majority, holding that the
interim payment provisions agreed by the parties had been sufficient for the
purposes of the Act, and accordingly the Scheme did not apply, and that there was
no implied term that interim payments would continue.
We also report Fraser J’s decision in Beumer Group UK Ltd v Vinci Construction
UK Ltd, a challenge to an adjudication decision on the grounds of the adjudicator’s
failure to disclose that he was also conducting a parallel adjudication on the same
project between the same claimant and another defendant. In upholding the
challenge the learned judge examined whether the claimant had in fact advanced
factually inconsistent cases in the two adjudications, and concluded they had. It
was held that the defendant to the adjudication was deprived of the opportunity to
make submissions in respect of these inconsistencies because they did not know
of the other adjudication. While noting that to succeed in a challenge on the grounds
of natural justice the adjudication proceedings must have been obviously unfair
within the context of a quick procedure, the judge concluded that the adjudicator
should have disclosed that he was acting in a related adjudication.
(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors 1

2 Construction Law Journal
In the Technology and Construction Law Report we include Coulson J’s decision
in Ziggurat (Claremont Place) LLP v HCC International Insurance Company plc.
The claimant employer had the benefit of a performance bond from the defendant
guarantor. The bond was a standard Association of British Insurers’ Model Form
which had been amended. The employer terminated their building contract for
lack of progress. The works were completed by others, following which the
employer demanded payment first from the by then insolvent contractor and then
the guarantor. The learned judge decided the employer was entitled to payment
under the bond. The judgment includes reference to Perar BV v General Surety
and Guarantee Co Ltd, and our commentator reviews Perar and related authorities.
(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

Concurrent Delay: What is All the
Fuss About?
1
*
Kim Rosenberg
Comparative law; Concurrent causes; Construction disputes; Delay
Introduction
Concurrent delay is a topic that evokes passion amongst members of the
construction law community, yet it is an often misunderstood concept. The question
of how concurrent delay is defined is frequently forgotten in favour of debate
around how it should be treated. Concurrent delay is rare, meaning that angst over
its treatment is often a futile exercise. Concurrency gains so much attention, despite
its infrequency, because decision makers at recipients of delay-related claims may
be nervous about accepting such claims absent clarity on whether concurrency
exists. This nervousness arises because of the treatment of concurrent delay:
depending upon the jurisdiction, concurrency can, at least in part, eradicate
responsibility for an extension of time, liquidated damages and/or prolongation
costs.
This paper addresses two key questions regarding concurrent delay.
1) What is it?
2) How is it treated?
These questions cannot be answered in isolation from the relevant governing law
(and the contract if that expressly deals with concurrent delay, although this is rare
with many standard form contracts).2 As a result, the answers to these questions
may be different depending upon the jurisdiction.
To illustrate this point, this paper provides a comparative law overview on the
second question regarding treatment of concurrent delay in various jurisdictions.
This firstly covers the position in England/ Wales and Scotland, where this issue
has received attention (albeit more so from commentators than courts). That is
followed by a consideration of the principles in other common law jurisdictions,
namely the US, Canada, Hong Kong and Australia. Next, this paper provides an
overview of the principles favoured by the courts in civil law jurisdictions, including
Switzerland, Germany, France, Turkey, Egypt, the United Arab Emirates (UAE)
and Qatar (as well as Shari’a-based systems such as Saudi Arabia), where there is
limited (if any) judicial authority on the specific issue of concurrent delay.
1
This paper was first presented at the Istanbul International Construction Law conference in April 2017 (https:/
/construction-law.bilgi.edu.tr/en/conferences/delays-in-international-construction/ [Accessed 9 January 2018]).
*
Kim Rosenberg is Counsel at Freshfields Bruckhaus Deringer LLP, based in Dubai. The author would like to
acknowledge the assistance of various colleagues at Freshfields Bruckhaus Deringer LLP in the production of this
paper, in particular Oliver Sangster, Amr Omran and Patricia Snell.
2
FIDIC standard form contracts do not expressly address concurrent delay, whereas many Australian standard
form contracts do (such as AS 2124-1992, AS 4300-1995, AS 4000-1997 and AS 4902-2000).

What is concurrent delay?

There are two scenarios where two or more events can give rise to delay:
1) where the combination of two events cause delay—e.g. where
employer-supplied materials were not properly protected from the
weather (the employer’s contractual responsibility) and there was a
storm during the anticipated wet season (the contractor’s contractual
responsibility) so that the materials were washed away, resulting in
the need to procure new materials; and
2) where two events cause delay independently of each other—e.g.
where the employer did not procure the building permit by the
planned date (the employer’s contractual responsibility) and the
contractor did not complete the shop drawings by the planned date
(the contractor’s contractual responsibility).
The construction law community gives greater attention to the second scenario,
which will be the focus of this paper.
With that in mind, we turn then to the relevant question: what is concurrent
delay? Put simply, in the absence of a contractual definition (which takes
precedence), concurrent delay arises when the effects of two or more independent
events cause (or will cause) completion to occur later than it otherwise would have
occurred. In other words, both events must cause critical delay to completion.3
Concurrent delay is of particular interest where one of those delay events is the
contractual responsibility of the employer and the other is the contractual
responsibility of the contractor.
As is evident from this definition, at the heart of the identification of concurrent
delay is a causation analysis. The principles of causation differ both across
jurisdictions and in different contexts within jurisdictions. In England and Wales,
for example, in the context of concurrency the current position now appears to be
that the law seeks to identify whether the putative concurrent causes are each
“effective causes” of the critical delay (rather than merely incidental)—and whether
something is an “effective cause” is a matter to which the court must apply its
common sense in the particular case.4 In a similar way, principles of causation in
jurisdictions such as Egypt and the UAE look to the “effective and direct cause”
in assessing what brought about the harm.5 However, courts in these civil law
jurisdictions tend to take a slightly more flexible approach in identifying the
effective cause(s), particularly where one of the events under consideration came
about through bad faith or deliberate disregard of a contractual obligation (both
of which are high thresholds to meet).
3
This definition is consistent with that contained in Guidance Section 10, UK Society of Construction Law, “Delay
and Disruption Protocol”, 2nd edn (February 2017). In the interest of full disclosure, it should be noted that the author
chaired the drafting committee of the Second Edition of the Protocol. This is also the position taken most recently
by the English courts: Saga Cruises BDF Ltd v Fincantieri SPA [2016] EWHC 1875 (Comm); 167 Con. L.R. 29 and
North Midland Building Ltd v Cyden Homes Ltd [2017] EWHC 2414 (TCC); [2017] B.L.R. 605; 174 Con. L.R. 1 at
[23]–[29].
4
Adyard Abu Dhabi v SD Marine Services [2011] EWHC 848 (Comm); [2011] B.L.R. 384; 136 Con. L.R. 190 at
[277]; Walter Lilly & Co Ltd v Mackay [2012] EWHC 1773 (TCC); [2012] B.L.R. 503; 143 Con. L.R. 79 and [2012]
EWHC 1972 (TCC); 143 Con. L.R. 79; [2012] 6 Costs L.O. 862 at [370]; Galoo Ltd v Bright Grahame Murray
[1994] 1 W.L.R. 1360; [1995] 1 All E.R. 16 at 29; [1994] B.C.C. 319.
5
See A. Al-Sanhouri, Al-Wasit Commentary on the Civil Code: Part I—The Sources of Obligations (2010),
pp.832–833.

Concurrent Delay: What is All the Fuss About? 5
Therefore, at least under English law, the mere overlapping of the effects of two
delay events is not sufficient. Both events must cause critical delay. The following
simple bar charts show example scenarios to illustrate that point (note that these
bar charts show the effect of the relevant delay events as opposed to the occurrence
of the events themselves).6
Figure 1
Figure 2
6
These scenarios are based upon the example given in para.10.7 of the UK Society of Construction Law, “Delay
and Disruption Protocol”, 2nd edn (2017).

Figure 3
It is only the third of the above example scenarios where there is concurrent
delay. In the first two examples, there is none, but rather there is one event that is
solely causing critical delay at the relevant times.
In summary, concurrent delay (that is relevant to the allocation of responsibility
between the employer and the contractor) exists when the following criteria are
met7:
1) at least two delay events occur—one the contractual responsibility
of the employer and the other the contractual responsibility of the
contractor;
2) the effects of both delay events either start or end at the same time;
and
3) completion is or will be delayed because of those delay effects—i.e.
both events affect the activities on the critical path.
As to the second point, given the less rigid approach to causation in civil law
jurisdictions, there may be more flexibility around the requirement that the effects
of both delay events start or end at the same time. However, if one event clearly
is not on the critical path because the other event is driving the completion date,
as a matter of causation, there is unlikely to be concurrent delay.
An analysis of the facts is crucial to identifying whether the above criteria have
been met. For anything other than a simple project, that will involve a programming
analysis. Modern programming tools allow the parties (and relevant decision
makers) to more readily distinguish between the effects of different delay events,
rather than assuming concurrency of effect.8 However, it is important to recognise
that a programming analysis, no matter how detailed the programme, can rarely
be precise down to even a few days.9 Therefore, a common sense approach ought
7
There is also the concept of “true concurrent delay” referred to in the UK Society of Construction Law, “Delay
and Disruption Protocol”, 2nd edn (2017). This is a sub-set of concurrent delay, which arises when, in addition to
these criteria, the relevant delay events occur at the same time (see para.10.3 of the Protocol).
8
Essex Electro Engineers v Danzig , 224 F 3d 1283 (Fed Circ 2000), as cited in J. Bidgood, “Cutting the Knot on
Concurrent Delay” (2008) Construction Briefings No 2008-2, pp 6-8; see also K. Pickavance, Delay and Disruption
in Construction Contracts, 3rd edn (London: Sweet & Maxwell, 2005), p.652: “The widespread use and acceptance
of the CPM programmes has, it might be argued, made it progressively easier for parties to differentiate between the
impacts on programmes of individual events and thereby determine the appropriate entitlement.”
9
See para.10.11 of the UK Society of Construction Law, “Delay and Disruption Protocol”, 2nd edn (2017).

to be taken in identifying the start and end dates of the effects of delay events and,
therefore, whether there is concurrent delay.
How is concurrent delay treated?

In the rare circumstance that concurrent delay has arisen, the next question is: how
is it treated? This paper provides an overview of the approach (or arguments
available) regarding the treatment of concurrent delay in various common law and
civil law jurisdictions. What is evident from this overview is that it is not possible
to generalise as to the position in common law jurisdictions, nor is it possible to
describe the position in many civil law jurisdictions because concurrent delay is
not specifically addressed in the relevant civil code and there is a paucity of judicial
authority.
The available options for dealing with concurrent delay are generally as follows:
1) an extension of time for the full period of concurrent delay but no
prolongation costs for the contractor (and no liquidated damages for
the employer);
2) apportionment between the delay events so that the contractor is
entitled to a part extension of time for the period of concurrent delay,
with the employer entitled to liquidated damages to the other part,
and part prolongation costs; or
3) a combination of the above.
This section considers various common law jurisdictions, followed by civil law
jurisdictions. Of course, the parties may elect to contract out of the position at law
by instead agreeing a contractual regime for dealing with concurrent delay. This
is an increasingly common trend on larger projects.
Common law jurisdictions
England and Wales

The Malmaison case10 is often seen as the genesis of judicial authority and
commentary on the treatment of concurrent delay in England and Wales. This case
concerned a contractor’s claim for an extension of time under the JCT 1980
Conditions (Private Edition with Quantities), part of a set of standard form contracts
in the UK that continues to be in common use (as updated) today. The issue of
concurrent delay arose. In respect of how any concurrency (if it existed) ought to
be treated, the approach was in fact agreed between the parties, as recorded in the
judgment:
“It is agreed that if there are two concurrent causes of delay, one of which is
a relevant event, and the other is not, then the contractor is entitled to an
extension of time for the period of delay caused by the relevant event
notwithstanding the concurrent effect of the other event.”11
10
Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd (1999) 70 Con. L.R. 32.
11
Malmaison (1999) 70 Con. L.R. 32 at [13].

Despite no judicial consideration or decision on the treatment of concurrent delay

in Malmaison, this agreed approach (i.e. an extension of time for the full period
of concurrency) has been subsequently adopted as English law, often with reliance
on Malmaison.12 Commentators have explained the rationale for this approach as
follows, which explanation was accepted by the English court in Steria13:
“[I]t now appears to be accepted that a contractor is entitled to an extension
of time notwithstanding the matter relied upon by the contractor is not the
dominant cause of delay, provided only that it has at least equal ‘causative
potency’ with all other matters causing delay. The rationale for such an
approach is that where the parties have expressly provided in their contract
for an extension of time caused by certain events, the parties must be taken
to have contemplated that there could be more than one effective cause of
delay (one of which would not qualify for an extension of time) but
nevertheless by their express words agreed that in such circumstances the
contractor is entitled to an extension of time for an effective cause of delay
falling within the relevant contractual provision”.14
In addition to the above quoted rationale, John Marrin QC has pointed out that
this approach, as initially agreed by the parties in Malmaison, has the following
notable features15:
1) it respects the prevention principle. This is a common law doctrine
which provides that “a promisee cannot insist upon the performance
of an obligation which he has prevented the promisor from
performing”.16 This would be contravened if the contractor were not
awarded an extension of time for a delay (effectively) caused the
employer;
2) it prevents inconsistent cross claims for prolongation costs and
liquidated damages; and
3) it represents an appropriate relaxation of the “but for” test of
causation in the circumstances, because in situations where there is
more than one thing causing delay to the critical path (e.g. lack of
labourers and lack of materials), application of the “but for” test
would (absurdly) always result in the conclusion that none of the
putative causes had in fact caused the delay.
12
Royal Brompton Hospital NHS Trust v Hammond (No.7) [2001] EWCA Civ 206; 76 Con. L.R. 148 at [85];
Steria Ltd v Sigma Wireless Communications Ltd [2007] EWHC 3454 (TCC); [2008] B.L.R. 79; 118 Con. L.R. 177;
De Beers UK Ltd (formerly Diamond Trading Co Ltd) v Atos Origin IT Services UK Ltd [2010] EWHC 3276 (TCC);
[2011] B.L.R. 274; 134 Con. L.R. 151; Adyard Abu Dhabi v SD Marine Services [2011] EWHC 848 (Comm); [2011]
B.L.R. 384; 136 Con. L.R. 190 and Walter Lilly [2012] EWHC 1773 (TCC); [2012] B.L.R. 503; 143 Con. L.R. 79.
13
Steria [2008] B.L.R. 79; 118 Con. L.R. 177 at [130].
14
The Hon Sir Vivian Ramsey and Stephen Furst, QC (eds), Keating on Construction Contracts, 8th edn (London:
Sweet & Maxwell, 2006), p.275. The quotation also appears in substantively similar form in the current 10th edn:
The Hon Sir Vivian Ramsey and Stephen Furst, QC (eds), Keating on Construction Contracts, 10th edn (London:
Sweet & Maxwell, 2016), p.238.
15
J. Marrin QC, “Concurrent Delay Revisited” (2013) SCL, pp.16–17.
16
Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd (No.2) [2007] EWHC 447 (TCC); [2007]
B.L.R. 195; 111 Con. L.R. 78 at [47].

Case law subsequent to Malmaison and Steria, however, casts doubt on the first
point above. In Jerram Falkus17 the English court concluded that, on the question
of time, the prevention principle is not triggered where there is concurrent delay
in the sense described in the previous section of this article.18 Rather, a better
rationale for the proposition that the contractor is entitled to “time but not money”
may be the application of the “but for” causation test in response to a claim for
monetary compensation: a claimant (whether the contractor or the employer) should
not recover compensation where there is concurrent delay because the claimant
would have suffered the loss even absent the respondent’s offending act or
omission. That means that, where there is concurrent delay, the contractor should
not recover prolongation costs and the employer should not recover liquidated
damages. The only way to prevent the employer recovering liquidated damages
is for the contractor to be given an extension of time, thereby achieving the outcome
of “time but not money” for the contractor where there is concurrent delay.
As an alternative, some commentators have suggested that apportionment
between the relevant delay events may exist under English law amongst other
methods of assessment.19 However, this was firmly rejected by the English court
in the first instance decision of Walter Lilly20:
“In any event, I am clearly of the view that, where there is an extension of
time clause such as that agreed upon in this case and where delay is caused
by two or more effective causes, one of which entitles the Contractor to an
extension of time as being a Relevant Event, the Contractor is entitled to a
full extension of time. … The fact that the Architect has to award a ‘fair and
reasonable’ extension does not imply that there should be some apportionment
in the case of concurrent delays. The test is primarily a causation one”.
Therefore, as a matter of English law, the contractor is entitled to an extension of
time for the full period of any concurrent delay.
There is less judicial authority regarding the treatment of the contractor’s
prolongation costs claims when there is concurrent delay. The UK Society of
Construction Law Delay and Disruption Protocol (the SCL Protocol) provides that
for periods of concurrency the contractor is not entitled to recover prolongation
costs, except to the extent it can separately account for the costs of the employer
delay event that would not have otherwise been incurred as a result of the contractor
delay event (e.g. the costs of the variation itself, but not the prolongation costs for
the period of (concurrent) delay arising from the variation instruction).21 This
guidance framed the approach taken by the industry to prolongation costs in periods
of concurrent delay—i.e. time but not money. The English courts have subsequently
17
Jerram Falkus Construction Ltd v Fenice Investments Inc (No.4) [2011] EWHC 1935 (TCC); [2011] B.L.R.
644; 138 Con. L.R. 21.
18
Jerram Falkus [2011] B.L.R. 644; 138 Con. L.R. 21 at [52], in support of Adyard Abu Dhabi [2011] B.L.R. 384;
136 Con. L.R. 190. See also North Midland Building [2017] B.L.R. 605; 174 Con. L.R. 1 at [23]–[29], approving
these cases obiter.
19
M. Cocklin, “International Approaches to the Legal Analysis of Concurrent Delay: Is there a Solution for English
Law?”(April 2013) SCL, p.8.
20
Walter Lilly [2012] EWHC 1773 (TCC); [2012] B.L.R. 503; 143 Con. L.R. 79 at [370].
21
Section 1.10 of the UK Society of Construction Law, “Delay and Disruption Protocol”, 1st edn (October 2002),
which is materially the same in s.14 of the 2nd edn (2017).

recognised this approach as the “general rule in construction and engineering

cases”22.
Scotland
The Scottish approach to concurrency represents a marked contrast to the English
approach, in that the courts apportion liability as between the relevant events where
there is concurrent delay. This approach was first advanced in John Doyle
Construction, where the court determined that apportionment may be appropriate
in cases of concurrency based on the evidence and carried out on a basis that is
reasonable in all the circumstances23:
“During the period when both [delay events] operated [i.e. there is concurrent
delay], we are of the opinion that each should normally be treated as
contributing to the loss, with the result that the employer is responsible for
only the part of the delay during that period. Unless there are special reasons
to the contrary, responsibility during that period should probably be divided
on an equal basis, at least where the concurrent cause is not the contractor’s
responsibility”.24
In City Inn, the court endorsed this approach so that, where two causes are
operative, the decision-maker may apportion the period of concurrent delay between
the relevant contractor event and the employer event.25 This decision was upheld
on appeal:
“In such a situation, which could, as a matter of language, be described as
one of concurrent causes, in a broad sense (see para. [48] infra), it will be
open to the decision-maker, whether the architect, or other tribunal,
approaching the issue in a fair and reasonable way, to apportion the delay in
the completion of the works occasioned thereby as between the relevant event
and the other event. In that connection, it must be recognised that the
background to the decision making, in particular, the possibility of a claim
for liquidated damages, as opposed to one for extension of time, must be
borne in mind and approached in a fair and reasonable manner.”26
The Scott law approach of apportioning responsibility for concurrent delay adopts
a rationale similar to the apportionment of liability on account of contributory
negligence, i.e. based on considerations of culpability and causative potency.27
22
De Beers UK [2011] B.L.R. 274; 134 Con. L.R. 151at [177]. This approach is also recognised by other
commentators, for example: Ramsey and Furst (eds), Keating on Construction Contracts, 9th edn (2016), pp.295 and
302.
23
John Doyle Construction Ltd v Laing Management (Scotland) Ltd 2004 SC 713 (Court of Session, Inner House);
2004 S.C.L.R. 872; [2004] B.L.R. 295 at [18] and [19].
24
John Doyle Construction , 2004 SC 713 (Court of Session, Inner House); 2004 S.C.L.R. 872; [2004] B.L.R. 295
at [16].
25
City Inn Ltd v Shepherd Construction Ltd [2007] CSOH 190; [2008] B.L.R. 269; (2008) 24 Const. L.J. 590 at
[167].
26
City Inn Ltd v Shepherd Construction Ltd [2010] CSIH 68 (Court of Session, Inner House); 2011 S.C. 127; 2011
S.C.L.R. 70 at [42].
27
N. Dennys (ed.), Hudson’s Building and Engineering Contracts, 13th edn (London: Sweet & Maxwell, 2015),
p.790; John Doyle Construction Ltd v Laing Management (Scotland) Ltd 2004 S.C. 713 (Court of Session, Inner
House); 2004 S.C.L.R. 872; [2004] B.L.R. 295 at [17]: “This procedure does not, however, seem to us to be
fundamentally different in nature from that used in relation to contributory negligence or contribution among
wrongdoers”.

US
As a general proposition,28 in the US, where concurrent delay arises, the contractor
is entitled to an extension of time for the full period of concurrent delay (and so
the employer is not entitled to liquidated damages), but the contractor is not entitled
to prolongation costs—i.e. time but not money.29 Essentially, neither party can
benefit monetarily from periods of concurrent delay.30 There is no provision for
the courts to engage in apportionment between the different delay events.
Concurrent delay has been described by commentators in the US as a risk allocation
principle to distribute the costs associated with contemporaneous delays on a status
quo basis—with each responsible party bearing its own costs for periods of
concurrent delay.31
Canada
There is a dearth of Canadian commentary and jurisprudence on concurrent delay,
however the Canadian position may be described as a hybrid time-and-cost
procedure. The contractor will be entitled to an extension of time for the full period
of concurrent delay (and so the employer has no entitlement to liquidated damages).
As to prolongation costs, there is a low evidentiary threshold borne by the contractor
in identifying the costs attributable to the employer delay event. As a result, there
is likely to be “an almost indistinguishable exercise of apportionment” when it
comes to prolongation costs.32 One of the rationales for this approach is an extension
of the concept of “contributory negligence” to contractual claims, which some
commentators suggest is evident in the courts in certain provinces.33 Also relevant
to the treatment of concurrent delay in Canada is that the courts exercise a flexible
discretion and apply a “broad brush” or “do the best it can” approach when it
comes to assessing quantum.34 The upshot is that where concurrent delay arises,
the contractor will be entitled to an extension of time for the full period and, likely,
will recover some of its prolongation costs.35
Hong Kong
Concurrent delay is not well-defined in Hong Kong jurisprudence, though the
English approach has traditionally been favoured by commentators, with the SCL
28
Bearing in mind the differing jurisdictions within the US, both among different States and at the federal level.
29
Dennys (ed.), Hudson’s Building and Engineering Contracts, 13th edition (2015), pp.791–792; See RP Wallace,
Inc v US , 63 Fed Cl 401, 410–411 (2004) and also P. O’Connor and P. Bruner, Bruner & O’Connor on Construction
Law (Thomson Reuters, 2016), section 15-67.
30
See Pittman Construction Co, Inc v US , 2 Cl Ct 211 (1983) at [217]: Settled law dictates that, where both parties
contribute to the delay, “neither can recover damage, unless there is in the proof a clear apportionment of the delay
and the expense attributable to each party”.
31
O’Connor and Bruner, Bruner & O’Connor on Construction Law (2016), section 7-195.
32
Dennys (ed.), Hudson’s Building and Engineering Contracts, 13th edn (2015), p.792.
33
M. Cocklin, “International Approaches to the Legal Analysis of Concurrent Delay: Is There a Solution for English
Law?” (April 2013) SCL, p.12.
34
Wood v Grand Valley Railway (1915) 51 SCR 283 (SCC), cited by Cocklin, “International Approaches to the
Legal Analysis of Concurrent Delay: Is There a Solution for English Law?” (April 2013) SCL, p.12; See also A.
Stephenson, “Concurrency Causation Common Sense and Compensation” (2010) 13 Journal of the Canadian College
of Construction Lawyers.
35
G. Grenier, “Evaluating Concurrent Delay—Unscrambling the Egg” (2006) Construction Law Reports, 4.

Protocol being recognised by the industry in Hong Kong.36 However, the first
instance decision in W Hing Construction, in which the court expressly agreed
with the apportionment approach in the Scottish case of City Inn, suggests a shift
of approach in this jurisdiction.37
Australia
Commentators suggest that the position under Australian law reflects that under
English law.38 However, there is limited case law on this topic. This is because
many Australian standard form contracts expressly deal with concurrent delay—and
do so in a manner different from the English approach.39 For those contracts, it is
unnecessary to have regard to the position at law. Instead, the contractual position
prevails.
Civil law and Shari’a jurisdictions

There are several key distinctions in civil law jurisdictions as compared to the
common law, particularly English law. As indicated above, civil codes, and
accordingly the domestic courts in those jurisdictions, have a more flexible concept
of causation, adopting a general “adequate cause” approach.40 This, coupled with
the lack of case law precedent rules found in common law jurisdictions, provides
courts in civil law jurisdictions with greater discretion in making determinations
regarding the treatment of concurrent delay. Further, as most civil law jurisdictions
do not address concurrent delay in their respective civil codes and there is limited
jurisprudence on the issue, it is difficult to discern a defined approach to addressing
concurrent delay.
Common law practitioners may seek to apply the “time but not money” approach
against the legislative and jurisprudential vacuum of a given civil law jurisdiction.
The prevention principle arguably may be transposed onto the intention of the
parties and good faith principles, which occupy a central role in civil law systems
and are frequently invoked in court opinions. If that approach is successful, the
decision maker will likely conclude that the parties cannot have intended that the
employer receives liquidated damages for delay periods caused (at least
concurrently) by its own acts of prevention. Alternatively, apportionment of liability
may be more consistent with the allocation of liability for contributory fault (faute
commune) and the fairness or good faith requirements under the civil codes.41
Overall, civil jurisdictions often provide a relatively blank canvas from which
arguments can be developed, in any direction, regarding the treatment of concurrent
delay.
36
Cocklin, “International Approaches to the Legal Analysis of Concurrent Delay: Is There a Solution for English
Law?” (2013) SCL, p.13. The Protocol’s recommended approach to concurrent delay accords with the position in
England and Wales described above.
37
W Hing Construction Co Ltd v Boost Investments Ltd [2009] 2 HKLRD 501 at [61].
38
Dennys (ed.), Hudson’s Building and Engineering Contracts, 13th edn (2015), p.791.
39
Clause 35.3 of AS 2124-1992 that dictates the contractor has no entitlement to an extension of time for periods
of concurrent delay and clause 34.4 of AS 4000-1997 and AS 4902-2000 provides for apportionment in the event of
concurrent delay.
40
J. Bell, Principles of French Law, 2nd edn (OUP, 2008), p.410.
41
See M. Grose, Construction Law in the United Arab Emirates and the Gulf, 1st edn (Wiley-Blackwell, 2016),
p.133.

Switzerland
There is no clearly prescribed or clear-cut position on dealing with concurrent
delay under Swiss law (and it is unusual for Swiss construction contracts to
expressly deal with this issue). That said, commentators suggest that there appears
to be a tendency by the Swiss courts to follow the “time but not money” approach,
however this will depend on the circumstances of the case.42 An argument remains
though that a form of nuanced apportionment should apply based on general
contractual law principles applicable to the reduction of damages and the
apportionment of liability under art.44(1) of the Swiss Code of Obligations.43
Germany
There is no clear position as to how the German courts will address the treatment
of concurrent delay as the concept is not expressly dealt with in the German Civil
Code (BGB). Commentators suggest that the contractor will be entitled to an
extension of time for the full period of concurrent delay (or “parallel hindrances”).44
On the question of prolongation costs, the courts have a broad discretion (“free
discretion” or “free belief”) when assessing quantum pursuant to s.287 of the BGB.
Despite this, commentators suggest that German courts are unlikely to award
prolongation costs to the contractor for periods of concurrent delay.45 However,
like other civil law jurisdictions, the argument remains that the courts can rely on
the principle of contributory fault (s.254 of the BGB) to apportion liability between
the parties.
France
Similarly to the position in Switzerland and Germany, the French Civil Code does
not address concurrent delay, there is no clear judicial authority and there is no
uniformly-accepted view among practitioners regarding the treatment of concurrent
delay. It is possible that the French courts would apportion liability as between
the employer and the contractor delay events.46 This approach would be premised
on the requirement of good faith in the performance of the contract, as provided
under art.1104 of the French Civil Code47 and the principle of full compensation
(réparation intégrale) as enshrined in arts 1231–2 of the French Civil Code,48
42
N. Voser, “Construction Arbitration 2016: Switzerland (2016)” GAR Know-How.
43
Article 44(1) of the Federal Act on the Amendment of the Swiss Civil Code (Part Five: The Code of Obligations)
of 30 March 1911 (Status as of 1 January 2016): “Where the injured party consented to the action which caused the
loss or damage or circumstances attributable to him helped give rise to or compound the loss or damage or otherwise
exacerbated the position of the party liable for it, the court may reduce the compensation due or even dispense with
it entirely”.
44
The courts must justify this approach under the German good faith obligation, s.242 of the BGB. See C. Ennis,
“Claims for Extensions of Time and Compensation under the FIDIC Red Book: Civil Law and Common Law
Approaches Compared” (October 2013) SCL, pp.6–7.
45
See Ennis, “Claims for Extensions of Time and Compensation under the FIDIC Red Book: Civil Law and
Common Law Approaches Compared” (2013) SCL, p.5; see also S. Osing, “Time and Acceleration Issues Affecting
International Construction Contracts: The German Approach” (2010) International Construction Law Review 282–283.
46
P. Rosher and F. Gillion, “Construction Arbitration 2016: France (2016)” GAR Know-How.
47
Article 1104 of the French Civil Code (consolidated version as of 2 March 2017); Bell, Principles of French
Law, 2nd edn (2008), p.333 (referring to art.1134 under an earlier version of the Code). Other civil law jurisdictions,
such as Italy, similarly proceed on the basis of apportionment of liability and proportional valuation of damages when
faced with concurrent delay where the damage quantification cannot be shown: See L. Di Paola, “Concurrent Delays”
(2006) International Construction Law Review 384.
48
Article 1231-2 of the French Civil Code (consolidated version as of 2 March 2017).

whereby a party is “compensated for the loss he has suffered—no more and no
less—and for the gain of which he has been deprived”.49
Turkey
While the recently enacted Turkish Code of Obligation50 applies to construction
contracts51 it makes no explicit reference to concurrent delay and there is no Turkish
case law that deals with this topic. However, given the Turkish Code of Obligations
is modelled on the Swiss Code of Obligations, Swiss jurisprudence and commentary
on this topic will be persuasive.52 As indicated above, though, there is a paucity of
guidance from Switzerland. Nonetheless, the same leaning towards “time but not
money” may be accepted under Turkish law. Of course, like Switzerland, there
are arguments available for apportionment under the Turkish Code of Obligations
based on the following articles53:
1) Article 51(1):
the judge determines the nature and the amount of the compensation
taking particular account of the degree of fault54;
2) Article 52:
regarding the reduction of damages:
“Where the injured person consented to the action which caused
the damage or circumstances attributable to him helped give
rise to or compound the damage or otherwise exacerbated the
position of the person liable for it, the judge may reduce the
compensation due or even dispense with it entirely”.55
Egypt
The Egyptian Civil Code does not address concurrent delay and there is no judicial
authority or persuasive commentary on this topic. Like French law, the Egyptian
Civil Code emphasises the importance of observing good faith in carrying out
contractual obligations,56 which might support an argument for an extension of
time for full periods of concurrent delay. An argument for apportionment, in
contrast, could be developed based on the principle of “full compensation”,57 along
49
G. Bermann and E. Picard (eds), Introduction to French Law, 1st edn (Kluwer Law International, 2008), p.235
(referring to art.1149 under an earlier version of the Code).
50
Entered into effect on 1 July 2012.
51
Z. Akinci, Arbitration Law of Turkey: Practice and Procedure, 1st edn (Juris, 2011), p.248.
52
See Ennis, “Claims for Extensions of Time and Compensation under the FIDIC Red Book: Civil Law and
Common Law Approaches Compared” (2013) SCL, pp.2–5.
53
E. Buyksagis, “The New Turkish Tort Law” (2012) 3 Journal of European Tort Law 44, 62; see T. Ansay,
Introduction to Turkish Law, 3rd edn (Singer, 1987), pp.200–201; Turkey: Construction & Engineering Law (2016)
International Comparative Law Guide.
54
Translation provided by: E. Buyksagis, “The New Turkish Tort Law” (2012) 3 Journal of European Tort Law
44, 90.
55
Translation provided by: Buyksagis, “The New Turkish Tort Law” (2012) 3 Journal of European Tort Law 44,
91.
56
Article 148(1) of the Egyptian Civil Code, Law No.131 of 1948 (as amended): “A contract must be performed
in accordance with its provisions and in compliance with the requirements of good faith”.
57
Article 221(1) of the Egyptian Civil Code, Law No.131 of 1948 (as amended): “The judge shall assess the amount
of damages, if it has not been fixed in the contract or by a provision of law. Damages include compensation for losses

with art.216 of the Egyptian Civil Code, pursuant to which the judge retains a
discretionary power to either reduce or refuse to award any damages to the injured
party if it had contributed, through its own fault, to the occurrence or increase of
the harm.58
Furthermore, on the question of liquidated damages, where there is concurrent
delay, liquidated damages could be reduced under Egyptian law if the judge is
satisfied that:
1) the agreed amount is “greatly exaggerated” in comparison to the
actual harm sustained by the creditor (the employer); or
2) the original obligation has been partially performed.59
In fact, the debtor (the contractor) may succeed in denying the creditor’s claim to
liquidated damages altogether if it is able to prove that the creditor has suffered
no harm as a result of the breach.60 These provisions may be relied on by a
contractor to support an argument that it ought not be liable for liquidated damages
for periods of concurrent delay given the employer was itself responsible for an
event that caused that delay.
United Arab Emirates

Like the position in Egypt (by whose Civil Code the UAE Civil Code is largely
inspired), the concept of concurrent delay is not expressly provided for under the
UAE Civil Code, and there are no (or at least no accessible) cases that address the
treatment of concurrent delay. From a contractual perspective, there is no objection,
on grounds of UAE public policy, for parties to address concurrent delay in their
contract. This is consistent with the principle that contracting parties are free to
allocate risk and adjust the default rules of contractual liability provided they do
not exclude or otherwise limit liability for fraud or gross negligence.61
Notwithstanding, concurrent delay is rarely dealt with in contracts performed in
the UAE as a matter of practice.62
An argument for apportionment could be made based upon the following
provisions:
incurred by the creditor and profits foregone, provided that they are the natural result of the failure to perform the
obligation or the delay in such performance. The harm shall be considered a natural result if the creditor is unable to
avoid it by exerting reasonable efforts”.
58
Article 216 of the Egyptian Civil Code, Law No.131 of 1948 (as amended): “The judge may reduce the amount
of damages or award no damages if the creditor, through his own fault, contributed to the occurrence of the harm, or
increased it”.
59
Article 224(2) of the Egyptian Civil Code, Law No.131 of 1948 (as amended): “The judge may reduce the amount
of damages if the debtor proves that the amount fixed [by agreement] was greatly exaggerated, or that the original
obligation has been partially performed”.
60
Article 224(1) of the Egyptian Civil Code, Law No.131 of 1948 (as amended): “Damages fixed by agreement
are not due if the debtor proves that the creditor has suffered no harm”.
61
Articles 296 and 383(2) of the UAE Civil Code, Law No.5 of 1985 (as amended).
62
Grose, Construction Law in the United Arab Emirates and the Gulf, 1st edn (2016), p.131.

1. Article 290 (which is found in the tort section of the UAE Civil
Code but has been found to have application in the context of a
contract claim)63:
if the employer contributes to the occurrence of the harm, the judge
may take into account the level of involvement of the injured party
when assessing compensation, and may reduce or deny compensation
in accordance with the degree of its contribution;
2. Article 246(1):
enshrining the duty of good faith in the performance of a contract;
and
3. Article 106:
sets out the criteria for the unlawful exercise of a right.
However, equally, an argument in favour of an extension of time for the full period
of concurrent delay can be developed based on the same provisions of the UAE
Civil Code.
It is also worth noting that, on the question of liquidated damages, the courts
retain a power to revise the specified amount upwards or downwards pursuant to
art.390(2) of the UAE Civil Code. The court has full discretion to ensure that
compensation reflects the actual loss,64 and this provision may be relied on to adjust
the liquidated damages down where there is concurrent delay.
Qatar
Again, there is no provision for concurrent delay in the Qatari Civil Code. Because
the Qatari Civil Code is closely aligned with its Egyptian counterpart, the same
arguments available in Egypt and the UAE for the treatment of concurrent delay
are likely to apply in Qatar. Indeed art.257 of the Qatari Civil Code regarding
reduction of compensation due to the claimant’s contribution to harm65 is almost
word-for-word the same as art.216 of the Egyptian Civil Code as referred to above.
Similarly, the provisions on liquidated damages in the Egyptian Civil Code have
been reproduced almost verbatim in the Qatari Civil Code.66
Saudi Arabia
The Kingdom of Saudi Arabia is one of few countries in the world to embrace a
legal system derived almost solely from the Islamic Shari’a.67 Saudi Arabia has
not promulgated a civil code, and there are no codified rules in other laws that
63
See, e.g., UAE Union Supreme Court, Petitions Nos 1 and 28 of JY26 (Shar’i), 27 June 2005 (explaining that
the rule on contributory fault in art.290 of the UAE Civil Code applies equally to both contractual and tort liability,
because the rationale for applying it under either theory is the same).
64
Grose, Construction Law in the United Arab Emirates and the Gulf, 1st edn (2016), p.139.
65
Article 257 of the Qatari Civil Code, Law No.22 of 2004 on issuing the Civil Code: “The court may reduce the
amount of damages or award no damages if the creditor, through his own fault, contributed to the occurrence of the
harm, or increased it”.
66
Articles 224 and 225 of the Egyptian Civil Code are almost identical to arts 266 and 267 of the Qatari Civil
Code.
67
Articles 1 and 23 of the Basic Law of Governance, Royal Order No. (A/91) 27 Sha’ban 1412H (1 March 1992),
published in Umm al-Qura Gazette No 3397, 2 Ramadan 1412H (5 March 1992).

address concurrency in Saudi Arabia. Analyses of contractual obligations are often

made by reference to general principles derived from the Quran and the Sunnah
(teachings) of the Prophet.
According to the prevailing opinion in Saudi Arabia, where there is breach by
the aggrieved party’s counterparty but the aggrieved party participated in the
breach, the breaching party is relieved from liability. This is a general rule that is
based on the assumption that the aggrieved party’s conduct made it impossible for
the breaching party to perform their obligations. This type of reasoning might be
applied in cases of concurrency, leading to an apportionment on time and money.
However, equally, arguments could be made for alternative outcomes, such as an
extension of time for the full period of concurrent delay on the basis of good faith
principles.
Conclusion
The title of this paper queries the fuss about concurrent delay. This is a fair question
given the infrequency of concurrent delay:
• modern programming tools can more readily distinguish between
the effects of different delay events;
• that, coupled with the definition of concurrent delay, namely when
two or more delay events cause completion to be later than it would
have been, demonstrates that concurrent delay is factually rare (albeit
principles of causation vary across jurisdictions, which will impact
the identification of concurrent delay);
• as is evident from the comparative overview of the treatment of
concurrent delay in various jurisdictions, there is hardly an abundance
of cases on this topic; and
• in civil law jurisdictions, concurrent delay is not addressed in the
civil codes and there is scant judicial authority.
That landscape should serve as a significant flag that concurrency is not a usual
feature of construction projects that are in delay. Yet this is an issue that has arisen
in every construction dispute in which the author has been involved, across multiple
jurisdictions, only for the court or the tribunal to usually determine there was no
concurrent delay. Project participants should recognise this situation before
over-emphasising the topic of concurrent delay.
On the rare occasion when concurrent delay does arise, there is no uniform
approach to its treatment across jurisdictions. In fact in many legal systems,
particularly civil law jurisdictions, there is no authority at all regarding concurrent
delay. This creates uncertainty for project participants, particularly given the
differing outcomes on entitlement for extensions of time, liquidated damages and
prolongation costs.
To conclude, below is a summary of the position on the treatment of concurrent
delay in each of the jurisdictions addressed by this paper. As indicated above, if
the relevant contract addresses concurrent delay, that will prevail over the position
at law.

Figure 4
Jurisdiction Treatment of Concurrent Delay
England and Wales Contractor gets time but not money. No liquidated damages for employer.
Scotland Apportionment on time and money.
US Contractor gets time but not money. No liquidated damages for employer.
Canada Contractor gets time and probably some money (depending on the facts).
No liquidated damages for employer.
Hong Kong Traditionally, followed English approach of time but not money. Apportion-
ment may be possible.
Australia Limited case law, but possibly English approach of time but not money.
Switzerland Unclear; arguments can be made either way, but possibly time but not
money depending on the facts.
Germany Unclear; arguments can be made either way, but possibly time but not
money depending on the facts.
France Unclear; arguments can be made either way, but possibly apportionment
depending on the facts.
Turkey Unclear; arguments can be made either way, but possibly time but not
money depending on the facts (in following Switzerland).
Egypt Unclear; arguments can be made either way, but possibly apportionment
United Arab Emirates Unclear; arguments can be made either way, but possibly apportionment
Qatar Unclear; arguments can be made either way, but possibly apportionment
Saudi Arabia Unclear; arguments can be made either way, but possibly apportionment

Strength from Diversity: A Refined
Proposal for Unifying Australian
Security of Payment Laws in Light
of the Murray Review
1
*
Jeremy Coggins
**
Stephen Donohoe
Australia; Comparative law; Construction contracts; Harmonisation; Payments;
Statutory adjudication
I. Introduction
Over the past 20 years, building and construction industry security of payment
legislation (“the legislation”) has come into force in several Commonwealth
jurisdictions.2 In Australia, the first jurisdiction to pass such legislation was New
South Wales (NSW). The NSW Act formed the model upon which most other
Australian jurisdictions, to varying degrees, progressively based their legislation
culminating in the Tasmanian Act which received Royal Assent on 17 December
2009. The consequence of this piecemeal, jurisdiction-by-jurisdiction, approach
to enacting the legislation throughout Australia has been diversity between the
various jurisdictions. Such inconsistency is particularly marked, with respect to
the underlying conceptual frameworks and detail of the drafting, between the
Western Australia (WA) and Northern Territory (NT) Acts on the one hand which
more closely resemble the construction industry payment legislation in the UK
and New Zealand (NZ), and the other Australian Acts on the other which are more
closely modelled on the NSW Act. In recognition that the Australian Acts may be
broadly categorised into one of two models, the WA and NT Acts are widely
referred to as the “West Coast model” (WCM) legislation as opposed to the “East
Coast model” (ECM) tag given to the other Australian Acts. With the ECM
1
This article is dedicated to the memory of the late Dr Stephen Donohoe.
*
BSc (Hons), LLM, Grad Cert BCLaw, PhD in Law (Adelaide); Senior Lecturer, School of Natural and Built
Environments, University of South Australia.
**
BSc, LLB, MSc, EdD, LLM, PhD; Associate Professor, School of Architecture, Design and Environment,
University of Plymouth.
2
Pt II of The Housing Grants, Construction and Regeneration Act 1996 (the UK Act); Building and Construction
Industry Security of Payment Act 1999 (the NSW Act); Building and Construction Industry Security of Payment Act
2002 (the Vic Act); Construction Contracts Act 2002 (the NZ Act); Building and Construction Industry Payments
Act 2004 (the Qld Act); Construction Contracts Act 2004 (the WA Act); Building and Construction Industry Security
of Payment Act 2004 (the Singaporean Act); Construction Contracts (Security of Payments) Act 2004 (the NT Act);
Construction Contracts Act 2004 (The Isle of Man Act); Building and Construction Industry Security of Payment
Act 2009 (the Tasmanian Act); Building and Construction Industry Security of Payment Act 2009 (the Australian
Capital Territory Act); Building and Construction Industry Security of Payment Act 2009 (the South Australian Act);
Construction Industry Payment and Adjudication Act 2012 (the Malaysian Act); Construction Contracts Act 2013
(the Irish Act).

legislation having been in operation for some 18 years and the WCM legislation
for some 13 years, the Australian jurisdictions have collectively amassed a wealth
of experience and adjudication usage data with respect to these two legislative
approaches to security of payment in the building and construction industry.
A common objective of all of the legislation is the eradication of unfair
contractual provisions and practices with regards to payment in order to get cash
flowing in as fair a manner as possible down the hierarchical contractual chains
that exist on most commercial construction projects. A central feature of all the
legislation is the provision for a rapid statutory adjudication scheme, designed to
facilitate quick and inexpensive resolution of contractual payment disputes in the
construction industry. The key differences between the East and West Coast models
have been broadly summarised by Coggins, Fenwick Elliott and Bell3 as follows.
• The ECM Acts provide a detailed statutory payments regime,
overriding any inconsistent contractual provisions, which parties
undertaking “construction work” or “related goods and services”
may choose to engage by submitting a payment claim under the Act
at regular intervals and have it responded to within a certain
timeframe. Conversely, the WCM Acts largely preserve (rather than
override) the parties’ contractual interim payment regimes.
• The ECM Acts only allow for payment claims to be made up the
“contractual stream” (typically by a subcontractor against its head
contractor, or head contractor against its principal). Conversely, the
WCM allows for payment claims both up and down the “contractual
stream”.
• Whilst both models allow for a statutory adjudication scheme to
determine, in the interim, disputed payment claims, they differ with
respect to adjudicator appointment, submissions which may be
considered by an adjudicator, and the approach which an adjudicator
is to adopt in order to arrive at his or her determination. In all of
these respects the East Coast Acts are more restrictive, disallowing
mutual agreement of an adjudicator, consideration of reasons for
withholding payment which have not been duly submitted in
accordance with the statutory payment scheme, and discouraging an
evaluative approach to adjudicators’ determinations.
Since enactment of the legislation in each of the eight Australian state and territory
jurisdictions came to pass, there have been several calls from commentators that
the legislation should be harmonised into a uniform national approach in order to
benefit the construction industry,4 echoing the recommendation of the Cole Royal
3
J. Coggins, R. Fenwick Elliott, and M. Bell, “Towards Harmonisation of Construction Industry Payment Legislation:
A Consideration of the Success Afforded by the East and West Coast Models in Australia”, (2010) 10(3) Australasian
Journal of Construction Economics & Building 15.
4
See, for example, I.H. Bailey, “Harmonisation or Reform of Legislation: Construction Industry and Dispute
Resolution.” Paper delivered at Construction Law Seminar, Melbourne Law School, 10 November 2009; T. Zhang,
“Why national legislation is required for the effective operation of the security of payment scheme”, (2009) 25(6)
Building and Construction Law 376; M. Bell and D. Vella, “From motley patchwork to security blanket: The challenge
of national uniformity in Australian ‘security of payment’ legislation” (2010) Australian Law Journal 84; J.K. Coggins,
“From disparity to harmonisation of construction industry payment legislation in Australia: a proposal for a dual
process of adjudication based upon Size of Progress payment claim” (2011) 11(2) Australasian Journal of Construction
Economics and Building 34–59.

A Refined Proposal for Unifying Australian Security of Payment Laws 21
Commission some 15 years ago.5 Towards the end of 2015, the Australian Senate
Economics References Committee report into insolvency in the Australian
construction industry6 made a recommendation to unify the building and
construction industry security of payment legislation by the enactment of a
Commonwealth act. This recommendation was heeded by the Turnbull
Commonwealth Government in December 2016 when it appointed John Murray
AM to conduct a review of security of payments laws in the building and
construction industry, which seeks to identify what measures can be taken to
overcome the current fragmented nature of the security of payment laws around
Australia.7
In his PhD thesis, completed in July 2012,8 the lead author of this article
proposed that unifying Commonwealth building and construction industry security
of payment legislation should be introduced on the basis of a dual process of
adjudication (“Coggins’ dual process proposal”). This proposal essentially
recommended the use of the ECM for “smaller” payment claims and the WCM
for “larger” payment claims. The proposal was derived from an analysis of the
contemporaneous dispute resolution and procedural justice literature, available
adjudication usage data, and judicial review activity with respect to adjudicators’
determinations in the various state courts. The proposal was, amongst other things,
founded upon the observation that the ECM legislation (as compared to the WCM)
was proving to be particularly well used and efficient for the resolution of smaller
payment claims (for which it was originally designed); and the WCM (as compared
to the ECM) was proving to be relatively well used, more economical (in terms
of adjudication fees) and more resilient to applications for judicial review with
respect to the determination of larger payment claims. In other words, it was found
that the enactment of diverse legislation in Australia appeared to have given rise
to a unique opportunity for a unified statute to capitalise on the best of both of the
existing East and West Coast models, with the strengths of each the models being
clearly identifiable through the review of the relevant literature and secondary
data.
Notably, under key reform to the Queensland Act that came into effect on 15
December 2014, a dual scheme for payment and adjudication was introduced into
the Queensland Act based upon size of payment claim.9 The Queensland dual
system establishes two types of payment claim: “standard payment claims” which
are claims up to $750,000 in value, and “complex payment claims” which are
claims greater than $750,000 in value. The Queensland dual scheme, however,
differs from Coggins’ dual process proposal in that it provides an ECM scheme,
5
T. Cole, Final Report of the Royal Commission into the Building and Construction Industry, Commonwealth of
Australia (2003).
6
Senate Economics References Committee, “‘I just want to be paid’—Insolvency in the Australian construction
industry”, Commonwealth of Australia, December 2015.
7
J. Murray, “Review of Security of Payments Laws: Issues Paper”, Department of Employment, Australian
Government, 2017, p.3.
8
J. Coggins, “A Proposal for Harmonisation of Security of Payment Legislation in the Australian Building and
Construction Industry”, 2012, PhD Thesis, Adelaide University.
9
The Qld Act is, at the time of writing, undergoing further key reform although the dual process is retained. The
Building Industry Fairness (Security of Payment) Bill 2017 is currently before the Qld Parliament. Amongst other
things, the bill provides for the mandatory use of project bank accounts on public sector construction contracts between
$1 million and $10 million, as well as some procedural changes to the ECM payment and adjudication mechanisms.

although with differing timescales being prescribed, for both standard and complex
payment claims.
Almost five years on from the publication of the lead author’s PhD thesis, the
publication of an Issues Paper, seeking submissions from stakeholders in the
legislation, by John Murray as part of his review into security of payments laws
has provided the impetus for the authors of this article to revisit Coggins’ dual
process proposal in light of the further developments and experience that has
accrued with respect to the security of payment legislation in the various Australian
jurisdictions, as well as some of the international jurisdictions. As such, the
following key issues raised by John Murray in his Issues Paper (the “Murray
Paper”) have been used as the basis for the structure of this article: two systems
under the one legislation; timeframes on key process steps; endorsement of payment
claims under the ECM; the process for appointment of adjudicators; quality of
adjudication decisions and adjudication for domestic construction.
This article initially presents an up-to-date analysis of adjudication usage and
judicial review data in Australia, which is subsequently used as evidence when
considering the key issues raised by the Murray Paper. Through the adoption of a
systematic and evidence-based approach to addressing the Murray Paper key issues,
the article revisits and refines Coggins’ 2012 unifying dual process proposal. The
article concludes that, conceptually, Coggins’ dual process proposal, refined in
light of a further five years of legislative experience, remains a viable option for
federal building and construction industry security of payment legislation in
Australia.
II. Analysis of the existing adjudication usage and judicial

review data
Adjudication applications
Usage of statutory adjudication in Australia is monitored by the relevant
administering government bodies in each jurisdiction.10 Most of these government
bodies have collated and published, to varying degrees of detail over varying
periods of time, statistical adjudication usage data. It is from these publications
that the data analysed in this section has been drawn.
A statistical analysis of the adjudication data in New South Wales (NSW),
Queensland (Qld), Victoria (Vic) and Western Australia (WA) shows that the
number of adjudication applications in NSW, Qld and Vic for smaller claims (less
than $25,000) is far higher by proportion than in WA—see Table 1.
10
NSW Fair Trading, Department of Finance and Services; Victorian Building Authority; Queensland Building
and Construction Commission; Building Commission, Department of Commerce (WA).

Table 1: Number of adjudications by claim value in NSW, Qld, Vic and WA

Range of NSW Qld Vic WA
claims ($)
2014/15 2014/15 2014/15 2014/15
No. of %of to- No. of % of To- No. of % of to- No. of % of to-
payment tal adju- payment tal Adju- payment tal adju- payment tal adju-
claims dication claims dication claims dication claims dication
decided decisions decided Deci- decided decisions decided decisions
by adju- by adju- sions by adju- by adju-
dicator dicator dicator dicator
0–9,999 93 19.5 119 29.2 99 44.0 12 5.1
10,000–24,999 109 22.9 73 18.0 44 19.6 13 5.5
25,000–99,999 141 29.5 98 24.1 50 22.2 49 20.9
100,000–249,999 51 10.7 40 9.8 12 5.3 33 14.0
250,000–499,999 33 6.9 22 5.4 7 3.1 26 11.1
>500,000 50 10.5 55 13.5 13 5.8 90 38.3
Other11 - - - - - - 12 5.1
Total 477 100 407 100 225 100 235 100
In 2014/15, 42 per cent of all payment claims adjudicated in NSW, 47 per cent
of all payment claims adjudicated in Qld, and 64 per cent of all payment claims
adjudicated in Vic were for less than $25,000. In WA for 2014/15, only 11 per
cent of all adjudicated payment claims lodged were for less than $25,000.
The low rate of adjudication usage for small claims in WA has been recognised
as an issue in the 2015 WA Evans Review,12 which the Review attributes to lack
of education of smaller contractors about the Act.
The data presented in Table 1 also shows that the number of adjudication
applications in WA for larger claims (more than $250,000) is far higher by
proportion than in NSW, Qld and Vic. Forty-nine per cent of all payment claims
adjudicated in WA in 2014/15 were in excess of $250,000, whereas over the same
period only 17 per cent of all payment claims adjudicated in NSW, 19 per cent of
all payment claims adjudicated in Qld, and 9 per cent of all payment claims
adjudicated in Vic were in excess of $250,000.
Adjudication fees
A comparison of adjudication fees between Qld, WA and NSW is shown in Table
2. The last year that the WA Building Commission published adjudication fees by
payment claim size was 2010/11 and, therefore, this is the last year in which a
comparison of adjudication fees by payment claim size can be made between the
relevant states. The first financial year that NSW Fair Trading published average
adjudication fees by claim size was 2011/12.
11
These include applications which were invalid, had a zero amount or were a superseded claim.
12
P. Evans, “Report on the Operation and Effectiveness of the Construction Contracts Act 2004 (WA)”, 2015,
p.31.

This comparison shows that in 2010/11 and 2011/12 respectively, adjudication

fees13 were significantly lower in Qld and NSW14 for smaller payment claims,
specifically those below $25,000. For payment claims less than $25,000, the mean
adjudication fee in WA is, generally, around double of that in each of Qld and
NSW.
Table 2: Mean adjudication fees reported in Qld, WA and NSW

Range of claims ($) Mean fees for adjudication
Qld15 WA16 NSW17
2010/11 ($) 2010/11 ($) 2011/12 ($)
0–9,999 873 1,634 767
10,000–24,999 2062 3,880 1,293
25,000–99,999 3,553 3,225 2,419
100,000-249,999 6,887 3,876 5,389
250,000–499,999 10,307 4,761 8,026
>500,000 16,907 7,466 15,341
The data also shows that mean adjudication fees were significantly lower in
WA than in Qld and NSW for larger payment claims. For payment claims between
$100,000 and $249,999 the mean adjudication fee in WA is 56 per cent of that in
Qld, and 71 per cent of that in NSW. For payment claims over $250,000, the mean
adjudication fee in Qld is generally more than double, and in NSW around double,
of that in WA.
When compared to the 2010/11 and 2011/12 data, 2014/15 adjudication fees in
NSW and Qld (see Table 3) have decreased for claims in the ranges between $1
and $99,999 and, generally, increased slightly for claims in the ranges between
$250,000 and $499,999.
Table 3: Mean adjudication fees reported in Qld, Vic and NSW for 2014/15
Range of claims ($) Mean fees for adjudication ($)
Qld Vic NSW
2014/15 2014/15 2014/15
<5,000 624 525 697
5,000–9,999 950 1,093 986
10,000–24,999 1,503 1,496 1,493
25,000–39,999 2,953 2,075 2,259
40,000–99,999 4,021 3,909 3,177
13
2010/11 was the last year in which the WA Building Commission published adjudication fees by payment claim
size.
14
The 2011/12 adjudication fee statistics were used for NSW in this comparison, as 2011/12 was the first financial
year that NSW Fair Trading published average adjudication fees by claim size.
15
QBCIPA (2011).
16
Construction Contracts Registrar (WA) (2011).
17
NSW Procurement (2012).

Range of claims ($) Mean fees for adjudication ($)

Qld Vic NSW
2014/15 2014/15 2014/15
100,000–249,999 7,297 8,475 6,292
250,000–499,999 9,347 12,186 10,569
500,000–749,999 12,838 12,943
750,000–999,999 41,761 12,339
1,000,000–4,999,999 22,608
4,999,999–9,999,999 90,250
>10,000,000 40,379 58,143 21,866
Judicial reviews of adjudicators’ determinations

According to the Society of Construction Law Australia (SOCLA),18 up to end of
2013 the state Supreme Courts quashed almost 80 per cent of all applications for
judicial review of adjudicator’s determinations in the ECM jurisdictions (around
100 quashings in total), as compared to a total of only two quashings in WA. An
analysis of court decisions, carried out by the authors, relating to applications for
judicial review of adjudicators’ determinations between the start of 2014 to the
end of March 2017 (see Table 4) shows that:
• there have been 53 applications for judicial review of adjudicators’
determinations in the NSW, Qld and Vic collectively19;
• there have been 14 applications for judicial review of adjudicators’
determinations in WA20;
• the percentage of quashings appears to have decreased quite
considerably in NSW (34 per cent) and Qld (53 per cent) as compared
to that observed to the end of 2013 by SOCLA;
• 6 quashings of adjudicators’ determinations have occurred in WA,
10 in NSW, and 9 in Qld;
• the number and percentage of quashings appears to have increased
in WA (43 per cent) as compared to that observed to the end of 2013
by SOCLA; and
• around 80 per cent of all applications for judicial review in NSW,
Qld, Vic and WA concern adjudication determinations over $100,000,
and 91 per cent concern adjudication determinations over $50,000
(see Table 5).
18
Society of Construction Law Australia, “Report on Security of Payment and Adjudication in the Australian
Construction Industry”, 2014, Australian Legislative Reform Sub-Committee.
19
Lists of these decisions may be viewed in Appendix 1.
20
A list of these decisions may be viewed in Appendix 1.

Table 4: Number of applications for judicial review of adjudicators’

determinations in NSW, Qld, Vic and WA—Jan 2014 to Mar 2017
NSW Qld Vic WA
No. % No. % No. % No. %
Quashed 10 34 9 53 5 71 6 43
F a i l e d 19 66 8 47 2 29 8 57
challenges
Total 29 100 17 100 7 100 14 100
Table 5: Number of applications for judicial review of adjudicators’

determinations by adjudication determination in NSW, Qld, Vic and
WA—January 2014 to March 201721
NSW Queens- V i c t o - WA Total %age
land ria
$1 - $24,999 1 0 0 0 1 1.75%
$25,000 - $49,999 2 1 1 0 4 7.02%
$50,000 - $99,999 1 3 2 0 6 10.53%
$100,000 - $249,999 6 3 0 1 10 17.54%
$250,000 - $1 million 10 3 0 5 18 31.58%
>$1 million 6 4 2 6 18 31.58%
Total 26 14 5 12 57 100%
III. Two systems under the one legislation
“Big end” versus “small end” of town

It is submitted that a “one size fits all” legislative approach towards security of
payment legislation is not suitable due to the differences between the larger
construction businesses at the “big end of town” and the smaller construction
businesses at the “small end of town”.22
The “big end of town” is generally characterised by the use of more risk balanced
forms of contract, closer parity in bargaining power between contractual parties,
and the ability to afford professional legal advice. Whereas, the “small end of
town” is generally characterised by harsher contractual payment terms (or, even,
lack of payment terms), an imbalance in bargaining power between contracting
parties, high levels of sensitivity and commercial vulnerability of contractors and
suppliers to delayed cash flow of relatively smaller amounts, and an inability to
afford professional legal advice.
21
Only cases which readily identify the adjudication determination amount in the case report have been included
in this analysis, which explains the discrepancies between the numbers reported in Tables 4 and 5. The cases and
their adjudication determination amounts are shown in Appendix 1.
22
According to the Australian Bureau of Statistics, “2011-12 Private Sector Construction Industry Australia”,
8772.0, at the end of June 2012 there were 209,783 businesses in the construction industry, 97.7% of which were
small construction businesses (employment range of 0–19 persons) and only 0.1% of which were large construction
businesses (employment range of 200 persons or more). Of these, small construction businesses accounted for 49%
of total industry income, whereas large businesses accounted for 27%.

The ECM was originally designed to provide security of payment for “small
end of town”. As stated in the Second Reading Speech for the Building and
Construction Industry Security of Payment Bill in the NSW Legislative assembly:
“It is all too frequently the case that small subcontractors—such as bricklayers,
carpenters, electricians and plumbers—are not paid for their work. Many of
them cannot survive financially when that occurs, with severe consequences
for themselves and their families.”23
The focus on small subcontractors and suppliers explains the highly regulatory
nature and short timescales of the ECM.
The original objective of the ECM was to be a quick independent payment
certification mechanism for construction works done and/or goods and services
supplied, as opposed to a dispute resolution method to assess amounts claimed for
damages within the scope of the contract (e.g., contractors’ claims for delay and
disruption costs). However, shortly after the commencement of the ECM legislation,
“mission drift” began to occur in the three ways: the courts found that the ECM
could be used for assessing more complex matters such as delay damages claims24;
the ECM became regularly used to decide very large payment disputes in the order
of millions of dollars; and the courts declared adjudication to be an administrative
tribunal and, therefore, susceptible to judicial review.
Not being originally designed as a dispute resolution process, the ECM is
unsuitable for the determination of larger payment claims as it lacks basic elements
of procedural justice. This can been seen in the following ways:
• the ECM essentially limits the adjudicator to a consideration of
documents only when making their determination;
• the ECM bars respondents from submitting adjudication responses
where no payment schedule has been duly served;
• the ECM’s adjudication process does little to facilitate, or enable the
facilitation, of an ongoing commercial relationship between parties;
and
• The ECM provides short timeframes for respondents to prepare their
adjudication responses and for adjudicators to make their
determinations.
A further issue which has come to light is the lack of perceived procedural justice
afforded by the adjudicator appointment mechanism under the ECM due to the
unilateral selection of an Authorised Nominating Authority (ANA),25 as discussed
in further detail in Part IV of this article.
Simply speaking, the ECM was not designed to cater for the resolution of large
and/or complex payment claims. It is, however, being often used to do so. Hence,
23
M. Iemma, Building and Construction Industry Security of Payment Bill Second Reading Speech, 29 June 1999,
Parliament of NSW Legislative Assembly Hansard Transcript, p.1594.
24
See, for example: Coordinated Construction Co Pty Ltd v JM Hargreaves Pty Ltd [2005] NSWCA 228;
Coordinated Construction Co Pty Ltd v Climatech (Canberra) Pty Ltd [2005] NSWCA 229; Minister for Commerce
(formerly Public Works & Services) v Contrax Plumbing (NSW) Pty Ltd [2005] NSWCA 142; and, John Holland
Pty Ltd v Roads & Traffic Authority of New South Wales [2007] NSWCA 19.
25
See further: A. Wallace, “Final Report of the Review of the Discussion Paper—Payment dispute resolution in
the Queensland building and construction industry”, 2013, pp.131–140; B. Collins, “Final Report of the Independent
Inquiry into Construction Industry Insolvency in NSW”, 2012, p.72.

it is no coincidence that high rates of quashings of adjudicators’ determinations

have occurred in relation to large payment claims in the ECM jurisdictions.
The strengths of the ECM lie in its higher rates of adjudication usage by smaller
contractors, and its efficiency (in terms of speed and adjudication cost) for recovery
of smaller payment claims, as evidenced by:
• the high proportion/numbers of smaller claims adjudicated under the
ECM (see Table 1);
• lower adjudication fees relative to the WCM for smaller payment
claims (see Table 2); and
• the ECM’s mechanisms allowing for an adjudicator’s determination
to be obtained as quickly as 26 business days from the date the
payment claim was served (see Figure 1).
WCM more suitable for dispute resolution of larger claims

The WCM, having been designed to cover all contractual payment disputes, and
with its respect for the primacy of contract, generally measures up more
satisfactorily than the ECM against the key criteria by which dispute resolution
systems can be evaluated. For example, in contrast to the ECM, under the WCM:
• neither party will be precluded from making an adjudication
application, or from being able to present its full case to the
adjudicator;
• an adjudicator is permitted to adopt a more investigative role when
determining a payment claim;
• legal representation at adjudication conferences may be permitted
at the adjudicator’s discretion; and
• the adjudicator’s determination is more likely to reflect an outcome
based upon the parties’ agreed contractual payment provisions.
A proposal for a dual process of adjudication based upon size

of progress payment claim (“Coggins’ dual process proposal”)
The unifying legislative scheme reviewed and refined by this article is a dual
process according to size or value of payment claim, first proposed by the lead
author in his 2012 PhD thesis.26 It employs the ECM process for small progress
payment claims falling below a prescribed cap value and the WCM process for
all payment claims above the cap value.
The case for such a dual process is predicated on the following premises and
observations:
1) The East Coast legislative approach—with its regulatory nature and
shortcomings in procedural justice—is appropriate and justified at
the “smaller end of town” to protect the more vulnerable smaller
businesses in the lower tiers of the hierarchical contractual chain.
Indeed, the adjudication usage statistics reviewed in Part II of this
26
Coggins, “A Proposal for Harmonisation of Security of Payment Legislation in the Australian Building and
Construction Industry”, 2012, PhD Thesis, Adelaide University.

article demonstrate that the ECM has been relatively popular for
smaller claims, and that adjudication fees for smaller payment claims
in the ECM jurisdictions are relatively low, when compared to the
WCM. As such by retaining the ECM process for smaller claims,
the proposed dual process capitalises on the successful aspects of
the East Coast process.
2) The West Coast legislative approach—with its respect for primacy
of contract and procedural justice—is more appropriate for deciding
payment claims at the “larger end of town”, producing adjudication
determinations that are more likely to be accepted by the parties as
well as being more resilient to judicial review than determinations
under the ECM. The less regulatory nature of the WCM offers far
less scope for judicial challenge on the basis of jurisdictional error
than does the ECM with its “drop dead” timeframes and prescriptions
for payment claims and payment schedules. Accordingly, the
adjudication data reviewed in Part II of this article shows that the
ECM has generally been more susceptible to judicial challenges and
quashings since commencement of the legislation.
In light of the adjudication data previously reviewed in Part II, it is suggested the
cap value for the proposed dual process should be $100,000 due to the data
revealing this amount to be:
• a demarcation point below which adjudication fees are relatively
lower in the ECM jurisdictions as compared to WA; and
• the threshold below which applications for judicial review of
adjudicators’ determinations are rarely made—nearly all judicial
review applications since the start of 2014 have been for adjudicator
determinations in excess of $50,000, and around 80 per cent of
judicial review applications for adjudicator determinations in excess
of $100,000.
IV. Timeframes on key process steps
Overall timeframes under the current ECM and WCM legislation

The typical timeframes for the key process steps with respect to payment and
adjudication schemes under the current ECM27 and WCM legislation are shown
in Figures 1 and 2 respectively.
Figure 1: Typical ECM payment and adjudication scheme timeline
27
It should be noted that SA Act differs from the other ECM Acts in that it allows 15 business days for a payment
schedule to be served from the date of the payment claim, and 15 business days for a claimant to apply for adjudication
after receiving the payment schedule.

Figure 2: Typical WCM payment and adjudication scheme timeline28
Time to submit statutory payment claim (ECM process)

At present, the time in which a claimant must submit a payment claim under the
ECM legislation varies between the East Coast Acts. The NSW, Tasmanian and
ACT Acts provide that a payment claim must be served within the period
determined in accordance with the terms of the contract or within the period of 12
months after the construction work to which the claim relates was last carried out,
whichever is the later. With respect to the latter timeframe, the SA and Qld Acts
provide six months, and the Victorian Act provides three months.
Of these timeframes, it is submitted that six months after the construction work
to which the progress payment relates was last carried out is most appropriate for
the ECM process for small progress payment claims under Coggins’ dual process
proposal. Six months provides appropriate balance between allowing enough time
for the claimant to reserve its decision as to whether to use the Act and not allowing
too much time for the compilation of voluminous ambush claims.
This issue is not relevant to the WCM process as there is no statutory payment
claim provided for. Rather, under the WCM, the legislation gives primacy to the
contractual payment claim.
Time to prepare either statutory payment schedule (ECM) or

contractual payment certificate (WCM)
The majority of the ECM legislation presently provides for a period of 10 business
days after the payment claim is served for a respondent to prepare and serve a
payment schedule.29 It is submitted that this time period, which accords with
contractual progress payment provisions that have become standard within the
industry,30 is appropriate for the ECM process for small progress payment claims
under Coggins’ dual process proposal.
For the WCM process, which largely upholds the freely agreed contract terms,
the time by which a payment certificate must be issued depends on the contract
conditions used.
28
It should be noted that under the WCM, the time period between submission of payment claim and issuance of
the contractual payment certificate is in accordance with the agreed contractual terms. For the purposes of Figure 2,
10 business days has been used as this timeframe is typically provided by standard forms of construction contract—e.g.,
AS 2124 General Conditions of Contract cl.42.1; and AS 4000 General Conditions of Contract cl.37.2.
29
Except for: the SA Act which allows 15 business days; and the Qld Act which allows 15 business days for
complex payment claims served within 90 days or less, and 30 business days for complex payment claims served
more than 90 days after the reference date.
30
See, for example, cl.42.1 of the AS 2124 General Conditions of Contract, and cl.37.2 of the AS 4000 General
Conditions of Contract.

Time to submit adjudication application

The majority of the ECM legislation presently provides for a period of 10 business
days after the claimant receives the payment schedule for a claimant to lodge an
adjudication application.31 It is submitted that this time period is appropriate for
the ECM process for small progress payment claims under Coggins’ dual process
proposal.
The WA Act currently allows a party 90 business days,32 and the NT Act 90
days,33 after the payment dispute arises to apply for adjudication. Notably, the
timeframe under the WA Act was amended from 28 days on 15 December 2016
against the advice of the Evans Review.34 In order to preserve the legislation’s
objective of rapid cash flow provision, it is submitted that 28 days (or 20 business
days), as recommended by the Evans Review,35 from date of dispute is an
appropriate timeframe for the WCM process for larger payment claims under
Coggins’ dual process proposal. Further, as stated by the Evans Review36:
“If the provisions of the contract have been followed with respect to the
submission of the original payment claim, and if all supporting documentation
has been provided to the superintendent or contract administrator in order to
reasonably consider the basis of the claim, then it is considered that 28 days
to prepare an Application under the Act is adequate.”
Notably, several of the international Acts (e.g., the UK,37 Irish,38 and Malaysian39
Acts) allow an adjudication application to be made at any time.
Time to submit adjudication response

The majority of the ECM legislation presently provides a period of five business
days40 after receiving a copy of the adjudication application, or if later two business
days41 after notice of the adjudicator’s acceptance of the application is received,
for the respondent to lodge an adjudication response. It is submitted that these
timeframes are sufficiently prompt and appropriate for the ECM process for small
progress payment claims under Coggins’ dual process proposal.
Under the current WCM legislation, a party must serve a written response to an
adjudication application within 10 business days after it is served with such an
application.42 It is proposed, however, that, under the WCM process for larger
payment claims under Coggins’ dual process proposal, this timeframe be extended
to 15 business days in order to give sufficient time to parties responding to very
large payment claims to properly prepare their case.
31
Except for the SA Act which allows 15 business days.
32
WA Act s.26(1).
33
NT Act s.28(1).
34
Evans, “Report on the Operation and Effectiveness of the Construction Contracts Act 2004 (WA)”, 2015, p.23.
35
36
37
The Housing Grants, Construction and Regeneration Act 1996.
38
Construction Contracts Act 2013.
39
Construction Industry Payment and Adjudication Act 2012.
40
Except for the ACT Act which allows 7 business days, and the Qld Act which allows 10 business days for
standard payment claims and 15 business days for complex payment claims.
41
Except for the ACT and Tasmanian Acts which allow 5 business days, and the Qld Act which allows 7 business
days for standard payment claims and 12 business days for complex payment claims.
42
See WA Act s.27(1); NT Act s.29(1).

Time for adjudicator’s determination

All the ECM legislation presently provides a period of 10 business days for an
adjudicator to make their determination. The ECM Acts are, however, divided
with respect to when the 10 business day period starts to run. Under the New South
Wales and Victorian Acts, the period starts to run after the date on which the
adjudicator notified the claimant and the respondent as to his or her acceptance of
the application.43 Under the other East Coast model Acts, the period starts to run
from the date on which the adjudicator receives the adjudication response.44 Under
all the East Coast model Acts, the prescribed 10 business day period for
determination may be extended with the consent of the parties. It is submitted that
a period of 10 business days from the date on which the adjudicator receives the
adjudication response is an appropriate timeframe for the ECM process for small
progress payment claims under Coggins’ dual process proposal. Having the receipt
of the adjudication response as the trigger for the time period ensures that the
adjudicator will be informed of the respondent’s arguments in the adjudication
response for the full 10 business day period in which they must make their decision.
As a further measure to increase the speed of cash flow of smaller payment
claims it is suggested that, under the ECM process for smaller payment claims,
the time within which an adjudicator must make their determination should be
shortened to five business days where a respondent has failed to submit a payment
schedule (as per the Singapore Act45) on the basis that the adjudicator will only
have to consider the validity of the claimant’s application and relevant submissions.
Under the current WCM legislation, the adjudicator is required to make a
determination within 10 business days,46 with this time period being extendable
with the consent of the parties. It is submitted that this period is too short for an
adjudicator to properly consider the volume and/or complexity of arguments and
documentation submitted by the parties for many larger payment claims. Therefore,
for the WCM process for larger payment claims under Coggins’ dual process
proposal, it is recommended that an adjudicator be allowed 20 business days to
make their determination, with the possibility for this period to be extended by up
to 10 business days with agreement of claimant (as per the Irish Act47). Permitting
extension of the time for determination without the adjudication respondent’s
consent reduces any opportunity for the respondent to encourage a “rushed”
determination that may contain grounds for judicial review (e.g., jurisdictional
error due to failure of the adjudicator to properly consider the parties’ relevant
submissions).
Revised timeframes for the proposed unifying dual process

model
Overall, for the ECM process for small progress payment claims under Coggins’
dual process proposal, no changes are recommended to those timeframes that
typically exist for the majority of the current ECM Acts. These timeframes would
43
NSW Act s.21(3)(a); Vic Act s.22(4)(a).
44
Qld Act s.25(3)(a); Tas Act s.24(1)(a); SA Act s.21(3)(a); ACT Act s.23(3)(a).
45
Building and Construction Industry Security of Payment Act 2004 s.17(1)(a).
46
WA Act s.31(2)(b); NT Act s.33(1)(b).
47
Construction Contracts Act 2013 s.6(7).

mean that, as illustrated in Figure 1, an adjudicator’s determination would be made

for a smaller payment claim between 26 and 35 business days after a payment
claim is made under the legislation, and the period of time from adjudication
application to adjudicator’s determination would typically be no longer than 15
business days.
Under the WCM process for larger payment claims under Coggins’ dual process
proposal, the revised timeframes proposed and discussed above are illustrated in
Figure 3. These timeframes would mean that an adjudicator’s determination would
be made for a larger payment claim between 46 and 73 business days after a
payment claim is made, and the period of time from adjudication application to
adjudicator’s determination would typically be no longer than 35 business days.
Figure 3: Recommended timeline for larger payment claims under Coggins’

dual process of adjudication proposal
Due dates for payment

In the absence of any express contract terms on the matter, the majority of the
ECM Acts provide for payment to be due 10 business days after a statutory payment
claim is made.48 The NSW Act, however, was amended49 to provide for payment
to be due 15 business days after a payment claim is made for head contractors and
30 business days after a payment claim is made for subcontractors, or at an earlier
date provided in the contract.50 The effect of this NSW amendment has been
twofold: to prevent the express provision of prolonged payment terms in the
contract; and to postpone payment for claimants, as compared to their statutory
payment right pre-amendment, where the contract remains silent as to due date
for payment. In order to optimise rapid cash flow for small progress payment
claims under Coggins’ dual process proposal, it is recommended that, where no
relevant express contract terms exist, the due date for payment be 10 business days
after the statutory payment claim is made, and where express contractual due date
payment terms are provided, they be limited by the legislation to a period of 30
business days after a payment claim is made.
Under Coggins’ proposed dual process, it is recommended that the due date for
payment for larger payment claims follow the current WCM approach as per s.10
of the Western Australian Act, which limits the time between when payment is
claimed and made to a maximum period of 42 days.
48
Except for the SA Act which allows 15 business days, and the NSW Act as discussed below.
49
This amendment commenced on 21 April 2014.
50
NSW Act ss.11(1A)(a) and 11(1B)(a).

V. Endorsement of payment claims under the ECM

With the exception of the NSW Act, the ECM requires that a statutory payment
claim be endorsed as being made under the Act.51 In order to prevent potential
claimant contractors from losing their right to use the legislation due to intimidation
by respondents,52 the NSW Act was amended in April 2014 to dispense with the
requirement for claimants to endorse their payment claims as being made under
the Act. None of the other ECM Acts have, to date, followed NSW in making such
an amendment although key reforms currently before the Queensland Parliament,
in the form of the Building Industry Fairness (Security of Payment) Bill 2017,
seek to remove the payment claim endorsement requirement from the Queensland
Act.
The NSW amendment, however, appears to have led to some confusion about
which is the statutory payment claim for a reference date. There is a risk that
unwitting claimants will inadvertently lose their right to have their intended payment
claim for a specific reference date53 adjudicated by having previously submitted a
document to the respondent which, although not intended to be, may be construed
as a statutory payment claim by virtue of it requesting payment in some way.
Accordingly, Justice Robert McDougall has described the amendment as “unwise”.54
Under the ECM process for smaller payment claims in Coggins’ dual process
proposal, therefore, it is recommended that endorsement of payment claims is
required in order to clearly identify the claimant’s intended payment claim in
relation to a reference date.
VI. The process for appointment of adjudicators
Appointment of adjudicators under the current ECM

In the ECM jurisdictions, with the exception of Qld which is discussed below, the
ministers have appointed a mixture of “for profit” companies and “not-for-profit”
construction/legal professional bodies/organisations as Authorised Nominating
Authorities (ANAs) to appoint adjudicators. As the Wallace Review states:
“ANAs that fit within the category of ‘membership associations’ register as
an ANA as a means of generating income for their members who become
registered adjudicators. ‘Private ANAs’ assumedly register to provide returns
to their shareholders.”55
The level of commission taken from adjudicators’ fees varies between the different
appointing bodies depending upon the level of services each provides and the profit
51
See, for example, the Vic Act s.14(2)(e).
52
In their survey, which sought to assess the performance of the NSW Act by surveying the members of two peak
trade associations operating in NSW, Brand and Uher found that around half of the sampled contractor and subcontractor
firms felt that endorsement of payment claims negatively affects to some degree the working relationship between
the parties to a payment claim—see M.C. Brand and T. Uher, “Follow-up empirical study of the performance of the
New South Wales construction industry security of payment legislation”, 2010 2(1) International Journal of Law in
the Built Environment7–25. See also Collins, “Final Report of the Independent Inquiry into Construction Industry
Insolvency in NSW”, 2012, p.73.
53
The ECM only permits one statutory payment claim per reference date—see, for example, NSW Act s.13(5).
54
Kitchen Xchange v Formacon Building Services [2014] NSWSC 1602 at [3].
55
Wallace, “Final Report of the Review of the Discussion Paper—Payment dispute resolution in the Queensland
building and construction industry”, 2013, p.130.

margin charged. The “for profit” ANAs appoint the majority of adjudicators, with
the largest for profit ANA stating on its website that it has managed over 60 per
cent of all applications made nationally.56
There has been much anecdotal evidence submitted regarding apprehended or
perceived bias with respect to appointment of “claimant-friendly” adjudicators by
“for profit” ANAs given the potential for such ANAs to benefit from repeat
business.57 There is also anecdotal evidence with respect to instances of “adjudicator
shopping” and “unhealthy relationships” between ANAs and payment claim
preparers.58
In their defence “for profit” ANAs point out, amongst other things, that the
private sector delivers services more efficiently; ANAs provide training,
professional administrative and mentor support; and ANAs provide advice to
claimants on making claims and submitting applications correctly.59
Appointment of adjudicators under the Queensland Act

As part of key reform to the Queensland Act which came into effect on 15
December 2014, claimants no longer make adjudication applications to ANAs in
Queensland. Instead, adjudication applications are made to a single government
adjudication registrar, the Queensland Building and Construction Commission
(QBCC), who refers adjudication applications to adjudicators.
The discontinuance of the ANA appointment system in Qld appears to have led
to a significant increase in the amount of adjudication applications withdrawn as
shown in Table 6. Statistics published by the QBCC identify 228 out of a total of
702 adjudication applications made in 2015/16 were withdrawn due to validation
issues raised by the Registry.60
In their submission to the SA Small Business Commissioner, Adjudicate Today
opines:
“The massive increase in the number of invalid applications is as a direct
consequence of the previous LNP government’s decision to abolish the free
support structure (ANAs) available to advise subcontractors and other industry
parties in complying with the strict and confusing time requirements of the
BCIP Act.”61
56
Adjudicate Today website, at http://www.adjudicate.com.au/vic/start/claimant-common-pitfalls [Accessed 10
January 2018].
57
See, for example, Wallace, “Final Report of the Review of the Discussion Paper—Payment dispute resolution
in the Queensland building and construction industry”, 2013, pp.131–140; Collins, Final Report of the Independent
Inquiry into Construction Industry Insolvency in NSW”, 2012, p.72.
58
in the Queensland building and construction industry”, 2013, pp.131–140.
59
in the Queensland building and construction industry”, 2013, p. 145; Adjudicate Today, “Response to Proposed
Changes to Building and Construction Industry Security of Payment Act Consultation Paper”, June 2016, Submission
to South Australian Small Business Commissioner, at https://www.sasbc.sa.gov.au/security_of_payment/review-of
-the-building-and-construction-security-of-payment-act-200 [Accessed 10 January 2018]; Thomas Uher, “Response
to the Consultation Paper”, 2016, Submission to South Australian Small Business Commissioner, at https://www
.sasbc.sa.gov.au/security_of_payment/review-of-the-building-and-construction-security-of-payment-act-200 [Accessed
10 January 2018].
60
Queensland Building and Construction Commission, “Monthly Adjudication Statistics—June 2016”, http://www
.qbcc.qld.gov.au/sites/default/files/BCIPA_overall_statistics_June_2016.pdf [Accessed 10 January 2018].
61
Adjudicate Today, Response to Proposed Changes to Building and Construction Industry Security of Payment
Act Consultation Paper”, June 2016, p.12.

Table 6: Adjudication applications withdrawn, outstanding and released in

Qld, 2014/1562
Total no. of Withdrawn Application Total no. of
adjudication outstanding decisions re-
applications No. % of total ap- leased
plications
14 July 14—14 238 60 25.2 39 182
November (pre-
amendment)
14 December–15 474 196 41.4 23 289
June (post-amend-
ment)
Total 712 256 36.0 62 471
The QBCC statistics do not show how many of the 228 applications withdrawn
concern smaller payment claims. If Adjudicate Today’s opinion is correct, that the
increase in withdrawals is due to the abolishment of the free support structure the
ANAs used to provide to subcontractors, then it could be expected that the vast
majority of withdrawals relate to adjudication applications made by smaller
contractors and suppliers who cannot afford the professional legal advice that
larger claimants often obtain.
Appointment of adjudicators under the current WCM

The parties to an adjudication under the current WCM legislation have the option
to either agree on an individual adjudicator, or on a prescribed appointer to select
an adjudicator for them. If neither an adjudicator nor a prescribed appointer is
appointed by the parties, the party applying for adjudication may serve their
application on a prescribed appointer of their choice. There are eight prescribed
appointers listed in both the WA and NT Regulations, comprising a mixture of
construction professional bodies or associations and legal professional bodies or
associations.
Authorised nominating bodies in other international jurisdictions

Notably, all international jurisdictions, with the exception of NZ, do not appear
to use “for profit” adjudicator nominating bodies. In the UK and WA all authorised
nominating bodies are professional associations or industry bodies. In Singapore
(which adopted the ECM legislation), the sole ANA is the Singapore Mediation
Centre, a not-for-profit organisation under the Singapore Academy of Law. In
Ireland, a panel of adjudicators is kept by the Minister and adjudicators are
appointed by agreement of parties. If parties can’t agree, then the chair of the panel
appoints an adjudicator. In Malaysia adjudicators are appointed by agreement of
the parties. If the parties can’t agree, then the Director of the Kuala Lumpur
Regional Centre for Arbitration appoints an adjudicator.
62
These statistics extracted from QBCC Monthly Adjudication Reports for November 2014 and June 2015.

Recommendation for appointment of adjudicators under the

proposed unifying dual process model
Under the ECM process for smaller payment claims in Coggins’ dual process
proposal, it is proposed that the ANA appointment system currently operated by
most of the ECM Acts be retained in order that the ANAs may guide smaller
claimants (who cannot afford legal advice) through the regulatory minefield of
the ECM payment and adjudication schemes.
Under the WCM process for larger payment claims in the proposed dual process
model, it is recommended that adjudicator appointment be made using one of the
following options:
1) a sole central appointing body; or
2) an ANA system based on the existing ECM system, but enhanced
to minimise the opportunity for perceived procedural injustice.
Option 1): sole central appointing body

Under Coggins’ dual process proposal, there is more scope to move to a sole central
appointing body for adjudicator appointment with respect to larger payment claims
for two reasons. Firstly, the WCM, unlike the ECM, does not operate a separate
statutory payment system characterised by statutory notices with strict time bars—in
other words, the WCM adjudication process is not as difficult for claimants to
navigate as is the ECM’s. Secondly, parties at the “bigger end of town” are often
in a position to be able to afford and engage lawyers to steer them through the
adjudication process. For both these reasons, parties using the WCM for larger
payment claims are less likely to need ANA support.
If a sole central appointing body is adopted, however, it would be preferable
that the body be a not-for-profit neutral body (such as in Malaysia and
Singapore—as discussed above), as opposed to a government body to avoid
perceptions of conflict of interest with respect to contracts where the government
is the client.
A sole central appointing body would remove the existing perception that
adjudicator appointment under the ECM process is lacking in procedural justice.
Option 2): enhanced ANA appointment system

Under the enhanced ANA appointment system, the parties to adjudication would
have the option to agree upon the identity of either an adjudicator or an ANA, but
only after the dispute has arisen (as per the NZ Act63). This would enhance
procedural fairness, without providing the opportunity for either party to unduly
influence the identity of the adjudicator.
In the event that the parties either do not, or cannot, agree on an adjudicator or
ANA, the adjudication applicant would provide a list of three ANAs of their choice
to the party being served with the application. The party who has been served with
the application would then choose an ANA from this list. If the party who has been
served with the application doesn’t choose an ANA by a stipulated deadline in the
63
See Construction Contracts Act 2002 s.33(3).

legislation, then the adjudication applicant would choose which ANA to submit
their adjudication application to.
This proposed appointment process may add a few business days to the
adjudication process, but would go a long way to eliminating any perceptions of
ANAs being claimant friendly, as it will introduce an element of respondent choice
into the ANA selection process.
VII. Quality of adjudication decisions
Adjudicator eligibility requirements under the current ECM and

WCM
With the exception of the Qld Act, a person is eligible to be an adjudicator under
the ECM Acts if the person is a natural person, and has the qualifications, expertise
and experience required for the purposes of the Act.64 Of these Acts, however,
none, except the SA Act,65 appear to set out the required qualifications, expertise
and experience either in the Act itself or the associated regulations. In practice,
therefore, it is left to the ANAs to ensure that adjudicators are suitably qualified,
trained and experienced.
The Qld Act is unique amongst the East Coast model Acts in requiring that an
adjudicator must be registered as an adjudicator under the Act.66 In order to be
registered, a person must hold an adjudication qualification as prescribed in the
regulations made under the Act.67 In this respect, the Building and Construction
Industry Payments Regulation 2004 (the “Qld Regulations”) states68 that the name
of the qualification is “Certificate in Adjudication”, and lists the elements that
need to be successfully completed in the certificate to become a registered
adjudicator,69 as well as listing the names of the bodies who may issue such a
qualification.70
Similar to the Qld legislation, but unlike the other ECM Acts, adjudicators must
be registered under the WCM. An individual is eligible to be a registered adjudicator
if they have the qualifications and experience prescribed by the regulations.71 The
WA regulations state that, to be eligible, an individual must72:
1) have a degree in law, project management or a construction-related
discipline,73 be eligible for membership of a listed professional
64
The NSW Act s.18(1)(b) and SA Act s.18(1)(b) state that such qualifications, expertise and experience may be
prescribed by the regulations for the purposes of this Act. The Tasmanian Act s.22(2), states that the qualifications,
expertise and experience required, if any, are to be determined by the Security of Payments Official. The ACT Act
s.20(1)(c), further requires that an adjudicator must have successfully completed a relevant training course.
65
The Building and Construction Industry Security of Payment Regulations 2011 (SA) s.6 requires that a person
has attended a 2 day adjudication course, and either holds a degree, diploma or other qualification in a listed discipline
or is, or is eligible to be, a member of a listed professional body.
66
Building and Construction Industry Payments Act 2004 s.22(1).
67
Building and Construction Industry Payments Act 2004 s.111(2)(b).
68
Building and Construction Industry Payments Regulation 2004 s.3.
69
Building and Construction Industry Payments Regulation 2004 Sch.1 Pt 2.
70
Building and Construction Industry Payments Regulation 2004 Sch.1 Pt 1. The bodies listed comprise 7 out of
the 8 registered ANAs.
71
Construction Contracts Act 2004 s.48(1); Construction Contracts Regulations 2004 reg.9.
72
Construction Contracts Regulations 2004 reg.9.
73
i.e., architecture, engineering, quantity surveying, building surveying, building or construction.

institution,74 or, be a builder registered under the Builders’

Registration Act 1939;
2) have had at least five years experience in administering construction
contracts, or in dispute resolution relating to construction contracts;
and
3) have successfully completed an appropriate training course which
qualifies the person for the performance of the functions of an
adjudicator under the Act.
Recommendation for registration of adjudicators under

Coggins’ dual process proposal
In order that stakeholders sustain confidence in the legislation, it is important that
adjudication determinations are of as high a quality as possible given the short
timeframes in which adjudicators have to make their decisions. In order to achieve
this, it is submitted that under any unifying legislation, central registration of
adjudicators should be required to ensure that all adjudicators are suitably qualified.
For Coggins’ dual process proposal, it is recommended two registration lists
should be kept: one for adjudicators of smaller payment claims under the ECM
process, and one for adjudicators of larger payment claims under the WCM process.
To be registered on the smaller payment claims ECM process list, adjudicators
should:
1) have a university degree in a construction related or engineering
discipline accredited by at least one of the relevant professional
bodies, or a university degree in law;
2) be eligible to be a member of a relevant professional body, or hold
registration as a building works supervisor under the relevant
legislation;
3) have at least five years’ experience in either administering
construction contracts, or dispute resolution relating to construction
contracts; and
4) have successfully completed an appropriate and approved adjudicator
training course for smaller payment claims under the ECM process.
The adjudicator registration criteria for larger payment claims under the WCM
process should be the same as those listed for ECM registration above with the
exception that the adjudicator training course should be appropriate for larger
claims under the WCM. Amongst other things, the training course for larger
payment claims should ensure adjudicators possess a good knowledge of the law
relating to construction contracts.
Other recommended provisions to ensure quality

In addition to adjudicator registration, it is submitted that any unifying model
should bolster quality of adjudication determinations by providing for:
74
The Royal Australian Institute of Architects, Institution of Engineers Australia, Australian Institute of Quantity
Surveyors, Australian Institute of Building Surveyors, The Australian Institute of Building, The Institute of Arbitrators
and Mediators of Australia, Australian Institute of Project Management.

1) formalised CPD training for all adjudicators;

2) disciplinary measures where an adjudicator engages in technical
misconduct—in this respect, it is suggested that an approach similar
to that provided in the South Australian Code of Conduct for ANAs
be adopted whereby an adjudicator who has been found to have acted
not in good faith, twice or more, by a Court in Australia within the
last five years in relation to adjudication duties must not be appointed
without the written approval of the Minister75;
3) the authority of ANAs to appoint adjudicators to be reviewed if there
are too many instances of their adjudicators being found by the courts
to have engaged in technical misconduct;
4) annual auditing of ANAs to ensure ongoing probity; and
5) adjudicators to act impartially in the conduct of the adjudication and
to comply with a code of practice published by the Minister, as per
the Irish Act.76
VIII. Adjudication for domestic construction

There is a general view that the ECM in its current form does not provide the
greater degree of protection that is required for consumers as opposed to commercial
operators.77 Accordingly, the ECM Acts exclude contracts with resident owners
of domestic building works.78
The Qld Building Services Authority states that the exemption of home owner
contracts
“appears to be inconsistent with the BCIPA [the Qld Act] objectives, to
provide better outcomes for the industry, particularly since subcontractors
and suppliers may make payment claims under BCIPA against a head
contractor for domestic building work.”79
Under Coggins’ dual process proposal, payment claims on construction contracts
with home owners could be made under the WCM adjudication process only. It
is submitted that the WCM process is more appropriate for home owners as it not
only provides marginally longer timeframes for the serving of the prescribed
documentation, but also provides more procedural justice—of which particularly
pertinent aspects are the rights for home owners to also apply for adjudication of
payment claims, and to have an adjudication response heard even if an earlier
response to the payment claim has not been served.
75
Small Business Commissioner (SA), Code of Conduct for Authorised Nominating Authorities, Building and
Construction Industry Security of Payment Act 2009, Government of South Australia, p.3.
76
See Construction Contracts Act 2013 s.6(8).
77
Qld Building Services Authority, “Building and Construction Industry Payments Act 2004”, Discussion Paper,
2010, Brisbane, p.5.
78
With the exception of the Tasmanian Act, which prescribes the same East Coast model type statutory payment
system for home owners as it does for commercial operators. It does, however, make one concession for home owners
in that “a home owner has 20, rather than 10, business days to consider the content of a payment claim” (N. Speranza,
“An evaluation of Australian security of payment and United States construction lien law” (2011) 27 Building and
Construction Law 187).
79
Qld Building Services Authority, “Building and Construction Industry Payments Act 2004”, Discussion Paper,
2010, Brisbane, p.5.

IX. Conclusion
Australia has eight differing acts throughout its states and territories dealing with
security of payment in the building and construction industry. Each of the acts
may broadly be categorised into one of two distinct legislative models. The ECM
provides a highly regulatory process originally designed, in accordance with
parliamentary intent, for the rapid determination of payment claims made by
smaller contractors for construction work carried out or related goods and services
supplied. The WCM provides a process, based upon primacy of contract, designed
for the determination of all payment claims under the contract including those for
damages within the scope of the contract. The scope of both the East and West
Coast models is similarly wide-ranging, covering any contractor or supplier,
regardless of size, who has undertaken construction work or supplied related goods
and services falling within the definition of the legislation.
The application of the ECM to larger and more complex payment claims, for
which it was not originally designed, has led to a considerable amount of
applications for judicial review of adjudicators’ determinations due to the
shortcomings in procedural justice it affords. Despite its problems at the “larger
end of town”, however, adjudication under the ECM has proven to have a
proportionally higher uptake rate, as well as being cheaper and faster, for the
determination of smaller payment claims than its WCM counterpart. Conversely,
the more procedurally just and contract-focused WCM has resulted in a
proportionally higher adjudication uptake rate, as well as an adjudication process
that is more economical and resistant to judicial review, for the determination of
larger payment claims relative to its ECM counterpart since commencement of
the legislation.
The existent diversity in Australia’s security of payment legislation may be
turned to advantage if the wealth of experience now accumulated in both East and
West Coast model jurisdictions is capitalised on, and the contrasting, yet
complimentary, strengths of the existing models are drawn together into a single
harmonised model. In light of the analysis of the available adjudication data
reviewed in this article, and a consideration of the key consultation issues raised
by John Murray AM as part of his federal review of security of payment laws in
Australia, it is proposed that a unifying dual process—where the ECM is used for
payment claims up to $100,000 and the WCM for payment claims above
$100,000—provides a sound starting point for agreement upon such an optimal
harmonised model.
With the construction industry accounting for around seven per cent of
Australia’s gross domestic product, and employing around nine per cent of the
workforce,80 the enactment of harmonised security of payment law is essential if
the Australian construction industry is to realise the concomitant efficiencies of
uniform legislation. It may, indeed, be argued that the precise shape and form of
any eventuating law should be secondary to the act of harmonisation per se. Having
said this, however, it would undoubtedly be preferable and conducive to successful
nationwide adoption, if the shape and form of any harmonising model were to be,
80
Australian Bureau of Statistics, “Feature Article: A Statistical Overview of the Construction Industry.” Retrieved
5 Mar 2012, from http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/1350.0Feature+Article1Oct+2010 [Accessed
10 January 2018].

as far as possible, welcomed inter-jurisdictionally. With this in mind, it is submitted

that the combining of the two existing models into federally harmonised law, as
proposed by this article, has more chance of being palatable to stakeholders across
all Australian states and territories who may be reluctant to relinquish their state’s
established legislative approach altogether.
Appendix 1: Lists of applications for judicial review of

adjudicators’ determinations 2014 to present
NSW
Southern Han Breakfast Point Pty Ltd (in Liq.) v Quashed for no refer-
Lewence Construction Pty Ltd [2016] HCA 52 ence date - overturned
decision of NSWCA
Futurepower Developments Pty Ltd v TJ & RF Failed challenge $684,054.89
Fordham Pty Ltd [2017] NSWSC 232;
BC201701512
Parkview Constructions Pty Ltd v Total Lifestyle Quashed for JE $539,634.24 (incl. GST)
Windows Pty Ltd T/as Total Concept Group
[2017] NSWSC 194; BC201701261
Fairfield City Council v Abergeldie Contractors Quashed for JE $1,286,603.96 (incl.
Pty Ltd [2017] NSWSC 166; BC201701262 GST)
Samuel Homes Pty Ltd v Raithby [2017] NSWSC Failed challenge $18,799 including GST
205; BC201701298 - Judge commented that
proceedings were re-
markable
Richard Crookes Construction Pty Ltd v CES Quashed for not carry- $573,100 (incl GST)
Projects (Aust) Pty Ltd (No 2) [2016] NSWSC ing out stat function
1229; BC201607512
Suprima Bakeries Pty Ltd v Australian Weighing Quashed for denial of $535,000
Equipment Pty Ltd [2016] NSWSC 998; NJ
BC201605944
Shade Systems Pty Ltd v Probuild Constructions Failed challenge - over-
(Aust) Pty Ltd (No 2) [2016] NSWCA 379; turned decision of
BC201611209 NSWSC
Probuild Constructions (Aust) Pty Ltd v Shade Quashed & Remitted $277,755.03 (including
Systems Pty Ltd [2016] NSWSC 770; Error of Law GST)
BC201604687
Probuild Constructions (Aust) Pty Ltd v DDI Failed challenge $495,473.20
Group Pty Ltd [2016] NSWSC 462;
BC201602706
Kyle Bay Removals Pty Ltd v Dynabuild Project Failed challenge $382,015.41
Services Pty Ltd [2016] NSWSC 334;
BC201602042
J Hutchinson Pty Ltd v Glavcom Pty Ltd [2016] Failed challenge $1,263,399.72 plus GST
NSWSC 126; BC201600965
Lewence Construction Pty Ltd v Southern Han Failed challenge - over-
Breakfast Point Pty Ltd [2015] NSWCA 288; turned decision of
BC201509309 NSWSC
New South Wales Netball Association Ltd v Quashed Invalid PC $124,599.23
Probuild Construction (Aust) Pty Ltd [2015]
NSWSC 1339; BC201508874

Illawarra Retirement Trust v Denham Construc- Failed challenge $1,459,193.47, inclusive

tions Pty Ltd [2015] NSWSC 1173; BC201507868 of GST
Broadview Windows Pty Ltd v Architectural Failed challenge N/A
Project Specialists Pty Ltd [2015] NSWSC 955;
BC201506473
Veer Build Pty Ltd v TCA Electrical and Commu- Failed challenge $124,197.53
nication Pty Ltd [2015] NSWSC 864;
BC201505864
Southern Han Breakfast Point Pty Ltd v Lewence Quashed, no ref date $1,221,051.08 including
Construction Pty Ltd [2015] NSWSC 502; GST
BC201503466
Reitsma Constructions Pty Ltd v Davies Engineer- Failed challenge $134,199.29
ing Pty Ltd t/as In City Steel [2015] NSWSC 343;
BC201502228
Lamio Masonry Services Pty Ltd v TP Projects Failed challenge $77,138.33 +
Pty Ltd (2015) 31 BCL 329; [2015] NSWSC 127; $33,982.00 inclusive of
BC201501694 GST (2 adj dets)
Omega House Pty Ltd v Khouzame [2014] Quashed, Invalid Pay- $179,221.74 (including
NSWSC 1837; BC201411090 ment Claim GST)
Pittwater Council v Keystone Projects Group Pty Failed challenge $272,286.76
Ltd [2014] NSWSC 1791; BC201410859
Kitchen Xchange v Formacon Building Services Quashed, Invalid Pay- $28,120.84
[2014] NSWSC 1602; BC201409565 ment Claim
Eastland Truss & Timber Pty Ltd v Byrnes t/as Failed challenge $65,000 excl GST
Qualibuilt Constructions [2014] NSWSC 1461;
BC201408918
Douglas Aerospace v Indistri Engineering Albury Failed Challenge N/A
[2014] NSWSC 1445; BC201408882
Patrick Stevedores Operations (No 2) Pty Ltd v Quashed, Invalid Pay- $23,147,562.86 exclud-
McConnell Dowell Constructors (Aust) Pty Ltd ment Claim ing GST.
(2015) 31 BCL 336; [2014] NSWSC 1413;
BC201408683
Dewu Pty Ltd v Fabiano [2014] NSWSC 943; Failed Challenge $166,000
BC201405525
Nefiko Pty Ltd v Statewide Form Pty Ltd (No 2) Failed Challenge $25,732.50 including
[2014] NSWSC 840; BC201405082 GST
Cornerstone Danks Street Pty Ltd v Parkview Quashed, determination $1,492,034.68 including
Constructions Pty Ltd [2014] NSWSC 866; made out of agreed ex- GST
BC201405127 tended time
PPK Willoughby Pty Ltd v Eighty Eight Construc- Failed challenge $450,000.00 exclusive
tion Pty Ltd [2014] NSWSC 760; BC201404754 of GST
FAL Management Group Pty Ltd v Denham Failed challenge $953,809
Constructions Pty Ltd [2014] NSWSC 747;
BC201404467
Anderson Street Banksmeadow Pty Ltd v JCM Failed challenge N/A but Payment Claim
Contracting Pty Ltd [2014] NSWSC 102; $79,901.10
BC201400997

Qld
Annie Street JV Pty Ltd v MCC Pty Ltd [2016] Failed Challenge N/A
QSC 268; BC201609945
Ostwald Bros Pty Ltd v Jaylon Pacific Pty Ltd Quashed for substantila $424,901.40
[2016] QSC 240; BC201608959 denial of NJ
Sierra Property Qld Pty Ltd v National Construc- Quashed in part due to $264,742.12
tion Management Pty Ltd [2016] QSC 108; JE
BC201603673
Wiggins Island Coal Export Terminal Pty Ltd v Failed Challenge $22,132,839.35
Monadelphous Engineering Pty Ltd [2015] QSC
307; BC201510571
Agripower Australia Ltd v Queensland Engineer- Quashed for JE N/A
ing & Electrical Pty Ltd [2015] QSC 268;
BC201508965
BRB Modular Pty Ltd v AWX Constructions Pty Failed Challenge $3,706,601.88 including
Ltd [2015] QSC 218; BC201507242 GST
Camporeale Holdings Pty Ltd v Mortimer Con- Failed Challenge $90,311.58
struction Pty Ltd [2015] QSC 211; BC201506897
JAG Projects Qld Pty Ltd v Total Cool Pty Ltd Failed Challenge $88,000 including GST
[2015] QSC 229; BC201507431
Sunshine Coast Regional Council v Earthpro Pty Quashed in part for JE $1.4M
Ltd [2015] QSC 168; BC201505768
Lean Field Developments Pty Ltd v E & I Global Failed Challenge $527,783.08
Solutions (Aust) Pty Ltd [2016] 1 Qd R 30; [2014]
QSC 293; BC201410238
McNab Developments (Qld) Pty Ltd v Mak Con- Failed Challenge (QSC $241,441.20
struction Services Pty Ltd [2015] 1 Qd R 350; decision upheld)
[2014] QCA 232; BC201407638
Caltex Refineries (Qld) Pty Ltd v Allstate Access Quashed for denial of 1784299.15 and
(Australia) Pty Ltd [2014] QSC 223; NJ $2,357,796.32
BC201407597
Eco Steel Homes Pty Ltd v Hippo’s Concreting Failed Challenge $29,689.84
Pty Ltd [2014] QSC 135; BC201406984
CMF Projects Pty Ltd v Masic Pty Ltd [2014] Quashed for denial of N/A but Payment Claim
QSC 209; BC201406985 NJ amount was $48.993.60
and Payment Schedule
-$40,445.95
Kaycee Trucking Pty Ltd v M & C Rogers Trans- Failed Challenge $99,813.27 (including
port Pty Ltd [2014] QSC 185; BC201406570 GST)
Ball Construction Pty Ltd v Conart Pty Ltd [2014] Quashed for JE N/A
QSC 124; BC201404388
J Hutchinson Pty Ltd v Cada Formwork Pty Ltd Quashed for denial of $222,625.70, including
& Ors [2014] QSC 063; BC201402398 NJ GST
Conveyor & General Engineering Pty Ltd v Quashed for denial of $121,472.02
Basetec Services Pty Ltd [2015] 1 Qd R 265; NJ
[2014] QSC 030; BC201401245
Vic
Raw Build Pty Ltd v JBK Industries Pty Ltd [2016] Challenge held over to $9115.7+ $81,415.00
VSC 547; BC201609286 a separate hearing

Vinson v Neerim Properties Developments Pty Adjudication Applica- N/A

Ltd [2016] VSC 321; BC201604465 tion held invalid
SSC Plenty Road Pty Ltd v Construction Engineer- Failed Challenge (QSC $2,172,837.57
ing (Aust) Pty Ltd [2016] VSCA 119; decision upheld)
BC201603955
Krongold Constructions (Aust) Pty Ltd v SR & RS Quashed due to JE (inap- $72,533.33 (including
Wales Pty Ltd [2016] VSC 94; BC201601614 propriate valuation pro- GST)
cess)
Saville (T/as China Sourcing Services) v Hallmarc Quashing upheld $46,328.10
Construction Pty Ltd (2015) 47 VR 177; [2015]
VSCA 318; BC201511588
SSC Plenty Road Pty Ltd v Construction Engineer- Quashed in part $2,172,837.57 (incl
ing (Aust) Pty Ltd [2015] VSC 631; BC201511095 GST)
Amasya Enterprises Pty Ltd v Asta Developments Quashed for JE $2,030,222.86
(Aust) Pty Ltd (No 2) [2015] VSC 500;
BC201509321
Hallmarc Construction v Saville [2014] VSC 491; Quashed on JE $46,328.10
BC201408246
Colonial Range Pty Ltd v Victorian Building Au- Failed Challenge N/A
thority [2014] VSC 272; BC201404529
WA
Cooper & Oxley Builders Pty Ltd v Steensma Quashed for JE $182,047.44 +
[2016] WASC 386; BC201610261 $88,626.88
Samsung C&T Corp v Loots [2016] WASC 330; Quashed for JE $333199 +
BC201608995 $49,642,958.72, plus
GST
Laing O’Rourke Australia Construction Pty Ltd Failed challenge $ 2 0 9 6 5 0 7 6 +
v Samsung C&T Corp (2016) 50 WAR 399; (quashing overturned) $8,287,786.01
[2016] WASCA 130; BC201606166
BGC Construction Pty Ltd v Citygate Properties Quashed for JE $402,273.21 (exclusive
Pty Ltd [2016] WASC 88; BC201601865 of GST) + $392,145
(exclusive of GST)
NRW Pty Ltd as Trustee for NRW Unit Trust v Failed Challenge $17,467,884.10
Samsung C & T Corp [2015] WASC 369;
BC201509667
SC Projects Australia Pty Ltd v Field Deployment Failed Challenge $162,625.64
Solutions Pty Ltd [2015] WASC 339;
BC201508785
Laing O’Rourke Australia Construction Pty Ltd Quashed for JE $20965076 +
v Samsung C & T Corp (2015) 31(5) BCL 290; $8,287,786.01
[2015] WASC 237; BC201506037
Delmere Holdings Pty Ltd v Green [2015] WASC Quashed for JE $873,011.87 including
148; BC201503021 GST
Field Deployment Solutions Pty Ltd v SC Projects Failed Challenge N/A
Australia Pty Ltd [2015] WASC 60;
BC201500628
Hamersley Iron Pty Ltd v James [2015] WASC Failed Challenge $2,138,733.05 plus GST
10; BC201500072

Johnson, Re; Ex parte Decmil Australia Pty Ltd Failed Challenge N/A but claimed
[2014] WASC 348; BC201408070 amount $705,586.50
(exclusive of GST)
WQube Port of Dampier v Philip Loots of Kahlia Failed Challenge N/A but claimed
Nominees Ltd [2014] WASC 331; BC201407692 amount $2,830,920.84
Red Ink Homes Pty Ltd v Court [2014] WASC Quashed for JE $65472 + $254,871.77
52; BC201400834 + $11,120.90
Zurich Bay Holdings Pty Ltd v Brookfield Multi- Quashed for JE $1,191,402.84
plex Engineering and Infrastructure Pty Ltd
[2014] WASC 40; BC201400449
Zurich Bay Holdings Pty Ltd v Brookfield Multi- Failed Challenge $522,209.25
plex Engineering and Infrastructure Pty Ltd
[2014] WASC 39; BC201400448

Cases
Balfour Beatty Regional Construction Ltd v Grove Developments

Ltd
Court of Appeal, Civil Division
Jackson and Longmore LJ and Lord Vos: 13 October 2016
[2016] EWCA Civ 990
Completion date; Conduct; Construction contracts; Implied terms; Interim

payments; Interpretation; Scheme for Construction Contracts
Building—Contract—Payments—Parties agreeing schedule for interim payments—

Project continuing after expiry of schedule—Whether contract containing provision
for payment of further interim payments—Whether such provision to be implied—
Whether parties reaching agreement as to amounts of interim payments for “any
work under the contract” and circumstances in which such payments becoming
due—Whether statutory default provisions for interim payments applying—Whether
contractor entitled to further interim payments—Housing Grants, Construction
and Regeneration Act 1996 (c 53), s 109(1)(3)
Held, by Jackson LJ that: (1) the parties did not make any agreement regarding
interim payments after July 2015; (2) the court could not use the canons of
construction to rescue one party from the consequences of what that party had
clearly agreed; (3) commercial common sense could not come to rescue a
contracting party if it was clear in all the circumstances what the parties had
intended to happen; (4) there was not any implied term enabling A to receive
interim payments after valuation 23 and so A would not receive full payment until
the final payment date as defined in cl.4.12 of the contract conditions; (5) no fresh
agreement could be derived from the parties’ correspondence between May and
December 2015, therefore dismissing the appeal.
Lord Vos dissented on the grounds that the contract was ambiguous and therefore
it was obvious that the parties had only agreed 23 specific payments because that
was the number of monthly payments up to when completion was expected. Thus
and applying business common sense, the contract should have been construed as
meaning that interim payments would have continued on equivalent monthly dates
until actual completion, therefore allowing the appeal
Longmore LJ agreed with Jackson LJ, dismissing the appeal.
Steven Walker QC and Camille Slow (instructed by Pinsent Masons LLP) for
the defendant/appellant.

Alexander Nissen QC and William Webb (instructed by Macfarlanes LLP) for the
claimant/respondent.
The judgment of Jackson LJ reads as follows:
LORD JUSTICE JACKSON:

1 This judgment is in eight parts, namely:
Part 1—Introduction
2 This is an appeal by a building contractor against a decision that there is no
entitlement to interim payments in the period after the contractual date for practical
completion. The principal issues are (i) how some rather unusual amendments to
the standard form building contract should be construed and (ii) how section 109
of the Housing Grants, Construction and Regeneration Act 1996 (“the 1996 Act”)
applies in the circumstances of this case.
3 The contractor, Mansell Construction Services Limited, had a name change
during the course of the building works and became Balfour Beatty Regional
Construction Limited. I shall refer to the contractor at all stages as “BB”. I shall
refer to the employer, Grove Developments Limited, as “Grove”.
4 Sections 109 and 110 of the 1996 Act provide as follows:
“109.– Entitlement to stage payments.
(1) A party to a construction contract is entitled to payment by
instalments, stage payments or other periodic payments for any
work under the contract unless –
(a) it is specified in the contract that the duration of the
work is to be less than 45 days, or
(b) it is agreed between the parties that the duration of the
work is estimated to be less than 45 days.
(2) The parties are free to agree the amounts of the payments and
the intervals at which, or circumstances in which, they become
due.
(3) In the absence of such agreement, the relevant provisions of
the Scheme for Construction Contracts apply.
(4) References in the following sections to a payment provided for
by the contract include a payment by virtue of this section.
110.– Dates for payment.
(1) Every construction contract shall –
(a) provide an adequate mechanism for determining what
payments become due under the contract, and when,
and
(b) provide for a final date for payment in relation to any
sum which becomes due.
The parties are free to agree how long the period is to be
between the date on which a sum becomes due and the final
date for payment.
…

Cases 49
(3) If or to the extent that a contract does not contain such provision
as is mentioned in subsection (1) […], the relevant provisions
of the Scheme for Construction Contracts apply.”
5 The Scheme for Construction Contracts (England and Wales) Regulations 1998
set out the Scheme for Construction Contracts (“the Scheme”) which applies to
construction contracts, in so far as the provisions of those contracts do not comply
with the requirements of the 1996 Act.
6 Paragraphs 1 to 7 of the Scheme set out rules for monthly interim payments to
the contractor. These provisions are incorporated in any construction contract
which does not comply with Sections 109 and 110 of the 1996 Act.
7 After these introductory remarks, I must now turn to the facts.
Part 2—The Facts

8 In 2013 Grove engaged BB to design and construct a hotel and serviced
apartments at Greenwich Peninsular in south east London. The contract was the
JCT standard form Design and Build Contract 2011, subject to a number of bespoke
amendments. It was dated 11th July 2013. The contract sum (subject to adjustment
in accordance with the contract provisions) was £121,059,632.00.
9 Clause 4 of the Conditions of Contract included the following:
“Issue and amount of Interim Payments
.1 Interim Payments shall be made by the Employer to the Contractor in
accordance with section 4 and whichever of Alternative A (Stage
Payments) or Alternative B (Periodic Payments) is stated in the
Contract Particulars to apply.
.2 The sum due as an Interim Payment shall be an amount equal to the
Gross Valuation under clause 4.13 where Alternative A applies, or
clause 4.14 where Alternative B applies, in either case less the
aggregate of:
.1 any amount which may be deducted and retained by the
Employer as provided in clauses 4.16 and 4.18 (‘the Retention’)
.2 the cumulative total of the amounts of any advance payment
that have then become due for reimbursement to the Employer
in accordance with the terms stated in the Contract Particulars
for clause 4.6; and
.3 the amounts paid in previous Interim Payments.
Contractor’s Interim Applications and due dates
.1 In relation to each Interim Payment, the Contractor shall make an
application to the Employer (an ‘Interim Application’) in accordance
with the following provisions of this clause 4.8, stating the sum that
the Contractor considers to be due to him and the basis on which that
sum has been calculated.
.2 Where Alternative A applies, an Interim Application shall be made as
at completion of each stage specified in or by the Contract Particulars
for Alternative A. Following the application in respect of the last stage,
such applications shall be made at intervals of 2 months (unless
otherwise agreed), the last such application being made upon the expiry

of the Rectification Period or, if later, the issue of the Notice of

Completion of Making Good (or, where there are Sections, the last
such period or notice). The due date for payment (the ‘due date’) in
each case shall be the later of the date of completion of the stage (or,
when applicable, the 2 monthly date) and the date of receipt by the
Employer of the Interim Application.
.3 Where Alternative B applies, for the period up to practical completion
of the Works, Interim Applications shall be made as at the monthly
dates specified in the Contract Particulars for Alternative B up to the
date of practical completion or the specified date within one month
thereafter. Subsequent Interim Applications shall be made at intervals
of 2 months (unless otherwise agreed), the last such application being
made upon the expiry of the Rectification Period or, if later, the issue
of the Notice of Completion of Making Good (or, where there are
Sections, the last such period or notice). The due date in each case
shall be the later of the specified date and the date of receipt by the
Employer of the Interim Application.
.4 Interim Applications may be made before , on or after completion of
the relevant stage or the monthly date and shall be accompanied by
such further information as may be specified in the Employer’s
Requirements and Contractor’s Proposals .
Interim Payments—final date and amount
.1 The final date for payment of an Interim Payment shall be 28 days14
days from its due date.
.2 Not later than 5 days after the due date the Employer shall give a notice
(a ‘Payment Notice’) to the Contractor in accordance with clause
4.10.1 and, subject to any Pay Less Notice given by the Employer
under clause 4.9.4, the amount of the Interim Payment to be made by
the Employer on or before the final date for payment shall be the sum
stated as due in the Payment Notice.
.3 If the Payment Notice is not given in accordance with clause 4.9.2,
the amount of the Interim Payment to be made by the Employer shall,
subject to any Pay Less Notice under clause 4.9.4, be the sum stated
as due in the Interim Application.
.4 If the Employer intends to pay less than the sum stated as due from
him in the Payment Notice or Interim Application, as the case may
be, he shall not later than 35 days before the final date for payment
give the Contractor notice of that intention in accordance with clause
4.10.2 (a ‘Pay Less Notice’). Where a Pay Less Notice is given, the
payment to be made on or before the final date for payment shall not
be less than the amount stated as due in the noticePay Less Notice.
.5 If the Employer fails to pay a sum, or any part of it, due to the
Contractor under these Conditions by the final date for its payment,
the Employer shall, in addition to any unpaid amount that should
properly have been paid, pay the Contractor simple interest on that

Cases 51
amount at the Interest Rate for the period from the final date for
payment until payment is made. Interest under this clause 4.9.5 shall
be a debt due to the Contractor from the Employer.
.6 Acceptance of a payment of interest under clause 4.9.5 shall not in
any circumstances be construed as a waiver of the Contractor’s right
to proper payment of the principal amount due, to suspend performance
under clause 4.11 or to terminate his employment under section 8 .
Payment Notices, Pay Less Notice and general provisions
.1 Each Payment Notice under this Contract shall specify the sum that
the Party giving the notice considers to be or have been due at the due
date in respect of the relevant payment and the basis on which that
sum has been calculated.
.2 A Pay Less Notice:
.1 (where it is to be given by the Employer) shall specify both the
sum that he considers to be due to the Contractor at the date
the notice is given and the basis on which that sum has been
calculated;
.2 (where it is to be given by the Contractor) shall specify both
the sum that he considers to be due to the Employer at the date
the notice is given and the basis on which that sum has been
calculated.
.3 A Payment Notice or a Pay Less Notice to be given by the
Employer may be given on his behalf by the Employer’s Agent
or by any other person who the Employer notifies the Contractor
as being authorised to do so.
.4 In relation to the requirements for the giving of notices under
section 4 and the submission of a Final Statement, it is
immaterial that the amount then considered to be due may be
zero.
.5 Any right of the Employer to deduct or set off any amount
(whether arising under any provision of this Contract or under
any rule of law or equity) shall be exercisable against any
monies due or to become due to the Contractor, whether or not
such monies include or consist of any Retention.
..”
…
Final Statement and final payment
.1 Following practical completion of the Works the Contractor shall
submit the Final Statement to the Employer and supply him with such
supporting documents as he may reasonably require.
.2 The Final Statement shall set out the adjustments to the Contract Sum
to be made in accordance with clause 4.2 and shall state:
.1 the Contract Sum, as so adjusted; and
.2 the sum of amounts already paid by the Employer to the
Contractor,
and the final payment shall be the difference (if any) between the two
sums, which shall be shown as a balance due to the Contractor from

the Employer or to the Employer from the Contractor, as the case may
be. The Final Statement shall state the basis on which that amount has
been calculated, including details of all such adjustments.
…
.5 The due date for the final payment shall be the date one month after
whichever of the following occurs last:
.1 the end of the Rectification Period in respect of the Works or
(where there are Sections) the last such period to expire;
.2 the date stated in the Notice of Completion of Making Good
under clause 2.36 or (where there are Sections) in the last such
notice to be issued; or
.3 the date of submission to the other Party of the Final Statement
or, if issued first, the Employer’s Final Statement (“the relevant
statement”).
…
Ascertainment—Alternative A
4.13 The Gross Valuation shall be the total of the amounts referred to in
clauses 4.13.1 and 4.13.2 less the total of the amounts referred to in
clause 4.13.3, calculated as at completion of the relevant stage.
.1 The following which are subject to Retention shall be included:
.1 the cumulative value at the relevant stage;
.2 the value of any Changes or other work referred to in
clause 5.2 that are relevant to the Interim Payment
(whether agreed pursuant to clause 5.2 or valued under
the Valuation Rules) but excluding any amounts referred
to in clause 4.13.2–4;
3. the value of any Listed Items, when their value is to be
included under clause 4.15;
.4 the amount of any adjustment under Fluctuations Option
C (if applicable);
.5 where Fluctuations Option C is applicable and where
in accordance with the Formula Rules amounts in the
Value of Work are to be allocated to lift installations,
structural steelwork installations or catering equipment
installations, the total value of Site Materials of those
descriptions, provided that their value shall only be
included if they are adequately protected against weather
and other casualties and they are not on the Works
prematurely; and
.6 the amount of any adjustment by Confirmed Acceptance
of an Acceleration Quotation.
.2 The following which are not subject to Retention shall be
included:
.1 any amounts to be included in Interim Payments in
accordance with clause 4.3 by the Employer as a result

Cases 53
of payments made or costs incurred by the Contractor

under clause 2.5.2, 2.20, 3.12, 6.10.2 or 6.10.3 or
paragraph B2.1.2 or C3.1 of Schedule 3;
.2 any amounts payable under clause 4.11.2;
.3 any amounts ascertained under clause 4.20;
.4 any amounts in respect of any restoration, replacement
or repair of loss or damage and removal and disposal
of debris under paragraph B3.5 and C4.5.2 of Schedule
3 or clause 6.11.5.2; and
.5 any amount payable to the Contractor under Fluctuations
Option A or B, if applicable.
.3 The following shall be deducted:
.1 any amounts deductible under clause 2.35 or 3.6; and
.2 any amount allowable by the Contractor to the Employer
under clause 6.10.2 or under Fluctuations Option A or
B, if applicable.
Ascertainment—Alternative B
4.14 The Gross Valuation shall be the total of the amounts referred to in
clauses 4.14.1 and 4.14.2 less the total of the amounts referred to in
clause 4.14.3, calculated as at the date for making an Interim
Application under clause 4.8.3.
.1 The total values of the following which are subject to Retention
shall be included:
.1 work properly executed including any design work
carried out by the Contractor and work so executed for
which a value has been agreed pursuant to clause 5.2 or
which has been valued under the Valuation Rules,
together, where applicable, with any adjustment of that
value under the Fluctuations Option C or by Confirmed
Acceptance of an Acceleration Quotation, but excluding
any amounts referred to in clause 4.14.2–4;
.2 Site Materials provided that their value shall only be
included if they are adequately protected against weather
and other casualties and they are not on the Works
prematurely; and
.3 Listed Items (if any), when their value is to be included
under clause 4.15.
.2 The following which are not subject to Retention shall be
included:
.1 any amounts to be included in Interim Payments in
accordance with clause 4.3 by the Employer as a result
of payments made or costs incurred by the Contractor
under clause 2.5.2, 2.20, 3.12, 6.10.2 or 6.10.3 or
paragraph B2.1.2 or C3.1 of Schedule 3;
.2 any amounts payable under clause 4.11.2;
.3 any amounts ascertained under clause 4.20;

.4 any amounts in respect of any restoration, replacement

or repair of loss or damage and removal and disposal
of debris under paragraph B3.5 or C4.5.2 of Schedule
3 or clause 6.11.5.2; and
.5 any amount payable to the Contractor under Fluctuations
Option A or B, if applicable.
.3 The following shall be deducted:
.1 any amounts deductible under clause 2.35 or 3.6; and
.2 any amount allowable by the Contractor to the Employer
under clause 6.10.2 or under Fluctuations Option A or
B, if applicable.”
The crossings out and underlinings in the above clauses indicate the amendments
which the parties had made to the standard conditions.
10 The contract specified 22nd July 2015 as the date for practical completion. In
relation to interim payments, in the contract particulars Alternative A was selected
and Alternative B was crossed out. In the gap for a list of stages under the heading
of Alternative A, the parties wrote:
“TO BE AGREED WITHIN 2 WEEKS FROM DATE OF CONTRACT.”
11 Unfortunately the parties were unable to agree a list of stages for incorporation
into Alternative A, either within the agreed two week period or at all. Instead, after
a delay of six weeks, they agreed that Grove should make interim payments to BB
in accordance with a schedule headed
“Greenwich Hotels and Apartments
Interim Valuation/Payment Dates 2013 – 2015
Valuation Application on Third Thursday of the month”
12 That schedule reads as follows:
“Valu- Val month Mansell Applica- Valuation Date Grove Certificate Payment made by
ation tion Submission Issued (3 work- Grove by (30
no. Date to Grove ing days) days from Val
date)
JUL
AUG
1 SEPT 19/09/2013 20/09/2013 25/09/2013 20/10/2013
2 OCT 17/10/2013 18/10/2013 23/10/2013 22/11/2013
3 NOV 14/11/2013 15/11/2013 20/11/2013 20/12/2013
4 DEC 19/12/2013 19/12/2013 24/12/2013 23/01/2014
5 JAN 23/01/2014 24/01/2014 29/01/2014 25/02/2014
6 FEB 20/02/2014 21/02/2014 26/02/2014 28/03/2014
7 MAR 20/03/2014 21/03/2014 26/03/2014 25/04/2014
8 APR 17/04/2014 18/04/2014 23/04/2014 23/05/2014
9 MAY 22/05/2014 23/05/2014 28/05/2014 27/06/2014
10 JUN 19/06/2014 20/06/2014 25/06/2014 25/07/2014

Cases 55
“Valu- Val month Mansell Applica- Valuation Date Grove Certificate Payment made by
ation tion Submission Issued (3 work- Grove by (30
no. Date to Grove ing days) days from Val
date)
11 JUL 17/07/2014 18/07/2014 23/07/2014 22/08/2014
12 AUG 21/08/2014 22/08/2014 27/08/2014 28/09/2014
13 SEPT 18/09/2014 19/09/2014 24/09/2014 24/10/2014
14 OCT 16/10/2014 17/10/2014 22/10/2014 21/11/2014
15 NOV 20/11/2014 21/11/2014 26/11/2014 26/12/2014
16 DEC 18/12/2014 19/12/2014 24/12/2014 23/01/2015
17 JAN 22/01/2015 23/01/2015 28/01/2015 27/02/2015
18 FEB 19/02/2015 20/02/2015 25/02/2015 27/03/2015
19 MAR 19/03/2015 20/03/2015 25/03/2015 24/04/2015
20 APR 16/04/2015 17/04/2015 22/04/2015 22/05/2015
21 MAY 21/05/2015 22/05/2015 27/05/2015 26/06/2015
22 JUN 18/06/2015 19/06/2015 24/06/2015 24/07/2015
23 JUL 16/07/2015 17/07/2015 22/07/2015 21/08/2015”
13 Mr Bakh Tumber, commercial manager of BB, sent that schedule to Michael

Keane at Grove by email on 30th September 2013. He wrote in the covering email:
“Michael
Please find attached agreed schedule of valuation / payment dates for this
project.”
14 For convenience I shall refer to the email of 30th September as “the Tumber
email”. I shall refer to the attached schedule as the “the Tumber schedule”. It can
be seen that the Tumber schedule has six columns. I shall refer to the column on
the left hand side as “column 1”, the next column as “column 2” and so forth.
15 Work duly proceeded under the contract. Delays occurred, for which BB obtained
a two month extension of time. Whether BB is entitled to any further extension of
time is a matter of dispute between the parties. BB achieved practical completion
of the hotel during December 2015. BB achieved practical completion of the
apartments, and thus of the whole project, on 26th July 2016.
16 Between September 2013 and July 2015 the interim payments for BB’s work
proceeded smoothly. The respective quantity surveyors for Grove and BB faithfully
adhered to the timetable set out in the Tumber schedule. They carried out the
valuation exercise each month in accordance with the provisions of clause 4.14.
17 By May 2015 it was clear that the project was going to overrun substantially
beyond the contractual completion date of 22nd July 2015. Accordingly, the
quantity surveyors on both sides gave thought to the question of interim payments
after the last date shown on the Tumber schedule. Both parties expected that interim
payments would continue, but they were in disagreement about the appropriate
dates for applications, valuations and payments.
18 On 21st August 2015 BB issued application for payment number 24. On 28th
August 2015 Grove’s agent issued a payment notice in respect of that application.

On 15th September Grove issued a Pay Less notice in respect of application 24.
This showed that Grove would deduct £2 million, because there was a dispute
about whether BB should give credit for an extra-contractual payment of £2 million
previously made by Grove. The Pay Less notice showed the payment date as 25th
September. On 18th September Grove paid £439,503, which was the sum shown
as due on the Pay Less notice after deducting the £2 million.
19 BB took strong exception to Grove’s calculation of dates. They also took the
view that by reason of Grove’s miscalculations the Pay Less notice was ineffective.
Accordingly on 30th September 2015 BB sent a formal letter to Grove demanding
payment of the £2 million, which Grove had withheld in reliance on the Pay Less
notice. On page 2 of that letter BB wrote:
“Despite efforts on both sides, no agreement has been reached in relation to
the Interim payment process beyond July 2015. For the avoidance of any
doubt, our previous offers to agree the Interim payment process beyond July
2015 are now withdrawn and are no longer capable of acceptance.”
20 During October and November 2015 the parties continued to correspond and
serve notices on the assumption that interim payments were due, but they never
reached agreement about the applicable dates. Grove made no further payments
to BB during that period. This was for two reasons. First, Grove maintained that
their Pay Less notice of 15th September was valid and entitled them to withhold
the disputed £2 million. Secondly, they maintained that liquidated and ascertained
damages for delay exceeded and extinguished any payments due to BB in respect
of work done.
21 On 9th December 2015, after taking independent advice, Grove asserted that
BB had no continuing entitlement to receive payments.
22 BB disputed the proposition that they had no further entitlement to interim
payments. Accordingly, in order to resolve that dispute, Grove commenced the
present proceedings.
Part 3—The present proceedings

23 By a claim form issued pursuant to CPR Part 8 in the Technology and
Construction Court on 10th December 2015, Grove claimed a declaration to the
effect that BB had no entitlement to interim payments in respect of work done
after July 2015. Grove also sought other relief which is no longer relevant.
24 The action proceeded swiftly. It came on for trial on 20th January 2016 (just
six weeks after issue of the claim form) before Mr Justice Stuart-Smith. The judge
delivered his reserved judgment on 3rd February 2016. He found in favour of
Grove and issued the following declaration:
“The Defendant has no contractual right to make Interim Application no.24
(or any subsequent application) and has no right to be paid in respect thereof.”
The judge also granted a second declaration concerning the validity of Grove’s
Pay Less notice, but that is not relevant for present purposes.
25 I would summarise the judge’s reasoning and conclusions as follows:

Cases 57
i) The Tumber schedule acted as a specific amendment to the contract. It

meant that the parties abandoned Alternative A and agreed instead that
there would be 23 interim payments in accordance with the dates set out
in the schedule.
ii) The contract as amended by the Tumber schedule did not make any express
provision for further interim payments after valuation 23.
iii) There was no implied term providing for interim payments after valuation
23.
iv) The contract as amended by the Tumber schedule satisfied the requirements
of sections 109 and 110 of the 1996 Act. Therefore the Scheme did not
apply.
v) The parties’ correspondence and conduct during the summer and autumn
of 2015 was not such as to give rise to a fresh agreement for interim
payments. This was because the parties never reached agreement on the
essential terms for such interim payments.
vi) Grove were not estopped from contending that BB had no continuing
entitlement to interim payments after valuation 23.
26 BB were aggrieved by the judge’s decision. Accordingly they appealed to the
Court of Appeal.
Part 4—The appeal to the Court of Appeal

27 By an appellant’s notice issued on 9th February 2016, BB appealed against the
judge’s decision on three grounds, which I would summarise as follows:
i) The contract as amended by the Tumber schedule expressly or impliedly
provided for continuing interim payments to be made between August 2015
and the date of practical completion.
ii) Alternatively, if there was no express or implied entitlement to continuing
interim payments, the contract as amended by the Tumber schedule, did
not comply with the requirements of section 109 of the 1996 Act. Therefore
the Scheme applied and conferred a statutory right to monthly interim
payments between August 2015 and practical completion.
iii) If Grounds (i) and (ii) fail, then the parties’ correspondence and conduct
in the summer and autumn of 2015 gave rise to a fresh contract for monthly
interim payments.
28 The appeal came on for hearing right at the end of the summer term, on 27th
July 2016. Mr Steven Walker QC leading Ms Camille Slow appeared for BB. Mr
Walker argued grounds (i) and (iii). Ms Slow argued ground (ii). Mr Alexander
Nissen QC, leading Mr William Webb, appeared for Grove. Mr Nissen argued the
respondent’s case on all three grounds.
29 Having set the scene, I must now turn to the first ground of appeal. This raises
the question whether BB had any contractual entitlement to interim payments after
valuation 23.

Part 5—Did BB have any contractual entitlement to interim payments after

valuation 23?
30 When the parties entered into their contract they intended that Grove should
make stage payments to BB under Alternative A, as defined in clause 4.7 of the
conditions. In other words a list of milestones in the progress of the works would
be drawn up; as and when BB reached one of the milestones, Grove would make
a stage payment. The quantity surveyors would calculate the amount of the stage
payment by applying the rules set out in clause 4.13.
31 In the event, the parties never did agree a list of work stages or milestones.
Instead they agreed the Tumber schedule. It is common ground that they thereby
abandoned Alternative A and the mechanism for quantifying interim payments set
out in clause 4.13.
32 Mr Walker contends that what the parties did amounted to an agreement that
Grove would make interim payments in accordance with Alternative B (as defined
in clause 4.7) or some variant of Alternative B. Mr Nissen resists that contention,
pointing out that the dates in the Tumber schedule are inconsistent with clauses
4.8 to 4.9.
33 A quick comparison of clauses 4.8 to 4.9 with the Tumber schedule reveals that
during the period September 2013 to July 2014 the parties were working to a
completely different timetable from that mandated by Alternative B. Mr Walker
states that the likely explanation for the discrepancies is that the parties did not
have the contract in front of them when they drew up the Tumber schedule. That
must be right. The parties were not giving effect to the detailed provisions of
clauses 4.8 to 4.9. They were drawing up what seemed to be a reasonable timetable
for applications, valuations and payments up to the anticipated date of practical
completion.
34 The discrepancies between the Tumber schedule and the contract conditions
did not cause any difficulty during 2013 – 2014. BB submitted their applications
on the dates shown in column 3. Grove issued payment notices on the dates shown
in column 5 and made payments on the dates shown in column 6. The respective
quantity surveyors quantified the payments due in accordance with clause 4.14,
not clause 4.13 (as envisaged originally).
35 Problems did not emerge until 2015. After valuation 23 there was no document
to tell the parties when valuations should be made, when payment notices and Pay
Less notices should be served or when payments should be made. Extrapolation
from the Tumber schedule suggested one possible timetable. Application of clauses
4.8 to 4.9 suggested an alternative possible timetable. It is hardly surprising that
this situation led to confusion and disagreement about who should do what and
when.
36 In my view, it is not possible to say that in September 2013 the parties simply
agreed to adopt Alternative B. What they agreed was a hybrid arrangement which
had elements of Alternative B (in particular valuation under clause 4.14) and a
timetable of their own invention. That timetable ended on 22nd July 2015, the
contractual date for practical completion.
37 The parties made no agreement as to whether or how they would deal with
interim payments after July 2015. Mr Walker has valiantly argued that clearly the
parties intended monthly interim payments to continue. The dates of valuations,

Cases 59
payment notices and payments were a matter of detail which could if necessary
be resolved by adjudication or some similar mechanism. I cannot accept that.
Identification of the dates for valuation, payment notices, Pay Less notices and
payments were an essential feature. If Grove served notices out of time, the
consequences would be Draconian (as BB asserted in their letter dated 30th
September 2015). Both parties needed to know with certainty what were the
applicable dates.
38 Mr Walker submits that to interpret the contract in this way creates a commercial
nonsense. The parties cannot have intended that, if practical completion were
delayed, BB would have to wait for payment until the final payment date under
clause 4.12. Therefore the court must construe the contract as amended by the
Tumber schedule as providing a continuing entitlement to interim payments after
July 2015.
39 I reject this submission for three reasons. First, the express words used make it
clear that the parties were only agreeing a regime of interim payments up to the
contractual date for practical completion. See the Tumber email, which referred
to the “agreed schedule of valuation / payment dates for this project”. Neither the
email nor the schedule made any provision for interim payments after July 2015.
Secondly, it is impossible to deduce from the hybrid arrangement what would be
the dates for valuations, payment notices, Pay Less notices and payments after
July 2015. These were essential matters for the reasons previously stated. Thirdly,
this is a classic case of one party making a bad bargain. The court will not, indeed
cannot, use the canons of construction to rescue one party from the consequences
of what that party has clearly agreed. There is no ambiguity in the present case
which enables the court to reinterpret the parties’ contract in accordance with
“commercial common sense”, which Mr Walker seeks to invoke.
40 Mr Walker places reliance on the judgment of Lord Neuberger (with whom
Lord Sumption and Lord Hughes agreed) in Arnold v Britton [2015] UKSC 36;
[2015] AC 1619 at [15] to [23]. I do not think that those principles assist BB. The
language of the contract as amended by the Tumber schedule is clear. It provides
only for interim payments up to valuation 23. As Lord Neuberger said at [19]:
“The mere fact that a contractual arrangement, if interpreted according to its
natural language, has worked out badly, or even disastrously, for one of the
parties is not a reason for departing from the natural language.”
41 Paragraph 20 of Lord Neuberger’s judgment is also apposite:
“Fourthly, while commercial common sense is a very important factor to take
into account when interpreting a contract, a court should be very slow to reject
the natural meaning of a provision as correct simply because it appears to be
a very imprudent term for one of the parties to have agreed, even ignoring
the benefit of wisdom of hindsight. The purpose of interpretation is to identify
what the parties have agreed, not what the court thinks that they should have
agreed. Experience shows that it is by no means unknown for people to enter
into arrangements which are ill-advised, even ignoring the benefit of wisdom
of hindsight, and it is not the function of a court when interpreting an
agreement to relieve a party from the consequences of his imprudence or poor

advice. Accordingly, when interpreting a contract a judge should avoid

re-writing it in an attempt to assist an unwise party or to penalise an astute
party.”
42 Commercial common sense can only come to the rescue of a contracting party
if it is clear in all the circumstances what the parties intended, or would have
intended, to happen in the circumstances which subsequently arose. In this case it
is quite unclear whether the parties intended to extrapolate valuation and payment
dates post-July 2015 from the Tumber schedule or from clauses 4.8 to 4.9. Indeed
Mr Walker has not put forward either in his skeleton argument or in his oral
submissions what the sequence of dates would be if the contract is construed as
he says it should be construed.
43 As a fallback BB argue that if they fail on the express terms, then there must be
an implied term providing for interim payments beyond July 2015.
44 In BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR
266 at 282–3 Lord Simon stated the general principles as follows:
“for a term to be implied, the following conditions (which may overlap) must
be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary
to give business efficacy to the contract, so that no term will be implied if the
contract is effective without it; (3) it must be so obvious that ‘it goes without
saying’; (4) it must be capable of clear expression; (5) it must not contradict
any express term of the contract.”
45 The leading authority of implication of terms is now, of course, Marks and
Spencer v BNP Parabis Securities Services Trust [2015] UKSC 72; [2016] AC
742. Lord Neuberger (with whom Lord Sumption and Lord Hodge agreed) accepted
Lord Simon’s statement of principle, but at [21] added the following six comments:
“First, in Equitable Life Assurance Society v Hyman [2002] 1 AC 408 , 459,
Lord Steyn rightly observed that the implication of a term was “not critically
dependent on proof of an actual intention of the parties” when negotiating
the contract. If one approaches the question by reference to what the parties
would have agreed, one is not strictly concerned with the hypothetical answer
of the actual parties, but with that of notional reasonable people in the position
of the parties at the time at which they were contracting. Secondly, a term
should not be implied into a detailed commercial contract merely because it
appears fair or merely because one considers that the parties would have
agreed it if it had been suggested to them. Those are necessary but not
sufficient grounds for including a term. However, and thirdly, it is questionable
whether Lord Simon’s first requirement, reasonableness and equitableness,
will usually, if ever, add anything: if a term satisfies the other requirements,
it is hard to think that it would not be reasonable and equitable. Fourthly, as
Lord Hoffmann I think suggested in Attorney General of Belize v Belize
Telecom Ltd [2009] 1 WLR 1988, para 27, although Lord Simon’s
requirements are otherwise cumulative, I would accept that business necessity
and obviousness, his second and third requirements, can be alternatives in
the sense that only one of them needs to be satisfied, although I suspect that
in practice it would be a rare case where only one of those two requirements

Cases 61
would be satisfied. Fifthly, if one approaches the issue by reference to the

officious bystander, it is “vital to formulate the question to be posed by [him]
with the utmost care” to quote from Lewison, The Interpretation of Contracts
5th ed (2011), p 300, para 6.09. Sixthly, necessity for business efficacy
involves a value judgment. It is rightly common ground on this appeal that
the test is not one of “absolute necessity”, not least because the necessity is
judged by reference to business efficacy. It may well be that a more helpful
way of putting Lord Simon’s second requirement is, as suggested by Lord
Sumption JSC in argument, that a term can only be implied if, without the
term, the contract would lack commercial or practical coherence.”
46 In my view the present case falls far short of satisfying the requirements for
implication of the proposed term. In particular, it is not obvious what the proposed
term would say or what would be the critical dates for serving notices. Furthermore,
the proposed term is not necessary to secure business efficacy. Nor can it be said
that the contract would lack commercial or practical coherence without such a
term.
47 Let me now draw the threads together. The contract as amended by the Tumber
schedule provided for interim payments to stop at the contractual date for practical
completion. There is neither an express term nor any implied term which enables
BB to receive interim payments after valuation 23. BB will receive full payment
for their work in due course, but they will have to wait until the final payment date
as defined in clause 4.12 of the contract conditions.
48 In the result, therefore, I agree with the judge on this issue and reject the first
ground of appeal. My answer to the question posed in this part of the judgment is
no.
49 I must now consider whether the 1996 Act and the Scheme enable BB to recover
interim payments after July 2015.
Part 6—Do the 1996 Act and the Scheme enable BB to recover interim
payments after July 2015?
50 I have set out the relevant provisions of the 1996 Act in Part 1 above. If the
parties’ contract did not comply with sections 109 and 110 of the 1996 Act, then
paragraphs 2-7 of the Scheme would apply.
51 Ms Slow submits that the word “any” in section 109(1) of the 1996 Act means
“all”. Therefore the relevant provisions of the Scheme will apply if a construction
contract fails to provide a regime of interim payments covering the whole of the
work which the contractor performs.
52 Ms Slow prays in aid the decision of Eve J in Clarke-Jervoise v Scutt [1920] 1
Ch 382. That case concerned a tenancy agreement in which the tenant agreed not
to plough “any grass land”. Eve J construed that phrase broadly as meaning all
land covered in grass either at the date of the demise or subsequently. He therefore
treated the word “any” as meaning “all”.
53 I readily understand, and respectfully agree with, the decision in that case. But
the judge arrived at his conclusion specifically by reference to the context in which
the word “any” appeared: see page 388. He was not saying that in every context
“any” means “all”.

54 I now return to section 109(1) of the 1996 Act. In that context I do not think
that “any work” means “every single piece of work”. In my view the subsection
is a more general one saying that work done under construction contracts shall
(except in very short projects) be subject to a regime of interim payments.
55 Section 109(2) gives the parties considerable latitude as to the system of interim
payments which they may agree. They can decide for themselves the frequency
of interim payments and the amounts to be paid. For example, the parties may
agree that interim payments shall be less than the full value of work done. Indeed
parties normally do agree that, so that the Employer holds retention monies, usually
releasing half at practical completion and the other half when all defects have been
made good.
56 We heard some interesting arguments as to whether contracting parties could
frustrate Parliament’s intention by agreeing a pitifully inadequate scheme of interim
payments. Mr Nissen relied upon the following passage in the 10th Edition of
Keating on Construction Contracts :
“18-106 Stage Payments.
Section 109 of the Act states that a party to a construction contract is generally
entitled to payment by instalments, stage payments or other periodic payments
for any work under the contract. The reference to “stage payments” would
seem to permit payment by reference to the achievement of particular elements
of the work. Further, there is no requirement as to when such payments are
to be made; any arrangement which satisfies the definition will be sufficient.
Thus a contract prescribing one periodic payment, even of an insignificant
amount, would, it would seem, meet the requirements.”
57 If the parties are going to exclude the operation of the Scheme, they must draw
up a system of interim payments in good faith. I doubt that a cynical device to
exclude the operation of the Scheme by prescribing one interim payment “of an
insignificant amount” would suffice. But for present purposes, it is not necessary
to decide whether that passage in Keating is correct. Suffice it to say that section
109(2) gives the contracting parties a wide measure of freedom as to the nature of
the regime which they may agree.
58 In the present case the parties agreed a regime of twenty three interim payments
stretching right up to the date specified for practical completion. I am quite satisfied
that the contract, as amended by the Tumber schedule, satisfies the requirements
of section 109.
59 Clause 4.14 of the contract provided an adequate mechanism for quantifying
interim payments. Therefore the parties’ contract, although unusual, satisfied the
requirements of section 110.
60 In those circumstances the Scheme does not apply. BB cannot rely upon the
1996 Act and the Scheme to recover interim payments after July 2015. My answer
to the question posed in this part of the judgment is no. I therefore reject the second
ground of appeal.
61 I must turn finally to the question whether the parties reached a separate
agreement for interim payments after valuation 23.

Cases 63
Part 7—Did the parties reach a separate agreement for interim payments
after valuation 23?
62 The judge has recited very fully the correspondence passing between the parties
in the period May to December 2015. See paragraphs 16 to 21 and 39 of his
judgment. I will not repeat that recitation.
63 The short answer to the third ground of appeal is this. The parties never agreed
the terms upon which interim payments would be made. They did not agree the
dates for valuations, notices and payments. Both parties treated those matters as
essential elements of any contract. BB themselves put this point forcefully in their
letter to Grove dated 30th September 2015, from which I have quoted in Part 2
above.
64 Mr Walker argued that Grove waived the need to agree on dates by issuing
payment notice 24. I do not agree. Grove maintained their position in relation to
dates and contractual terms. Grove issued the payment notice and made a payment
to protect themselves against the risk of losing their right to withhold £2 million,
if it turned out that their interpretation of the contract was wrong. In the event, BB
still maintained that Grove had forfeited the right to withhold £2 million.
65 In agreement with the judge, I find it quite impossible to derive any fresh
agreement between the parties from their conduct or their correspondence between
May and December 2015.
66 Accordingly my answer to the question posed in this part of the judgment is no.
I reject the third ground of appeal.
Part 8—Conclusion
67 For the reasons set out in Parts 5, 6 and 7 above, I would reject all three grounds
of appeal. If either of my Lords agree with me, this appeal will be dismissed.
LORD JUSTICE VOS:

68 I shall not repeat the facts and background so clearly explained by Lord Justice
Jackson. I only wish to deal myself with the first ground of appeal covered by
Jackson LJ in Part 5 of his judgment, namely the attack on the judge’s construction
of the contract, as amended on 30th September 2013 (which I shall call the
“Contract”). I shall also say something briefly about section 109 of the Housing
Grants Constructions and Regeneration Act 1996 (“the 1996 Act”).
Was the Contract ambiguous?

69 In order to decide if the meaning of the Contract is clear, it is necessary in this
case to consider two primary questions: first, the effect that the agreement of the
Schedule of 30th September 2013 (the “Tumber Schedule”) had on the applicability
of the terms in the JCT form (the “JCT form”), and secondly the meaning and
effect of the Tumber Schedule itself.
70 I will start with the effect on the applicability of the terms in the JCT form.
When the parties made their original contract, they had the option of agreeing to
“Alternative A: Stage Payments” or “Alternative B: Periodic Payments”. They
chose Alternative A agreeing that the stage payments would be agreed “within 2
weeks from date of contract”. It was common ground that clauses 4.8.2 and 4.13

of the JCT form were specifically applicable to Alternative A, and that clauses
4.8.3 and 4.14 were specifically applicable to Alternative B, so that by their original
choice the parties had excluded the operation of clause 4.8.3 and 4.14. The first
question is, therefore, whether when the parties agreed the Tumber Schedule, the
effect of that agreement was to bring those clauses back into operation (and/or
also, I suppose, to exclude the operation of clauses 4.8.2 and 4.13 that are
specifically applicable to Alternative A). For a number of reasons, I have concluded
that that must have been the result of the amendment that was agreed in the Tumber
Schedule.
71 First, in the language of the JCT form, the Tumber Schedule is only referable
to the agreement of “Periodic Payments” rather than “Stage Payments”. I need not
go into too much detail, but the columns in the Tumber Schedule are all referable
to elements of what is provided for by clause 4.8.3 and 4.14. Alternative B provides
in the period up to Practical Completion for “Interim Applications [to] be made
at monthly dates specified in the Contract” (clause 4.8.3), and column 3 of the
Schedule provides such monthly dates. Alternative B provides for monthly valuation
dates as being the “specified date” which is the same as the date of the interim
application (clause 4.8.3 and 4.14), whilst the Tumber Schedule provides for
valuation dates that were in all but one case the day following the date for the
interim application. The JCT form provides for the issue by the employer of a
“Payment Notice” not later than 5 days after the “due date” (the later of the specified
date and date the employer receives the interim application) (clauses 4.8.3 and
4.9.2), whilst the Tumber Schedule provides for Grove to provide an employer’s
certificate 3 working days after the valuation date (which comes to the same thing
because of the intervention of a week-end in every case). Finally, the JCT form
(as originally varied by the parties) provided for payment of the interim payment
28 days from its due date (clause 4.9.1), whilst the Tumber Schedule provided for
a payment date 30 days from the specified valuation date. The Tumber Schedule
does not specify or contemplate “stages” as envisaged by Alternative A and clauses
4.8.2 and 4.13.
72 Secondly, the valuation of each periodic payment envisaged by the Tumber
Schedule had to be undertaken according to some known process. Neither party
has suggested that any such process was available to the parties, save that contained
in clause 4.14. There was no evidence that any of the 3 adjudications invoked
clause 4.14, but it seems very likely that, had they involved an argument about the
basis of the valuation, they would have done so. Certainly, the process envisaged
by the Tumber Schedule cannot fit within the provisions of clause 4.13.
73 Thirdly, throughout the course of the Contract, it is clear that the parties operated
the process envisaged by the parts of the JCT form that were applicable to both
Alternatives A and B. The best example is the service of “Pay Less notices”
envisaged by clause 4.10. The parties spent much time arguing about one of these
notices and the consequence of it having been served late. They can only have
done so on the basis that they understood that the JCT form applied to the process
they were engaged upon.
74 It, therefore, seems to me that the inevitable consequence of the agreement of
the Tumber Schedule was that the parties must be taken to have reversed the express
decision taken in the original contract to elect for the applicability of Alternative

Cases 65
A. By agreeing the Tumber Schedule, they opted to revert to the applicability of

Alternative B and the re-introduction of clauses 4.8.3 and 4.14.
75 It is then necessary to ascertain the proper meaning of the Tumber Schedule
itself. Grove submits that it is a free standing complete document that provides
for each and every interim payment that is to be made under the Contract. BB
submits that it cannot be so construed, partly because of the reintroduction of
clauses 4.8.3 and 4.14, but also because that is not what it says on its face. I take
the view that BB’s submissions are to be preferred, for the following reasons.
76 First, the Tumber Schedule is silent as to whether the interim payments listed
are the only interim payments envisaged. Secondly, the Tumber Schedule is headed
“Interim Valuation/Payment Dates 2013–2015”, which does not indicate whether
or not there might be further interim payments due or to be agreed after 2015. I
accept that the completion date was 22nd July 2015, but parties to any construction
contract must be taken to know that the contract period may well be exceeded.
Thirdly, the Tumber Schedule is headed “Valuation Application on Third Thursday
of the month”, as is reflected in the dates in the 3rd column headed “… Application
Submission Date to Grove”. The last date is understandably immediately before
the agreed date for completion, but the rubric about the third Thursday of the month
would be quite unnecessary if the listed interim payment application dates were
intended to be exhaustive. Moreover, there is no reason to suppose that interim
payments were not envisaged after practical completion as would be normal and
as was provided for by clause 4.8.3. Finally, on this point, I would mention, but
not take into account since it is not strictly admissible, that it was clear from their
conduct after the event that the parties both thought that interim payments remained
due after those listed in the Tumber Schedule until Grove obtained legal advice
to contrary effect.
77 Where then do these conclusions leave the proper construction of the Contract?
In my judgment, they demonstrate that the Contract was indeed ambiguous. The
parties obviously intended to reintroduce clauses 4.8.3 and 4.14, but varied the
precise dates included in the JCT form for all interim payments listed in the Tumber
Schedule. The Tumber Schedule is silent as to any future interim payments if
practical completion were not reached on 22nd July 2015 (as in fact occurred). It
could be that the Contract meant that the parties should revert to the strict wording
of Alternative B and the JCT Form for interim payments after 22nd July 2015,
and it could be that it meant that interim payments should continue after interim
payment 23 on equivalent dates thereafter triggered on the third Thursday of every
month by BB’s application submission to Grove. It could be that the parties are
to be taken as having agreed nothing after interim payment 23, save that they would
later agree what process and what dates would apply to subsequent interim
payments. But in my judgment, the Tumber Schedule is not clear enough to be
construed as meaning, when taken together with the JCT form, that the parties
must have intended that there would be no interim payments after interim payment
23.
78 In addition to the reasons I have already given, I take the view that clear words
would be required for such a construction of the Tumber Schedule. In reality, such
a construction would mean that BB would not be paid large sums for 2 or 3 years
after the last interim payment. That is an uncommercial construction. There is no

suggestion from the admissible factual matrix that the financing and security risks
had been intended to pass in that way to BB after the expected completion date.
Grove’s submissions on incentives to complete on time are all pure speculation
when the JCT form has detailed provisions that have that effect.
79 I accept, of course, as Jackson LJ has mentioned, that the Tumber Schedule was
sent to Grove’s representative by BB under cover of an email that recited “[p]lease
find attached agreed schedule of valuation/payment dates for this project”. But I
do not think too much weight can be placed on this document that was apparently
sent after the Tumber Schedule had been agreed. Moreover, the dates in the Tumber
Schedule were the only ones actually specified “for the project”, so those words
cannot outweigh the proper meaning of the Tumber Schedule read together with
the JCT form in the way I have suggested and taken against the background of the
appropriate factual matrix.
80 In these circumstances, I cannot accept the judge’s conclusion that the proper
construction of the Tumber Schedule means that only 23 interim payments were
to be made under the Contract. For the reasons I have given, I take the view that
the Contract is ambiguous.
If the Contract is ambiguous, what is its proper construction?

81 The choice, I think, is between the process reverting to Alternative B for interim
payments after 22nd July 2015, or interim payments continuing on equivalent
dates triggered on the third Thursday of every month by BB’s application
submission to Grove, or there being a lacuna in the Contract as properly construed.
82 In my judgment, the key to this part of the case is not to be found in either section
109 of the 1996 Act or in a resort to an implied term, both of which have been
relied upon by the parties. The key is to be found in the reintroduction of the parts
of the JCT form that are applicable to Alternative B. There is no doubt, in my
view, that the Tumber Schedule must be taken to have varied the JCT form
including clauses 4.8.3 and 4.14 so as to substitute the specified dates for the
specified date, the valuation date, the due date and the final payment date envisaged
by the JCT form. In my judgment, the only sensible construction of what the parties
agreed is to construe the Contract as if the Word “etcetera” were included at the
end of the Tumber Schedule.
83 It makes no sense to imagine that the parties could have intended to revert to
the dates specified in clauses 4.8.3 and 4.14, since they had taken so much time
and trouble to agree a different regime. It makes no sense either to think that the
parties would have intended the Scheme under the Scheme for Construction
Contracts (England and Wales) Regulations 1998 to apply. It is, I think, obvious,
that the parties only agreed 23 specific payments because that was the number of
monthly payments that took them up to the date on which completion was expected.
For all the reasons I have given, they must be taken to have intended those monthly
interim payments to continue, and I see no reason to suppose they intended to
revert to a regime of dates that they had expressly departed from in agreeing the
Tumber Schedule. For my part, therefore, I would construe the Contract as meaning
that interim payments would continue on equivalent monthly dates up to actual
practical completion. It is permissible to have regard to business common sense

Cases 67
in construing a Contract that is ambiguous and I would regard that common sense
as pointing clearly to the construction I have reached.
84 A further question arises as to what the Contract provides for interim payments
after practical completion. That does not arise in this case thus far. One may hope
that parties will be able to agree a suitable regime. All I would say is that it is less
obvious that the Contract must be construed as meaning that monthly interim
payments were intended to continue in the same way after practical completion,
when clause 4.8.3 provides for bi-monthly payments and when the Tumber
Schedule ends at expected completion.
85 Since I do not think that, on a proper construction of the Contract, there was
actually a lacuna, section 109 of the 1996 Act will not be applicable. As to the
construction of section 109, I can, however, say that I am inclined to agree with
Jackson LJ. I do not, therefore, think that it would have come to BB’s aid had I
not construed the contract as I have.
86 I have reached these conclusions without feeling the need to repeat the
well-known principles of statutory construction most recently summarised by Lord
Neuberger in Arnold v. Britton [2015] AC 1619. But I should say, perhaps, that I
have had regard to these principles and do not think they are contravened by my
construction. This is a case somewhat akin to Aberdeen City Council v. Stewart
Milne Group Limited [2012] SC (UKSC) 240 referred to by Lord Neuberger at
paragraph 22 in Arnold, where Lord Hope said (also at paragraph 22) that the
context showed that the intention of the parties was as he found it to be, and that
it could be assumed that that was what the parties would have said if they had been
asked about it at the time. The fact that it made good commercial sense was simply
a makeweight. In that case, as in this, the words of the contract itself told the reader
what must have been intended. Here the parties must have intended interim
payments to continue on the same basis up to practical completion. No undue
violence is required to the words the parties actually used to reach that construction.
87 I would allow this appeal.
LORD JUSTICE LONGMORE:

88 To my mind the key to the question of construction is that the parties made no
agreement about interim payments beyond the contents of the schedule. It is idle
to speculate whether that was because they thought it was unnecessary or because
they deliberately refrained from opening up the possibility that the performance
would be delayed beyond the contractual completion date or because they thought
they could safely leave the topic to be sorted out by lawyers at a subsequent date
if necessary or because they did not think about it all.
89 I have therefore come to the conclusion that Jackson LJ is right when he says
that no agreement was reached (or can be implied) as to what was to happen after
the 23rd interim payment had been made. As he has pointed out there are just too
many imponderables that are left in the air.
90 The judgment of Vos LJ makes a valiant attempt to fill in the imponderables by
deciding that the parties “opted to revert” to the applicability of Alternative B. I
cannot, with respect, agree; the parties had expressly agreed that Alternative B
was not to be adopted. It is true that they found they could not reach agreement
on Alternative A but that does not mean that they “opted to revert” to Alternative

B which they had expressly agreed not to adopt in the first place. In my judgment,
they made a new agreement and that new agreement covered the matters set out
in the Tumber schedule and no more.
91 The effect of the construction preferred by Vos LJ is (as he is happy to
acknowledge) to treat the schedule as if at the end it had added the rubric “etcetera”.
That effectively adds an important word which is additional to the agreement made
by the parties and is, to my mind, an impermissible construction.
92 For these short reasons I agree with Jackson LJ on the point of construction (as
on all other matters) and concur with him in dismissing this appeal.
Beumer Group UK Ltd v Vinci Construction UK Ltd
High Court of Justice, Queen’s Bench Division
Technology and Construction Court
Fraser J: 13 September 2016
[2016] EWHC 2283 (TCC)
Adjudicators’ decisions; Adjudicators’ powers and duties; Disclosure; Natural

justice; Parallel proceedings; Procedural irregularity; Sub-contracts
Adjudication—Enforcement of adjudicator’s decision—Breach of natural justice—

Adjudicator conducting adjudication between claimant and defendant and parallel
adjudication between claimant and other party involved in same construction
project—Neither adjudicator nor claimant disclosing parallel adjudication to
defendant—Defendant challenging enforcement of adjudicator’s decision against
it on ground of breach of natural justice—Whether failure to disclose parallel
adjudication giving appearance of bias—Whether depriving defendant of ability
to meet case against it—Whether breaches of natural justice justifying refusal to
enforce adjudicator’s decision
Facts: Gatwick Airport Ltd (GAL) employed Vinci (D) which subcontracted
Beumer (C) to carry out works at Gatwick South Terminal Baggage and Pier
1-Phase 2, mainly the baggage handling system works, “Tilt Tray Sorter” amounting
to £30 million. The main contract and the subcontract were both based under the
NEC 3 Engineering and Construction Contract, Option A. C had sub-subcontracted
with Daifuku Logan Ltd (Logan). Dispute arose among the C and Logan, with the
latter referring to adjudication, with Dr Chern acting as the adjudicator in this first
dispute (BL II). Later on, another dispute arose between C and D (BV II) regarding
three instructions: CI 114, CI 115 and CI 116, issued by D on 9 March 2016 and
whether they constituted compensation events under the subcontract, which was
referred to adjudication to Dr Chern. Dr Chern decided in C’s favour, ordering
that they should pay his fees which should be in turn reimbursed by D. When D
failed to reimburse, C sought summary judgment under CPR Pt 24 for declarations

Cases 69
by the court commensurate with those decided by the adjudicator, as well as

payment by D. D opposed the decision, on the grounds of breaches of natural
justice, since on the same date that this adjudication was brought against them, C
had also brought BL II before the same adjudicator and concerning also delay
issues. At the time, D did not know of the simultaneous ongoing adjudication
between C and Logan in which Dr Chern was also the adjudicator, and the latter
did not disclose this to D either. D then argued that by not disclosing the above,
it was unfair for C to deprive them of access to the relevant information Dr Chern
must have acquired from the subject matter of BV II when dealing with the other
adjudication BL II. C submitted that neither them, nor Dr Chern were obliged to
inform D of adjudication BL II, and since D did not have a right to see the
documentation in such adjudication, there could not have been a breach of natural
justice.
Held, by Fraser J, that: for the court to decline ordering summary judgment
enforcing an adjudicator’s decision, the alleged breaches of natural justice in the
adjudication proceedings must have been clearly unfair. It was then important for
adjudicators not only to have acted, but to have been seen to act fairly. As a result,
Dr Chern was under the obligation to disclose to D that he was simultaneously
acting as adjudicator on another matter involving C, thus providing D with the
referral, response and pleadings in the BL II adjudication. By denying D access
to the above, the breach of natural justice was sufficiently material, therefore
rendering the decision unenforceable. However, the three instructions
abovementioned, subject to the dispute between C and D might still have been
compensation events, which would have to be decided either by another
adjudication, or by final resolution.
Michael Curtis QC (instructed by Silver Shemmings LLP) for the claimant.
Christopher Lewis and Felicity Dynes (instructed by Fenwick Elliot LLP) for the
defendant.
JUDGMENT
MR JUSTICE FRASER:
Introduction
1 This is an application by Beumer Group UK Ltd (“Beumer”) against Vinci
Construction UK Ltd (“Vinci”) for certain declarations arising as a result of an
adjudicator’s decision dated 17 June 2016 by Dr Chern. That decision followed a
second adjudication between Beumer and Vinci (which I shall refer to as “BV II”).
Dr Chern was also the adjudicator on the first adjudication between the parties,
the details of which are not relevant to this application.
2 Beumer and Vinci had contracted for certain works to be performed by Beumer
at Gatwick Airport, namely a Works Package that comprised the Baggage Handling
System. That contract was dated 8 November 2012. Vinci was the Main Contractor
and Beumer was the Sub-Contractor. The Main Contract works concerned the
South Terminal Baggage and Pier 1 — Phase 2 works at Gatwick, and the Employer
is Gatwick Airport Ltd (“GAL”). The Main Contract is based upon the NEC 3
Engineering and Construction Contract, Option A. The Sub-Contract, as might be

expected, is based upon the NEC 3 Engineering and Construction Sub-Contract,

Option A. Clause W2 is the relevant option chosen by the parties in respect of
dispute resolution. Further details concerning Clause W2 are dealt with below.
Effectively, Beumer was appointed by Vinci to perform the entire baggage handling
system works, including what is called a Tilt Tray Sorter. The value of Beumer’s
works is not agreed, but is in the region of approximately £30 million with further
claims. The sub-contract value is therefore sizeable. An Interim Final Account
Statement was agreed by the parties in October 2014 but works continued after
that, and the parties remain in dispute. The effect of the agreement in that Interim
Final Account Statement upon the parties’ contractual relationship was considered
by the adjudicator in the first adjudication.
3 Beumer also had a sub-sub-contract with another company called Daifuku Logan
Ltd (“Logan”) in relation to the works, and Logan’s works comprised the Tilt Tray
Sorter. Beumer and Vinci, and also Logan and Beumer, each found themselves in
dispute with their respective contracting parties about certain aspects of the works
under the sub-contract, and the sub-sub-contract, respectively. There was an
adjudication between Logan and Beumer in which Logan referred a particular
dispute to adjudication, the adjudicator being Dr Chern. He was one of three
individuals identified in the Sub-Contract data as being a potential adjudicator for
disputes under both the Main Contract and the Sub-Contract. Logan and Beumer
agreed between themselves that he should act as adjudicator on the first adjudication
between them (which I shall refer to as “BL I”). The details of BL I are not relevant,
but its existence is, because it explains the way in which Dr Chern came to be the
adjudicator in both adjudications which are relevant to this application.
4 The dispute between Beumer and Vinci which was the subject matter of BV II
was whether three instructions issued by Vinci, namely CI 114, CI 115 and CI
116, all issued on 9 March 2016, constituted Compensation Events under the
Sub-Contract. Dr Chern decided that they were, and made certain declarations in
Beumer’s favour to this effect, and ordered that Beumer pay his fees, with the sum
paid to be reimbursed by Vinci to Beumer. Beumer made that payment to him,
but Vinci did not reimburse Beumer. Beumer therefore seeks summary judgment
under CPR Part 24 on its application for declarations by the court commensurate
with those decided by the adjudicator, and also seeks payment to it by Vinci of
the sums paid by Beumer to him as his costs. As a result of the matters explained
further in the next section of this judgment, Vinci opposes enforcement of the
decision, relying upon breaches of natural justice. Other, habitual, defences were
deployed by Vinci in the adjudication itself, such as non-crystallisation of the
dispute affecting Dr Chern’s jurisdiction, but these are not relied upon to resist
enforcement by the court.
5 The witness evidence before the court comes from Mr Bhabra for Beumer, Mr
Francis and Mr Ashwood for Vinci, and from Mr Silver for Beumer in reply. I am
grateful to Mr Curtis QC for Beumer, and both Mr Lewis and Ms Dynes for Vinci,
for their clear and succinct submissions, both written and oral, which helped the
prompt resolution of the hearing within a period of half a day — a period that a
pessimist faced with the volume of material might have concluded was far too
short.

Cases 71
The facts
6 Put briefly, on the same day that Beumer commenced BV II against Vinci,
namely 18 March 2016, it also commenced a second adjudication (“BL II”) against
Logan. That adjudication was also before Dr Chern. It concerned similar issues,
although within the context of the Logan sub-sub-contract, namely failure by Logan
to complete its works by particular dates and a claim by Beumer for liquidated
damages for delay. It therefore concerned delay. That adjudication was conducted
at the same time as BV II. However, Vinci did not know that there was a
simultaneous adjudication ongoing between Beumer and Logan in which Dr Chern
was the adjudicator, or of the content of the submissions Beumer made to Dr Chern
in that adjudication. Neither Beumer nor Dr Chern notified Vinci of this other
adjudication, and Dr Chern did not disclose to Vinci that he was acting
contemporaneously as an adjudicator in another dispute to which Beumer was a
party (whether on the same project, or at all).
7 Dr Chern had been named by Beumer as the potential adjudicator for the dispute
in BV II, based upon his having been chosen by both Beumer and Vinci to be the
adjudicator for BV I, the first adjudication between the parties, and because he
was one of the three individuals named in Option W2. He was in fact the only one
of those three with availability at the time of BV I. When that had occurred, in
February 2015, Vinci were not told by Beumer that Dr Chern had already been
appointed as the adjudicator in BL I. His involvement in adjudications between
Beumer and Logan was therefore not brought to Vinci’s attention until Beumer’s
solicitors responded to queries from Vinci’s solicitors in July 2016.
The grounds of resistance to enforcement

8 Vinci argues that by virtue of being the adjudicator in BL II, Dr Chern must
have had, or acquired, background knowledge concerning the subject matter of
BV II. Vinci submits that no opportunity was available to it to consider that
information, which it is said was plainly relevant, and make submissions about it.
As a subsidiary or associated point, Vinci maintains that it was unfair that no
disclosure was given to it by Beumer of the material deployed, relevant to the
Beumer-Vinci dispute, in BL II. Further, Vinci complains that Beumer advanced
factually inconsistent cases in the two adjudications, BV II and BL II. In BV II,
Beumer maintained that Airport Operational Readiness (“AOR”), an important
date in the Sub-Contract relevant to completion, had been achieved by 16 December
2015. In BL II, part (if not the central plank) of Beumer’s case against Logan was
that Logan’s works (which formed part of Beumer’s works) had not achieved the
condition of AOR by at least 12 April 2016, hence could certainly not have been
in the condition of AOR on the date in December 2015 it maintained (to Vinci) in
BV II. These rather starkly contrasting positions taken by Beumer were not brought
to the attention of Dr Chern during BV II by Vinci in its submissions, for the
obvious reason that Vinci did not know that BL II was even taking place, still less
the content of the substantive submissions being made to Dr Chern by Beumer.
Although this submission is not made before me expressly, Dr Chern would have
known that Beumer’s position in the two adjudications was different, because he
was conducting both adjudications.

9 The relief sought in BV II by Beumer concerned declarations that each of CI

114, CI 115 and CI 116 were compensation events, that Beumer had been prevented
from commencing its works, that Beumer had not caused any delay, that the CIs
were changes to the Works Information and that the Subcontract Completion Dates
should be extended to named dates between 27 June 2016 and 11 July 2016, or
such other dates as the adjudicator may decide. In other words, one of the
components of that relief was a claim for an extension, or extensions, of time, and
the date of AOR was an important ingredient in the length of extension sought. In
BL II, one of the elements of relief sought was liquidated damages for delay and
payment of costs in respect of a failure to meet the Condition stated for a Key Date
(namely to achieve Completion excepting AOR trials) pursuant to Clause 25.3 of
the sub-sub-contract, together totalling approximately £2.8 million, and again the
date of AOR was an integral component of considering the state of the works at
particular dates so that delay could be considered, as delay affects the calculation
of liquidated damages and the the applicability of a claim under Clause 25.3.
10 Beumer submits before me that there was no obligation upon either Beumer or
Dr Chern to inform Vinci either of the existence of BL II, or its content; that Vinci
had no right to see the documentation before Dr Chern in that adjudication; and
that there was no breach of natural justice. It is also argued by Beumer that the
two cases advanced by Beumer were not factually inconsistent, but that even if
they were, no consequences flow from that. It is also argued that even if there were
some isolated breaches of natural justice these were not material, and that Dr Chern
plainly restricted himself in BV II to the material before him in that adjudication
alone, as can be seen from his findings in that decision. It is said that this can be
seen from the substance of his decision in each adjudication.
The issues on the application

11 These were refined during the hearing and fall into two categories, as follows.
This formulation was put to both parties who broadly agreed that they encompassed
all the issues on the application.
Issue 1.
(a) Did Beumer advance factually inconsistent cases in each of the two
adjudications, BV II and BL II?
(b) If so, what if any consequences flow from that?
(c) Was Vinci entitled to be provided with any relevant material from BL
II?
(d) If so, what consequences flow from the failure to do so?
Issue 2
(a) Should Dr Chern have disclosed to Vinci that he was acting as
adjudicator on another matter, involving Beumer, at the same time as
he was acting as adjudicator in the dispute between Beumer and Vinci?
(b) If the answer to that is No, does the fact that the other matter concerned
Beumer and Logan on the same project and Beumer’s works for Vinci
mean he should have disclosed this to Vinci?

Cases 73
The Law
12 It is trite law that adjudication is a speedy process designed only to provide what
is called “interim finality” on construction disputes. Parliament intended that the
parties should be given a quick answer, and that quick answer should be binding
on the parties until the dispute, whatever it may be, is resolved finally either by
litigation or arbitration. It has been said in a case concerning what is called the
statutory Scheme, namely the statutory instrument entitled the Scheme for
Construction Contracts (England and Wales) Regulations 1998 (“the Scheme”),
by Chadwick LJ in paragraph [86] of Carillion Construction Ltd v Devonport
Royal Dockyard Ltd [2005] EWCA Civ 1358 [2006] BLR 15 that:
“The need to have the ‘right’ answer has been subordinated to the need to
have an answer quickly.”
Although made in a case under the Scheme, that statement is of wide application
to adjudications generally, whether under the Scheme or otherwise. Adjudicators’
decisions will be enforced by the court by summary judgment regardless of errors
of fact and/or law by the adjudicator. Aggrieved losing parties can and should
comply with the adjudicator’s decision, as long as that decision was made by an
adjudicator with jurisdiction over the dispute, who has conducted the adjudication
fairly and in accordance with the rules of natural justice.
13 The rules of natural justice have two limbs, and these are firstly, that a party
must have an opportunity to present his own case and meet the case against him,
and secondly, that the matter is decided by an impartial tribunal. It is the second
of those two limbs that concerns bias, both actual and apparent.
14 The submissions concerning natural justice relied upon by Vinci encompass
both limbs of the rules of natural justice, although the first limb is emphasised
more than the second. Chadwick LJ in paragraph [85] of Carillion Construction
Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358 [2006] BLR 15
stated that a decision should be enforced:
“…unless it is plain that the question which he has decided was not the
question referred to him or the manner in which he has gone about his task
is obviously unfair”.
In paragraph [87] he continued:
“To seek to challenge the adjudicator’s decision on the ground that he has
exceeded his jurisdiction or breached the rules of natural justice (save in the
plainest cases) is likely to lead to a substantial waste of time and expense….”
The proper course is to comply with the decision — which is after all only an
interim solution — and resolve the dispute with finality if the losing party considers
it is wrong.
15 In Amec Capital Projects Ltd v Whitefriars City Estates Ltd [2004] EWCA Civ
1418 [2005] BLR 1 Dyson LJ (as he then was) stated in paragraphs [20] to [22]
that adjudicators are almost always professionally qualified and, like judges, can
be assumed to be trustworthy and to approach matters with an open mind. In that
case, apparent bias was claimed by the losing party, that plea being based upon
the adjudicator having been previously involved in deciding an issue. The

adjudicator had reached the same decision on a subsequent adjudication, his first
decision having been declared a nullity. The matter was then referred to him again,
and the Court of Appeal held that his second decision was enforceable. His failure
to recuse himself, and the other matters relied upon by the losing party to found
apparent bias, were insufficient to lead the fair minded and informed observer to
conclude that there was a real possibility of bias.
16 It is therefore clear that for breaches of natural justice to be sufficient to justify
the court declining to order summary judgment enforcing an adjudicator’s decision,
they must be the plainest of cases; the adjudication proceedings must have been
obviously unfair. Combing through what has occurred, or concentrating on the
fine detail of the material before the adjudicator, to allege a breach of natural
justice, will neither be encouraged nor permitted by the court. Adjudications are
conducted very quickly, and this speed is part of the process imposed by Parliament
on those who enter into construction contracts. The framework within which
adjudicators have to reach decisions has to be taken into account when complaints
are made by losing parties.
Discussion
17 Putting the identity of the adjudicator to one side for the moment, the first factual
question that arises is whether Beumer did advance factually inconsistent cases in
each of the two adjudications.
18 Beumer’s claim in BL II was for time related damages, stated in Payment
Notices, and calculated in two ways as set out in paragraph 125 of Mr Francis’
witness statement. They were (i) “failure to meet the Key Date AOR estimated
£35,000 per day” and (ii) “failure to meet the section Subcontract Completion
Date 3 (AOR Commencement) £10,000 per day”. These are time related claims,
and the date for AOR forms a clear, central and obvious part of the calculation. If
there were any doubt about that — and in my judgment there cannot sensibly be
such doubt — it is clearly resolved by the findings Dr Chern made in his decision
in BL II, in which (for example) on Issue No.3 he stated on the issue of:
“Whether substantial completion has been achieved. I find that substantial
completion has not been achieved.”
The date of AOR is highly relevant to substantial completion of the works. Also,
on Issue No. 8 he stated on the issue of:
“Whether liquidated damages apply and if so is [Beumer] able to recover
both liquidated damages and costs, I find that [Beumer] is entitled to recover
liquidated damages for delay and reimbursement of its costs in completing
[Logan’s] works consequent to [Logan’s] failure (and which excludes costs
associated with delay)”.
I accept that Mr Francis accurately summarises Beumer’s case in BL II when
he stated in paragraph 144 of his witness statement that:

Cases 75
“In the second Beumer-Logan adjudication, Beumer’s position was that its
sub-sub-contractor, Logan, had not completed all of its works to permit AOR
to commence by 16 December 2015 (and…..Beumer was asserting Logan
had still not reached that stage as at 12 April 2016).”
19 Turning to the case that Beumer was advancing at the same time in its
adjudication against Vinci in BV II, this is most starkly put in paragraph 62 of its
Reply pleading in that adjudication, dated 21 April 2016, which stated the
following:
“It is the case that all the works of [Beumer] to allow AOR to commence had
been completed on 16 December 2015.”
That document in the adjudication was not settled by Mr Curtis QC, who
appeared for Beumer on this application. Mr Curtis QC was not instructed in any
of the adjudications, and did not take any part in them. It was not settled by counsel
at all, but by the solicitors acting for Beumer in BV II. It was put in issue by Vinci,
and again this is not in real doubt, but any doubt would be resolved by the Vinci
Rejoinder in BV II which in paragraph 7.2.2 stated:
“More importantly, the suggestion that Beumer’s sub-contract works were
AOR ready in December 2015 is clearly factually incorrect in any event.”
20 Mr Curtis QC developed an interesting argument that, when looked at in context,
and taking into account the later issue of the three CIs in March 2016, Beumer
was not advancing factually inconsistent cases in the two adjudications. I reject
those submissions. They were an attempt to work around what, in my judgment,
is a stark and inexplicable adoption of two entirely different factual cases advanced
by the same party at the same time, albeit in different adjudications. A central
element of the dispute between Beumer and Vinci in BV II concerned delay, and
this encompassed or included consideration of the date upon which the works had
(or had not) achieved the condition of AOR, a stage in the works important in the
contractual analysis of completion. This judgment does not make any findings
about what that date was, nor could it. However, it is clear that the adjudicator was
being told by Beumer in BV II that the works had reached that condition on 16
December 2015. The same adjudicator was being told by Beumer in BL II that the
works had not reached that condition, even by April 2016.
21 I find, therefore, that the two cases advanced by Beumer in each of the
adjudications were clearly factually inconsistent.
22 Mr Curtis QC submitted that even if they were, nothing flowed from that. He
adopted different routes to the same answer. One was that Beumer could have
argued what it chose, for example, in a mediation leading to a settlement with
Logan, and nobody would have been any the wiser. Whether that is correct or not,
this did not occur in a mediation, which is a consensual confidential process. It
occurred in adjudication, which for all its time pressures and characteristics
concerning enforceability, is still a formal dispute resolution forum with certain
basic requirements of fairness. Although adjudication proceedings are confidential,
decisions by adjudicators are enforced by the High Court and there are certain
rules and requirements for the conduct of such proceedings. Adjudication is not
the Wild West of dispute resolution.

23 Another line of argument by Mr Curtis QC was that advancing two different

factual cases in two adjudications does not go to natural justice at all. Mr Lewis
for Vinci put the matter rather differently. He submitted that Vinci was entitled to
the material before Dr Chern in BL II, as it was relevant to the issues in BV II.
Had Vinci had that material, Vinci could have submitted to Dr Chern that Beumer
was advancing two different factual cases concerning the correct date for AOR
and this would have supported its submissions on that point.
24 In other words, Mr Lewis dealt with sub-issues 1(b) and 1(d) together, on the
assumption that the answer to sub-issue 1(c) was that Vinci was entitled to the
material before Dr Chern in BL II.
25 I take a very dim view of the propriety of behaviour where Party A says in one
set of adjudication proceedings with Party B “the works were complete on 16
December 2015” and, in relation to the very same works (or at least a sub-set of
the works) on the very same project states in another set of adjudication proceedings
with Party C “the works are not yet complete, you are liable to pay liquidated
damages”. They are wholly inconsistent. The correct legal characterisation of that
behaviour was not touched upon by either party before me, but I seriously doubt,
for example, that a director of a company could sign a statement of truth in two
sets of legal proceedings in such circumstances saying such quite different things
on the same point. That alone should provide obvious direction to the industry of
the type of behaviour that this constitutes.
26 It is therefore necessary to consider the second issue before making findings
about the correct approach upon enforcement to the advancing by Beumer of two
factually inconsistent cases.
27 In my judgment, Dr Chern should have disclosed to Vinci that he was acting as
adjudicator on another matter, involving Beumer, at the same time as he was acting
as adjudicator in the dispute between Beumer and Vinci. This is the case regardless
of the fact that the other matter concerned Beumer and Logan on the same project.
In my judgment, this failure to disclose his appointment led to a whole host of
problems that either would not have arisen, or had they arisen during the
adjudication could have been dealt with as part of that process.
28 Some appointing bodies, if asked to make an appointment of an adjudicator,
will enquire of the potential appointee what contact, or other matters, that person
has had with either party. For example, the RICS form to Request appointment of
an adjudicator states
“Adjudicators are required to disclose involvement or potential conflicts of
interest to RICS prior to nomination.”[emphasis added]
29 The Chartered Institute of Arbitrators Code of Professional and Ethical Conduct
for Members at Rule 3 states:
“Both before and throughout the dispute resolution process, a member shall
disclose all interests, relationships and matters likely to affect the member’s
independence or impartiality or which might reasonably be perceived as likely
to do so.”
This rule is quoted by Hamblen J (as he then was) in Cofely Ltd v (1) Anthony
Bingham (2) Knowles Ltd [2016] EWHC (Comm) [2016] BLR 187 in paragraph

Cases 77
[77], in a section from paragraph [76] to [83] dealing with disclosure generally.
That case was put before me by Mr Curtis QC and concerned a successful
application to remove an arbitrator. Adjudicators are not arbitrators, but in my
judgment are governed broadly by the same principles so far as disclosure is
concerned. Indeed, paragraph [33] of Cofely refers to the case of Eurocom Ltd v
Siemens plc [2014] EWHC 3710 (TCC) [2015] BLR 1 which was a case concerning
adjudication. Adjudicators are acting as impartial tribunals and although
involvement in other adjudications does not of itself constitute a conflict of interest,
that involvement should be disclosed.
30 It is important that adjudicators should not only act, but be seen to act, fairly.
It is for this reason, as an example, that unilateral telephone conversations should
be avoided. As Dyson LJ (as he then was) stated in paragraph [37] of Amec v
Whitefriars:
“I would accept that conversations between one party and the tribunal in the
absence of the other party should be avoided. Communications should
ordinarily be in writing with copies to all parties.”
Coulson J declined to grant enforcement of an adjudicator’s award for reasons
of apparent bias in Paice and Springall v MJ Harding Contractors [2015] EWHC
661 (TCC) [2015] BLR 345 based partly on a lengthy telephone conversation
between Mr Paice and Ms Springall and the adjudicator’s wife, who acted as his
office manager. In Discain Project Services Ltd v Opecprime Developments Ltd
(No.1) [2000] BLR 402 summary judgment was refused on the basis of apparent
bias, again based upon unilateral telephone conversations between one party and
the adjudicator.
31 If unilateral telephone calls are strongly discouraged (if not verging on
prohibited) due to the appearance of potential unfairness, it is very difficult, if not
in my judgment impossible, for an adjudicator to be permitted to conduct another
adjudication involving one of the same parties at the same time without disclosing
that to the other party. Conducting that other adjudication may not only involve
telephone conversations, but will undoubtedly involve the receipt of
communications including submissions, and may involve a hearing. If all that takes
place secretly, in the sense that the other party does not know it is even taking
place, then that runs an obvious risk in my judgment of leading the fair minded
and informed observer to conclude that there was a real possibility of bias. All of
this can be avoided by disclosing the existence of the appointment at the earliest
opportunity.
32 Mr Lewis relies upon a decision of HHJ Humphrey LLoyd QC in Pring & St
Hill Ltd v CJ Hafner trading as Southern Erectors [2002] EWHC 1775 (TCC). In
that case, the adjudicator had conducted an earlier adjudication between Pring and
the main contractor. Pring had been engaged by Sir Robert McAlpine Ltd
(“McAlpine”) as a glazing sub-contractor on a new building in Cardiff. McAlpine
was the main contractor. The defendant (“SE”) was Pring’s sub-sub-contractor.
SE successfully resisted enforcement, because Pring had not disclosed to it the
earlier decision of the adjudicator in the McAlpine adjudication, which the judge
referred to as Adjudication No.2, and to which SE was not a party. The adjudicator

himself had tried to persuade Pring to disclose this decision to SE, but Pring had
refused. The judge stated in paragraph [29] that SE:
“…was right to infer that there was something in Adjudication No.2 that
might have been relevant to its case in [the relevant] adjudication and of
which [the adjudicator] was aware but which he did not or could not
reveal…..The more material point is whether the information might be relevant
to SE.”
The judge also stated later in the same paragraph that the instant decision may
have been affected by the adjudicator’s prior knowledge which he ought to have
but did not (or could not) disclose, and also that SE had not been treated fairly
because the adjudicator:
“…had in effect communications with [Pring] (via Adjudication No.2) to
which SE was not a party”.
33 Mr Lewis submits that had BL II been conducted slightly early and resulted in
a decision prior to the adjudication in BV II, this authority makes it clear that Vinci
would have been entitled to see the decision in BL II. The test is relevance to the
issue or issues in BV II, and whether it would (or could) have affected how Vinci
chose to put its case. He posed the test as being: would such an earlier decision
have given Vinci the ability to make further, different, or alternative submissions
which the lack of disclosure denied? I accept those submissions. If Vinci would
have been entitled to see any such earlier decision in BL II, had the timing been
different, I turn to consider whether the position is any different because the
adjudications were commenced at the same time. In my judgment, the position is
no different. If, as here, the adjudications took place at exactly the same time, then
the decision cannot be provided because it did not exist. But at the very least, in
my judgment, the Referral document, the Response, and so on — what are
conventionally referred to as the pleadings in the adjudication — should have been
provided to Vinci. This is because the disputes were so closely connected and the
issues so similar. It will be a matter of fact and degree in any case (or more
accurately, two cases) whether this applies, but here in my judgment it clearly
does. It might be that the two adjudications were commenced by Beumer on the
same day deliberately so that neither Logan nor Vinci could see that Beumer was
adopting a contrary position in each adjudication. It might, however, have been
simply coincidence. It is not necessary to speculate.
34 Mr Lewis also relies upon London and Amsterdam Properties Ltd v Waterman
Partnership Ltd [2003] EWHC 3059 (TCC) where HHJ Wilcox stated in paragraph
[89] that:
“It is a fundamental requirement that any reliance upon previously acquired
relevant knowledge by an adjudicator is made known to the parties to the
adjudication, so that both have an opportunity to deal with it, should it be
likely to or if it does in fact affect his decision materially. A professionally
qualified person who is an adjudicator appointed by a body such as the RICS
must be presumed to be aware of such a basic ingredient of any fair hearing
which accords with the requirement of natural justice”.

Cases 79
The requirement of natural justice to which the judge is referring is the first
limb, namely a party’s ability to meet the case against him. Mr Curtis QC argues
that it can be seen from the two decisions in the two adjudications that Dr Chern
scrupulously confined himself to the submissions before him in each adjudication.
However, that submission cannot meet the argument that Vinci must be given a
fair opportunity to put its own case, and an important element of that case (that
Beumer was advancing a case that Logan’s works remained incomplete, which
supported Vinci’s case against Beumer) could not be put.
35 Mr Curtis QC used the Scheme, and in particular paragraph 8(1) and 8(2), by
way of contrast with Option W2.3(3a) and W2.3(3b), to explain the involvement
of Dr Chern in both adjudications at the same time and amplify what he called the
“ Amec default position” in terms of the legal ability of the adjudicator in this
respect to conduct two adjudications at the same time. Option W2.3(3a) and
W2.3(3b) gives the adjudicator the power to conduct adjudications between the
contractor (Vinci), the sub-contractor (Beumer) and the sub-sub-contractor (Logan)
at the same time, and together, if the same matter is disputed under both the
sub-contract and sub-sub-contract. The consent of the sub-sub-contractor is
required. Paragraph 8(1) of the Scheme contains a similar provision if disputes
arise under the same contract. Paragraph 8(2) of the Scheme is relied upon by Mr
Curtis QC principally. This states:
“The adjudicator may, with the consent of all the parties to those disputes,
adjudicate at the same time on related disputes under different contracts,
whether or not one or more of those parties is a party to those disputes.”
Mr Curtis QC also relies, to support his argument on paragraph 8(2) of the
Scheme, on the dicta in HHJ Humphrey LLoyd QC in Pring where at paragraphs
[13] to [15] he considered the different contentions in that case concerning the
effect of simultaneous adjudications and what “related disputes” actually meant.
However, what was decided in that case was set out in paragraph [16] where the
judge stated that paragraph 8(2):
“…is intended to cover all the situations in which there may be related disputes
under different contracts, whether or not the parties are the same and whether
or not there may permissibly be consolidation of the two proceedings”.
This requires consent of all the parties, and is in any event only something that
arises under the Scheme, which did not apply to these adjudications in any event.
I do not consider that this argument concerning paragraph 8(2) assists Mr Curtis
QC at all. Under the terms of Option W2.3(3a) and W2.3(3b), the two adjudications
could have been dealt with together, if the necessary consent had been forthcoming.
However, that is not what happened.
36 Mr Curtis developed his argument by submitting that Vinci are, in effect, seeking
to have a similar provision to paragraph 8(2) of the Scheme implied into Option
W2. In other words, his submission is that Vinci’s case in reality is that because
Vinci did not consent, the adjudicator could not do what he in fact did (conduct
two adjudications at the same time) precisely because he did not have Vinci’s
consent. I do not accept that Vinci are seeking to have an implied term read into
Option W2. Also, with respect to Mr Curtis QC, there is a danger in considering

by analogy what the Scheme does include, and applying it to Option W2 at all.
Option W2 satisfies the requirements of the legislation and as such the Scheme
does not apply at all. Dr Chern was entitled to conduct the two adjudications at
the same time. He should however have disclosed to Vinci that he was acting on
the other one between Beumer and Logan for the reasons that I have explained.
37 Vinci challenges the fundamental fairness of the proceedings before the
adjudicator, based partly upon the fact that he was conducting a parallel adjudication
contemporaneously on similar issues involving the same project, and the same
party (Beumer), and did not disclose this. It is also partly based upon the fact that,
as a result of this, Vinci was not provided with the necessary material to know that
this other adjudication involved Beumer advancing a factually inconsistent case
on the relevant date for AOR in BL II, to that advanced by Beumer in BV II. I
should also say that I would expect the result on enforcement to be the same in
terms of breaches of natural justice, whether an adjudication were conducted under
Option W2 or under the Scheme.
38 It is entirely correct to read Amec v Whitefriars, which is relied upon by Mr
Curtis QC, as stating that adjudicators can be trusted to approach matters with an
open mind, and to decide disputes only on the evidence and material placed before
them on that particular dispute. That is plain, in particular, from the passages in
the leading judgment of Dyson LJ (as he then was) at paragraphs [20] to [22].
Further, in paragraph [21] the following is stated:
“There needs to be something of substance to lead the fair minded and
informed observer to conclude that there is a real possibility that the tribunal
will not bring an open mind and objective judgment to bear.”
That is dicta clearly directed at the second limb of the rules of natural justice,
namely the impartiality of the tribunal. The “something of substance” here is the
appointment of Dr Chern in BL II at the same time, and the conducting of that
adjudication, with all that involved in terms of contact with Beumer, without
notifying Vinci of that fact.
39 The same approach could be said equally to apply to the first limb, namely there
must be “something of substance” to found a complaint of breach of natural justice
generally. That could be just another way of stating that any breach of natural
justice must be material, or plain and obvious. In this case, the “something of
substance” is not only the circumstances of the other adjudication, including the
non-disclosure both of its existence at all, and that Dr Chern was also the
adjudicator. It also includes the consequential keeping from Vinci (as a direct
result of that) of the factually inconsistent case Beumer was advancing in the other
adjudication. In my judgment, the fair minded and informed observer would come
to the conclusion, having considered the matter with the necessary care and only
taking into account relevant matters, that something had gone rather obviously
wrong and that this was a plain case of breach of natural justice.
40 Another important point is that Option W2.3(4) gives the adjudicator the power
both to instruct a party to provide further information related to the dispute within
a stated time, and to instruct a party to take any other action which he considers
necessary to reach a decision. I interpret those powers as including the power to
order (for example) that Beumer disclose documents to Vinci. Vinci were denied

Cases 81
any opportunity of asking the adjudicator to exercise his power to do this in relation
to Beumer’s submissions or pleadings in BL II, because Vinci did not know at the
relevant time that the other adjudication even existed, and so did not know that
such other documents existed. Dr Chern doubtless did not order Beumer to disclose
the relevant documents in the BL II adjudication to Vinci, because Vinci did not
ask him to do so. In my judgment, this made the adjudication proceedings between
Beumer and Vinci unfair.
41 Mr Curtis QC also relied upon lack of materiality were I to find any breach, or
breaches, of natural justice. BV II concerned declarations that the three CIs in
question were compensation events. Paragraph 2.1.1 of Beumer’s Referral states
the following in terms of the subject matter of the adjudication:
“2.1.1 The matter in dispute is in relation to whether certain Contractor’s
Instructions constitute compensation events and their effect on the
Completion Date for the Subcontract Works.”
Clause 62.2 of the Subcontract states:
“62.2 ….compensation events comprise proposed changes to the Prices and
any delay to the Subcontract Completion Date and Key Dates assessed
by the Subcontractor….”
Clause 63.3 of the Subcontract states:
“63.3 A delay to the Subcontract Completion Date is assessed as the length
of time that, due to the compensation event, planned Completion is
later than planned Completion as shown on the Accepted Programme.
A delay to a Key Date is assessed as the length of time that, due to the
compensation event, the planned date when the Condition stated for
a Key Date will be met is later than the planned date shown on the
Accepted Programme”.
There was no current Accepted Programme as at the time of BV II, but the above
clauses show that the question of delay is integral to consideration of compensation
events. The condition of the works therefore, and whether they were AOR ready
in December 2015, was part of the factual matrix being considered by Dr Chern
in considering whether the three CIs in question were compensation events.
42 I fail to see in those circumstances, and given the terms in which Beumer itself
framed the dispute, how it could be said that the date upon which Beumer’s works
were in a condition of AOR was anything other than of relevance. It is not necessary
to predict with certainty what Dr Chern would have done, or what findings he
would have made, had Vinci been given the opportunity to draw his specific
attention to the fact that its case on this point was substantiated by Beumer’s very
own submissions on the very same point in BL II. It is not always easy, and may
on occasion be verging on impossible, to assess the impact of any particular
submission upon the thought processes of the decision making tribunal. It might
very well be the case that the three CIs are compensation events. What is important
is the materiality of the breach of natural justice, and the fact that Vinci was denied
the opportunity of making that submission.

43 Further written submissions were received from Beumer following the hearing,
making the point that the first adjudication between Beumer and Vinci had made
findings that were binding on the parties concerning the operation of the time
machinery in the Sub-Contract. These submissions go to materiality. I therefore
invited a response on this limited point from Vinci. It is clear that the first
Beumer-Vinci adjudication concerned sectional completion dates, not the overall
Sub-Contract completion date. Accordingly, those further submissions do not
affect the materiality of the date for AOR in the second Beumer-Vinci adjudication.
Conclusion
44 In my judgment, therefore, the breach of natural justice was plainly material.
The question of the correct date for AOR was central to considerations of delay,
and delay was central to considerations of whether instructions were indeed
compensation events. The breach of natural justice is sufficiently material that the
decision will not be enforced.
45 Turning therefore to the different issues on this application for summary
judgment set out in paragraph 11 above, the answers are as follows:
Issue 1.
(a) Did Beumer advance factually inconsistent cases in each of the two
adjudications, BV II and BL II?
Answer: Yes
(b) If so, what if any consequences flow from that?
Answer: The consequences that flow are as follows. Beumer’s
advancing of an inconsistent case in the second Beumer-Logan
adjudication could have been specifically relied upon by Vinci as
supporting Vinci’s own case concerning the correct date for AOR.
Vinci was deprived of the opportunity of making submissions to this
effect.
(c) and (d) Was Vinci entitled to be provided with any relevant material
from BL II and if so, what consequences flow from the failure to do
so?
Answer: Vinci was entitled to have sought an order from the
adjudicator for such material. Vinci was deprived of the opportunity
to do so because the other adjudication’s existence was kept from it.
Had such an application been made by Vinci, the adjudicator would
have been likely to have ordered such disclosure in order to conduct
those proceedings fairly.
Issue 2
(a) Should Dr Chern have disclosed to Vinci that he was acting as
adjudicator on another matter, involving Beumer, at the same time as
he was acting as adjudicator in the dispute between Beumer and Vinci?
Answer: Yes
(b) If the answer to that is No, does the fact that the other matter concerned
Beumer and Logan on the same project and Beumer’s works for Vinci
mean he should have disclosed this to Vinci?
Answer: This does not arise

Cases 83
46 I wish, however, to emphasise the following points. Dr Chern considered both

parties’ submissions in BV II with evident care, and produced a detailed and
thoroughly reasoned decision. He appears to have restricted himself to the actual
submissions before him in that adjudication. Although the inability of Vinci to
make the submissions I have identified above constitutes a breach of natural justice,
that should not be taken as constituting a criticism of Dr Chern’s overall approach
to the material he had before him, or the evident care with which he approached
his task and made findings. I consider that he ought to have disclosed to Vinci that
he had been appointed in BL II, and had he done so the situation that then unfolded
would have been avoided, because Vinci would have had the opportunity to make
the submissions that Beumer’s case in BL II (regarding the date for AOR) supported
Vinci’s case in BV II. However, that is not to say that the result of this judgment
means that each or any of CI 114, 115 and 116 are not compensation events. They
may indeed be compensation events, and unless the parties can reach agreement,
that issue will need to be resolved either by another adjudication or by final
resolution.

Technology and Construction Law
Reports
Ziggurat (Claremont Place) LLP v HCC International Insurance

Company Plc
Technology and Construction Court
Coulson J.: 20 December 2017
[2017] EWHC 3286 (TCC); [2017] T.C.L.R. 11
Breach of contract; Construction contracts; Contractors; Corporate insolvency;

Debt; Interpretation; JCT contracts; Performance bonds; Sureties’ liabilities
H1 Principal and Surety—Performance guarantee bond—Termination of JCT 2011

contract followed by contractor’s insolvency—Whether breach of contract required
for demand—Whether breach occurred
H2 The defendant guarantor provided the claimant employer of a contractor under
a JCT 2011 form with a performance guarantee bond that provided:
“(1) The Guarantor guarantees to the Employer that in the event of a breach
of Contract by the Contractor the Guarantor shall subject to the
provisions of this Guarantee Bond satisfy and discharge the losses and
damages sustained by the Employer as established and ascertained
pursuant to and in accordance with the provision of or by reference to
the Contract and taking into account all sums due or to become due
to the Contractor.
(2) The damages payable under this Guarantee Bond shall include (without
limitation) any debt or other sum payable to the Employer under the
Contract following the insolvency (as defined in the Schedule) of the
Contractor.”
The employer terminated under the building contract for slow progress or
suspension, or both. The contractor became subject to a company voluntary
arrangement, followed by administration. Following completion of the works by
others, a contractual account indicated a balance due to the employer, which
demanded payment as a debt from the contractor, and then demanded payment
under the bond. In proceedings brought by the employer under Pt 8 of the Civil
Procedure Rules for declarations that the guarantor was liable under the bond, the
1
Paragraph numbers are as assigned by the court.
(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors T1

T2 Construction Law Journal
guarantor contended that the only trigger for its obligation to pay was a breach
under cl.1, not an insolvency event under cl.2, and there had been no breach because
the validity of the original termination had been disputed by contractor.
H3 Held, granting declarations in terms to be agreed:
(1) If cl.2 were subsidiary to cl.1 in such a way that cl.2 did not operate on the
occurrence of an insolvency event, that would mean that the employer could
never recover against the guarantor for losses due to insolvency, contrary
to the clear purpose and intent of cl.2.
(2) The debt had been asserted but not paid and the contractor was therefore
in breach of the building contract because it had not paid: dictum of Peter
Gibson LJ in Perar applied.2
H4 Alexandra Bodnar appeared for the claimant employer, instructed by Walker
Morris LLP.
Seb Oram appeared for the defendant guarantor, instructed by Clarkslegal LLP.
THE HON. MR JUSTICE COULSON:
1. Introduction
1. Pursuant to a building contract incorporating the JCT 2011 standard form, the
claimant employed County Contractors (UK) Limited (“County”) to build blocks
of student studios at 19-26 Claremont Place, Newcastle Upon Tyne (“the site”).
County’s performance was the subject of a Performance Guarantee Bond (“the
Bond”) provided by the defendant to the claimant and dated 28 January 2015.
Following County’s suspension of the works and insolvency, other contractors
were engaged by the claimant to complete the works. The additional costs were
claimed from but not paid by County. A subsequent claim was made on the Bond
which has not been satisfied.
2. By a claim form issued on 3 October 2017, under CPR Part 8, the claimant seeks
three declarations as to the true construction of the Bond. The claims for the first
two declarations are resisted by the defendant, although the third has been belatedly
agreed.
3. I propose to deal with the issues between the parties in this way. In Section 2,
I set out the relevant terms of the building contract and the Bond. In Section 3, I
set out a brief chronology of the relevant events. In Section 4, I set out the
declarations sought by the claimant. In Section 5, I summarise the relevant
principles of interpretation and the applicable authorities relating to performance
bonds of this kind. Then, in Sections 6, 7 and 8, I deal with each of the three
Declarations. I am very grateful to both counsel for their thoughtful skeleton
arguments and concise oral submissions.
2
Perar BV v General Surety & Guarantee Co Ltd (1994) 66 B.L.R. 72.

Technology and Construction Law Reports T3
2. The Building Contract and the Bond
2.1 The Building Contract

4. It is only necessary to set out the relevant terms of the building contract between
the claimant and County in so far as they relate to termination. The provisions
were as follows:
“General
8·1 Meaning of insolvency
For the purposes of these Conditions:
·1 a Party which is a company becomes Insolvent:
·1 when it enters administration within the meaning of
Schedule B1 to the Insolvency Act 1986;
·2 on the appointment of an administrative receiver or a
receiver or manager of its property under Chapter I of
Part III of that Act, or the appointment of a receiver
under Chapter II of that Part;
·3 on the passing of a resolution for voluntary winding-up
without a declaration of solvency under section 89 of
that Act; or
·4 on the making of a winding-up order under Part IV or
V of that Act.
·2 a Party which is a partnership becomes Insolvent:
·1 on the making of a winding-up order against it under
any provision of the Insolvency Act 1986 as applied by
an order under section 420 of that Act; or
·2 when sequestration is awarded on the estate of the
partnership under section 12 of the Bankruptcy
(Scotland) Act 1985 the partnership grants a trust deed
for its creditors.
·3 a Party who is an individual becomes insolvent:
·1 on the making of a bankruptcy order against him under
Part IX of the Insolvency Act 1986; or
·2 on the sequestration of his estate under the Bankruptcy
(Scotland) Act 1985 or when he grants a trust deed for
his creditors.
·4 a Party also becomes Insolvent if:
·1 he enters into an arrangement, compromise or
composition in satisfaction of his debts (excluding a
scheme of arrangement as a solvent company for the
purposes of amalgamation or reconstruction); or
·2 (in the case of a Party which is a partnership) each
partner is the subject of an individual arrangement or
any other event or proceedings referred to in this clause
8·1.
Each of clauses 8·1·1 to 8·1·4 also includes any analogous arrangement,
event or proceedings in any other jurisdiction.

…
Termination by Employer
8·4 Default by Contractor
·1 If, before practical completion of the Works, the Contractor:
·1 without reasonable cause wholly or substantially
suspends the carrying out of the Works or the design of
the Contractor’s Designed Portion; or
·2 fails to proceed regularly and diligently with the Works
or the design of the Contractor’s Designed Portion; or
·3 refuses or neglects to comply with a notice or instruction
from the Architect/Contract Administrator requiring
him to remove any work, materials or goods not in
accordance with this Contract and by such refusal or
neglect the Works are materially affected; or
·4 fails to comply with clause 3·7 or 7·1; or
·5 fails to comply with clause 3·23;
the Architect/Contract Administrator may give to the Contractor
a notice specifying the default or defaults (the ‘specified default
or defaults’).
·2 If the Contractor continues a specified default for 14 days from
receipt of the notice under clause 8·4·1, the Employer may on,
or within 21 days from, the expiry of that 14 day period by a
further notice to the Contractor terminate the Contractor’s
employment under this Contract.
·3 If the Employer does not give the further notice referred to in
clause 8·4·2 (whether as a result of the ending of any specified
default or otherwise) but the Contractor repeats a specified
default (whether previously repeated or not), then, upon or
within a reasonable time after such repetition, the Employer
may by notice to the Contractor terminate that employment.
8·5 Insolvency of Contractor
·1 If the Contractor is Insolvent, the Employer may at any time
by notice to the Contractor terminate the Contractor’s
employment under this Contract.
·2 The Contractor shall immediately notify the Employer if he
makes any proposal, gives notice of any meeting or becomes
the subject of any proceedings or appointment relating to any
of the matters referred to in clause 8·1.
·3 As from the date the Contractor becomes Insolvent, whether
or not the Employer has given such notice of termination:
·1 clauses 8·7·3 to 8·7·5 and (if relevant) clause 8·8 shall
apply as if such notice had been given;
·2 the Contractor’s obligations under Article 1 and these
Conditions to carry out and complete the Works and the
design of the Contractor’s Designed Portion shall be
suspended; and

·3 the Employer may take reasonable measures to ensure

that the site, the Works and Site Materials are adequately
protected and that such Site Materials are retained on
site; the Contractor shall allow and shall not hinder or
delay the taking of those measures.
…
8·7 Consequences of termination under clauses 8·4 to 8·6
If the Contractor’s employment is terminated under clause 8·4, 8·5 or
8·6:
·1 the Employer may employ and pay other persons to carry out
and complete the Works and/or (where applicable) the design
for the Contractor’s Designed Portion and to make good any
defects of the kind referred to in clause 2·38, and he and they
may enter upon and take possession of the site and the Works
and (subject to obtaining any necessary third party consents)
may use all temporary buildings, plant, tools, equipment and
Site Materials for those purposes;
·2 the Contractor shall:
·1 when required in writing by the Architect/Contract
Administrator to do so (but not before), remove or
procure the removal from the Works of any temporary
buildings, plant, tools, equipment, goods and materials
belonging to the Contractor or Contractor’s Persons;
·2 (where there is a Contractor’s Designed Portion) without
charge provide the Employer with copies of all
Contractor’s Design Documents then prepared, whether
or not previously provided;
·3 if so required by the Employer (or by the
Architect/Contract Administrator on his behalf) within
14 days of the date of termination, assign (so far as
assignable and so far as he may lawfully be required to
do so) to the Employer, without charge, the benefit of
any agreement for the supply of materials or goods
and/or for the execution of any work for the purposes
of this Contract;
·3 no further sum shall become due to the Contractor under this
Contract other than any amount that may become due to him
under clause 8·7·5 or 8·8·2 and the Employer need not pay any
sum that has already become due either:
·1 insofar as the Employer has given or gives a Pay Less
Notice under clause 4·12·5; or
·2 if the Contractor, after the last date upon which such
notice could have been given by the Employer in respect
of that sum, has become insolvent within the meaning
of clauses 8·1·1 to 8·1·3;
·4 following the completion of the Works and the making good
of defects in them (or of instructions otherwise, as referred to

in clause 2·38), an account of the following shall within 3

months thereafter be set out in a certificate issued by the
Architect/Contract Administrator or a statement prepared by
the Employer:
·1 the amount of expenses properly incurred by the
Employer, including those incurred pursuant to clause
8·7·l and, where applicable, clause 8·5·3·3, and of any
direct loss and/or damage caused to the Employer and
for which the Contractor is liable, whether arising as a
result of the termination or otherwise;
·2 the amount of payments made to the Contractor; and
·3 the total amount which would have been payable for
the Works in accordance with this Contract;
·5 if the sum of the amounts stated under clauses 8·7·4·1 and
8·7·4·2 exceeds the amount stated under clause 8·7·4·3, the
difference shall be a debt payable by the Contractor to the
Employer or, if that sum is less, by the Employer to the
Contractor.”
2.2 The Bond

5. It is principally the first two clauses of the Bond which are relevant to the present
dispute. They were in the following terms:
“(1) The Guarantor [the defendant] guarantees to the Employer [the
claimant] that in the event of a breach of Contract by the Contractor
[County] the Guarantor shall subject to the provisions of this Guarantee
Bond satisfy and discharge the losses and damages sustained by the
Employer as established and ascertained pursuant to and in accordance
with the provision of or by reference to the Contract and taking into
account all sums due or to become due to the Contractor.
(2) The damages payable under this Guarantee Bond shall include (without
limitation) any debt or other sum payable to the Employer under the
Contract following the insolvency (as defined in the Schedule) of the
Contractor.”
6. The Schedule provided that the maximum value of the Bond was £382,519.08
(being 10% of the building contract sum). Insolvency was defined as “the
occurrence in relation to the Contractor of any of the events set out at clause 8.1
of the Contract”, again a reference back to the building contract.
7. Other clauses to which reference was made during argument included:
(a) Clause 3, which identified the maximum aggregate liability under the Bond.
It said that “the liability of the Guarantor shall be co-extensive with the
liability of the Contractor under the contract.”
(b) Clause 5, which identified that discharge occurred upon Expiry (a term also
defined in the Bond) “save in respect of any breach of the Contract which
has occurred and in respect of which the claim in writing containing
particulars of such breach has been made upon the Guarantor before Expiry.”

8. It should be noted at the outset that the Bond was in standard ABI Model Form
with one important exception: clause 2 was an entirely homemade addition, and
must therefore be taken to have been added by the parties to meet their particular
requirements.
3. The Relevant Events

9. At some time in February 2016, County stopped work at the site. They did not
suggest that this was anything to do with the claimant; the evidence suggests that
it was because of their financial difficulties. On 14 March 2016, CAG Architects
Limited, the contract administrator (“CAG”) served a notice on County pursuant
to clause 8.4.1 of the contract identifying two specified defaults. These were:
(a) Without reasonable cause wholly or substantially suspending the carrying
out of the works (clause 8.4.1.1); and
(b) Failing to proceed regularly and diligently with the works (clause 8.4.1.2).
10. The notice gave County 14 days to remedy the specified defaults and warned
that, if they failed to do so, their employment under the building contract would
be terminated. County failed to respond to the notice or return to site. So, on 31
March 2016, the claimant served notice of termination under clause 8.4.2. The
notice made plain that, pursuant to clause 8.7.1, the claimant would employ and
pay others to carry out and complete the works and would seek to recover from
County the costs which were thereby incurred. County again failed to respond to
the notice.
11. On 8 April 2016, County became subject to a Company Voluntary Arrangement
(“CVA”). County were therefore insolvent as defined in clause 8.1.1 of the building
contract. Administrators were appointed on 19 May 2016. County remains in
administration, and there has been a recent application to extend the administration
until 1 November 2018.
12. The claimant then engaged others to complete County’s works. Following
completion and the making good of defects, an account was prepared by CAG in
accordance with clauses 8.7.4-8.7.5 of the building contract, which indicated a
balance due to the claimant of £621,798.38. On 10 March 2017, a notice pursuant
to clause 8.7 was served on County, demanding the payment of this sum as a debt
in accordance with clause 8.7.5.
13. On 17 March 2017, the claimant made a demand under the Bond against the
defendant. This referred to the debt due from County of £621,798.38. The claim
on the Bond was limited to the maximum permitted, namely £382,519.06.
14. Under the terms of the building contract, the debt was due and payable by County
on 31 March 2017, 21 days after the notice. It was not paid by County and neither
was the claim on the Bond accepted.
15. On 12 April 2017, County’s solicitors wrote, more than a year after the relevant
events, to complain about the claimant’s termination of County’s employment. It
was said that the purported termination was invalid due to a miscalculation of the
length of the relevant notice period. This, it was said, meant that the termination
notice was invalid and that, in consequence, the claimant had repudiated the
building contract. As to the quantum of the claimant’s claim, County’s solicitors
simply said that “in any event the sums claimed by Ziggurat are disputed”. Further

particulars of this dispute were promised, but have never been provided, either by
County or by the defendant.
16. As for the claim on the Bond, in a letter from the defendant dated 12 July 2017,
the defendant’s position was summarised as follows:
“As the bond is a default bond and not a demand instrument, it must be proven
that a breach of contract has taken place and that losses have been incurred
as a result of that breach before a claim can be made upon it.
We are aware that County Contractors (UK) Limited and Ziggurat (Claremont
Place) LLP are in dispute regarding the purported breaches of contract, the
resolution of which needs to be established via the terms and conditions of
the underlying construction contract.
Until a formal decision as to whether County Contractors (UK) Limited has
breached the underlying construction contract and a formal ruling upon the
extent of the losses therefore arising have been established, HCC deny that
any payment is due.”
4. The Declarations Sought

17. Declaration 1 is in the following terms:
“(a) That an insolvency event has occurred within the meaning the
paragraph 2 of the bond and [the claimant] is entitled as a matter of
principle to claim under paragraph 2 of the bond as a result of that
insolvency event.
(b) In respect of a claim under paragraph 2 of the bond, there is no
requirement for [the claimant] to prove a breach by [County] of the
construction contract and/or valid termination of the construction
contract, which are irrelevant to a claim under paragraph 2 of the
bond.”
“For the purpose of a claim under paragraph 1 and/or paragraph 2 of the bond,
as a matter of principle, [the claimant] would be entitled to rely on the result
of an accounting exercise properly carried out in accordance with clauses
8.7.4-8.7.5 of the construction contract, in order to establish:
(a) The losses and damages sustained by [the claimant] for the purpose
of a claim under paragraph 1 of the bond; and/or
(b) Damages, including any debt or other sum payable (for the purpose
of a claim under paragraph 2 of the bond).
There would be no requirement to also or instead obtain a court judgment or
reach an agreement with [County] in order to establish these matters.”
“For the purpose of a claim under paragraph 1 and/or paragraph 2 of the Bond,
to the extent necessary, [the claimant] would be entitled as a matter of principle
to seek to establish (a) breach by [County] and valid determination of
[County]’s employment under the construction contract and/or (b) losses and
damages sustained (for the purpose of a claim under paragraph 1 of the bond)

and/or damages, including any debt or other sums payable (for the purpose
of a claim under paragraph 2 of the bond), in Court proceedings against [the
defendant]. There would be no requirement for [the claimant] to issue
proceedings against [County] first or at all in order to establish these matters.”
20. It is right to note at the outset that, in my view, these declarations are
unnecessarily prolix. More significantly, they do not always reflect the arguments
that were so skilfully advanced by both counsel. Up to a point, this reflects the
uncertain and fluid nature of civil litigation, and no substantive criticism is intended
of either side. But I cannot help feeling that these Part 8 proceedings were not
perhaps the best vehicle for resolving the underlying issues, and that it would have
been much better if the arguments had arisen on an application for summary
judgment under Part 24. Then at least the tramlines introduced by the draft
declarations would have been unneccessary.
21. Following the production of Mr Oram’s skeleton argument, as I have indicated,
Declaration 3 is no longer in issue.
5. The Relevant Principles of Law
5.1 The Principles of Interpretation

22. As to the general principles of contract construction, I follow the well-known
guidance set out most recently by the Supreme Court in Arnold v Britton [2015]
AC 1619 and Wood v Capita Insurance Co [2017] UKSC 24. What matters is what
a reasonable person, having all the background knowledge available to the parties,
would have understood the words of the contract to mean, using the language in
its commercial and factual context. Where there are rival interpretations, concepts
of business common sense can be relevant as an aid to construction.
5.2 The Relevant Principles Relating to Performance Bonds

23. A bond of this sort is an instrument of secondary liability. The surety cannot be
in a worse position, as against the employer, than the contractor. In Tower Housing
Association Limited v Technical and General Guarantee Co Limited (1998) 87
BLR 74, Judge Humphrey Lloyd QC said:
“As the claim is made on the bond, certain basic principles have to be borne
in mind in approaching a bond of this kind. First of all, it is well established
and it must, I assume, be taken to be common ground that a bondsman in the
position of the defendant is entitled to avail itself of all the defences that might
have been available to the contractor had the contractor either not been
insolvent and obviously, where it is in either insolvent or in financial
difficulties, the defences available to the administrative receivers. Secondly
- and this was prayed in aid by Mr Darling in the course of his submissions
- that, in general terms, one would approach the terms of the bond on the
basis that they are to be ‘strictly construed and no liability is imposed which
is not clearly and distinctly covered by the terms of the agreement’…”
24. In that case, Tower were arguing that, as against the surety, their hands were
not tied by some of the detailed provisions of the contract, as they might have been

if they were pursuing the contractor. Judge Lloyd rejected that submission. He
said that “the obligation of the surety is relative to the obligation of the contractor
under the terms of the contract; as one might expect in approaching any bond, the
obligation of a surety is simply to stand behind that of the debtor (the contractor)
and not to be under any greater liability than the contractor would have had.”
25. Thirty years ago, there were regular arguments about performance bonds of this
kind provided in support of building contractors. Many of those arguments arose
because the performance bond was only triggered if the contractor was in breach
of contract and so, if the contractor became insolvent, and the contract was
terminated, it was argued that that was not a breach, and that there was therefore
no liability under the bond. In this way, given the unhappy habit of building
contractors becoming insolvent, both then and now, the secondary liability market
was not reflecting the reality of the construction industry.
26. However, those issues were largely resolved by the Court of Appeal in Perar
BV v General Surety and Guarantee Co Limited (1994) 66 BLR 72. In that case
the Court of Appeal held that the automatic termination of the contract following
the insolvency of the contractor did not amount to a breach of contract, with the
result that there was no right to immediate payment under the bond merely because
the contractor did not continue to execute the works. Insolvency alone did not
therefore give rise to any payment entitlement.
27. However, Peter Gibson LJ noted that clause 27.4.5 of the contract under
consideration contained a provision which allowed the calculation of a sum due
under the contract following determination. This provision culminated in a debt
payable by one side to the other. It was a forerunner of the provisions of clause
8.7 in the building contract between County and the claimant. Peter Gibson LJ
went on to say that, in Perar, there had never been a claim under clause 27.4.5,
and that:
“Had a claim been made, as the contract envisaged, it may well be that these
proceedings would have been avoided, as plainly any consequent failure by
the contractor to pay any such demand, if properly made, would have enabled
a claim to be made under the bond…”
In other words, insolvency would lead to a breach (and thus a claim under the
bond) if the employer had followed the provisions of the contract and established
a debt due, and the debt remained unpaid by the contractor.
28. The importance of the contractual ascertainment exercise was restated in
Paddington Churches Housing Association v Technical and General Guarantee
Co Limited [1999] BLR 244. Again, that was a claim on a bond in the absence of
any ascertainment of the debt due under clause 27. Judge Bowsher QC reiterated
both the secondary liability that arose under the bond and the importance of the
contractual mechanism. At paragraph 24 he said:
“The defendants are liable as surety only, and it seems to me to be plain on
the face of the bond that the defendants are liable to pay the amount (if any)
shown to be due to the plaintiffs on a statement made by the employer in
accordance with the terms of the contract. That contract was imported into
the bond by the recitals. Clause 27 of that contract is referred to specifically
in the conditions. Both in case of default and in case of determination on

insolvency (or indeed in any case where it were relevant, for corruption) the
damages are calculated by reference to the code of the contract, which are in
any event unlikely to be different from the damages at general common law.
The accuracy of the employer’s statement might be challenged in the courts,
but the employer’s statement is required before the damages can be said to
be ascertained and there is no liability on the defendants until those damages
are ascertained. The plaintiffs submit that the employer’s statement is only a
mechanism and not a condition precedent to payment, but no other mechanism
for ascertaining the net damages is put forward or relied on by the plaintiffs.”
29. The judge said that the absence of the statement was fatal to the employer’s
claim. At paragraph 30 he said that, “When such a statement is provided, if it
shows a net sum due to the plaintiffs, the defendants will become liable up to the
amount of the bond.”
30. In the present case, the relevant provisions at clauses 8.5 and 8.7 of the 2011
standard form have been the subject of recent consideration by the Court of Appeal
in Wilson and Sharp Investments Limited v Harbour View Developments Limited
[2015] EWCA Civ. 1030. That case was concerned with an appeal against a refusal
by the first instance judge to allow the appellant an injunction to restrain the
defendant from presenting a winding up petition. The issue was whether an accrued
debt could be payable after termination. The judge concluded that clauses 8.5.3
and 8.7.3 could have no application if the contract had already been terminated
prior to the insolvency.
31. The Court of Appeal rejected that conclusion. The critical paragraphs for present
purposes are paragraph 49 and 50 of the judgment of Gloster LJ which were in
the following terms:
“49. First, it is clear that the provisions of clause 8.7.3 are intended to
operate after termination of the contract. Indeed the entire scheme of
clauses 8.7 and 8.8 are directed at setting out the respective rights and
obligations of both parties after the contractor’s employment under
the contract has been terminated by the employer and necessarily the
contract has come to an end: see the opening words of clause 8.7 –“if
the Contractor’s employment is terminated under clause 8.4, 8.5 or
8.6”. To similar effect is clause 8.12 which addresses the consequences
of termination by the contractor under clause 8.9 or by either party
under clause 8.11 upon the happening of certain specified events.
There is no wording in clause 8 which in any way suggests that the
consequential provisions are not to apply after termination, or are not
to apply after a termination by the contractor (pursuant to the saving
provisions of clause 8.3.1) on the grounds of repudiatory breach (as
opposed to pursuant to the express termination provisions contained
in 8.4, 8.5 or 8.6).
50. Second, clause 8.5 (“Insolvency of Contractor”) has a wider ambit
than simply conferring a right of termination on the employer in the
event of the contractor’s insolvency. Thus clause 8.5.2 imposes an
obligation on the contractor immediately to notify the employer if the
contractor makes any proposal, gives notice of any meeting, or

becomes the subject of any proceedings or appointment relating to

insolvency, to enable the employer to decide on its options. And, most
importantly, clause 8.5.3 expressly states that clause 8.7.3 applies as
from the date when the contractor becomes insolvent “whether or not
the Employer has given such notice of termination” – i.e. a termination
notice under clause 8.5 based on the contractor’s insolvency. Contrary
to the judge’s view, therefore, I see no necessity, or basis, for the
implication of what would have to be an implied term that clauses
8.5.3 and 8.7.3 have no operation in circumstances where the employer
has already terminated the contractor’s employment, as it is entitled
to do (pursuant to the saving provisions of clause 8.3.1), on the grounds
of repudiatory breach (as opposed to pursuant to the express
termination provisions contained in 8.4, 8.5 or 8.6), but do apply in
circumstances where either:
i) the employer has not served any notice of termination; or
ii) the employer has already served a notice of termination under
clauses 8.4, 8.5 or 8.6.”
6. Declaration 1: The Effect of Clause 2
6.1 The Real Issue

32. Declaration 1 is set up on the basis that the only issue between the parties is
whether a breach of contract on the part of County is always required under clauses
1 and 2, or whether an insolvency event (which the parties have assumed not to
be itself a breach of contract) is enough to trigger liability on the part of the
defendant under clause 2.
33. In my view, for the reasons set out below, that is not necessarily the right
question. The right approach is to identify what is necessary for a successful claim
against the defendant under clauses 1 and 2 of the Bond, in circumstances where
County are insolvent and have not paid the debt which has been ascertained in
accordance with the building contract and is therefore due pursuant to clause 8.7.5.
6.2 The True Construction and Proper Operation of these Clauses

34. Under clause 2 of the Bond, the damages payable by the defendant to the claimant
included “any debt or other sum payable to the Employer under the Contract
following the insolvency”. On the facts, there is a debt payable to the claimant by
County under the building contract. That is the figure of £621,798.38 set out in
detail in the letter from CAG to County on 10 March 2017. That debt “follows”
the insolvency in that it was ascertained and had been demanded after the CVA
of April 2016.
35. On the face of it, therefore, the unpaid debt is payable by the defendant (as
surety) to the claimant under the terms of the Bond, albeit at the maximum sum
due under the Bond of £382,519.06. In my view, that result can be arrived at in
two different ways.

(a) Breach Not Required

36. The first route involves a consideration of the Bond in the context of the building
contract. The relevant terms of the contract, set out in Section 2.1 above, carefully
differentiate between the two main ways in which termination may occur. One is
on the default by the contractor (clause 8.4); the other is due to the insolvency of
the contractor (clause 8.5). They both give rise to the same result: the calculation
and identification of the debt under clause 8.7.
37. Thus, anyone reading clauses 1 and 2 of the Bond would see that the purpose
and intent of those clauses was to mirror the two principal termination routes
provided for in the building contract. It would be contrary to common sense to
maintain that clause 2 was subsidiary to clause 1 in such a way that clause 2 did
not operate on the occurrence of an insolvency event. That would mean that the
employer could never recover against the defendant surety for losses due to
insolvency (on the assumption that insolvency was not a breach), contrary to the
clear purpose and intent of clause 2.
38. Paragraph 2 of the Bond refers to damages “payable under this Guarantee
Bond…following the insolvency…of the contractor.” Thus, the Bond is making
it as clear as possible that the defendant is liable for sums payable by County under
the building contract, but which have not been paid as a result of, or following,
County’s insolvency. In addition, the accounting exercise set out in clauses
8.7.4-8.7.5 of the building contract follows the insolvency, and results in a debt
payable by the contractor to the employer. Thus, the wording of the building
contract is echoed by clause 2 of the Bond.
39. Mr Oram’s response was to suggest that clause 2 was definitional only, and did
not set out a stand-alone obligation. He said that the only trigger for the defendant’s
obligation to pay was a breach under clause 1, not an insolvency event under clause
2. In my view, that is an erroneous reading of the provisions of the Bond.
40. First, as I have already indicated, that interpretation would mean that clause 2
could never operate. If an insolvency event is not a breach, which is the assumption
for this purpose, and the only trigger under the Bond is a breach of contract by
County, then clause 2 would be rendered redundant. Secondly, this interpretation
reads much too much into the word “damages”. The suggestion is that damages
can only flow from a breach, but that reading is contradicted by the further words
of clause 2 which make it plain that, for the purposes of this Bond, the damages
payable by the defendant can include a debt. In law, a debt can arise without breach,
which strongly suggests that the word ‘damages’ was intended to have the broader
meaning of ‘loss’ or ‘sums recoverable under the Bond’.
41. Another difficulty with Mr Oram’s interpretation is that, even if he was right
and clause 2 was somehow assisting in the definition of the quantification process
only, it would be adding nothing. Under the building contract, the loss and damage
following termination is dealt with in clause 8.7 and there is a clear method for
ascertaining the final figure. What in those circumstances is clause 2 doing, unless
it is making it clear that any sum due to the claimant under clause 8.7 is recoverable
under the Bond, whether or not there has been a breach?
42. In an attempt to answer that, Mr Oram argued that there was in law a difference
between liquidation and administration, and he referred on that topic to the
judgment of David Richards J (as he then was) in Re MF Global UK Limited (in

Special Administration) [2013] 1 WLR 903. Mr Oram said that, depending on the
precise nature of the contractor’s insolvency, the measure of damages at common
law might not necessarily be that provided for in clause 8.7, and so clause 2 of the
Bond was making it plain that, irrespective of any theoretical difference in the
measure, the loss recoverable under the Bond would be calculated in accordance
with clause 8.7.
43. In my view this is an unrealistic and convoluted interpretation of clause 2. Under
a building contract, the employer does not care about the precise way in which the
building contractor has become insolvent, or the nice distinctions between
liquidation and administration. All he cares about are the consequences of the
insolvency, which almost always include the abrupt halt to the carrying out of the
works. The employer’s loss in these situations is always the same: the additional
cost of completing the works. That is why the provisions under clause 8.7 are so
clear. So, in my view, clause 2 of the Bond can have had no purpose whatsoever
other than to make it clear that the Bond was to protect the claimant from the
non-payment by County of the debt following the insolvency.
44. There were a number of other minor points as to how, if this was the correct
reading of the Bond, then it would be inconsistent with other references to ‘breach’
alone, such as in clause 5. But in my view, these were simply the consequence of
the parties adding the homemade amendment at clause 2 to cover insolvency, and
then failing to amend the other ABI Model Form provisions at the same time.
These matters cannot affect the proper interpretation of this Bond.
(b) Breach Required

45. Now let us assume that this interpretation is wrong and that Mr Oram was right
to say that there had to be a breach under clause 1 of the Bond before clause 2
came into play. In my view, it is beyond doubt that there was such a breach. The
debt under clause 8.7 was asserted by the claimant on 10 March 2017 but it has
not been paid by County. County are therefore in breach of the building contract
because they have not paid the debt. The amount of the damages payable by the
defendant to the claimant is the amount of the debt, limited by the maximum figure
stipulated in the Bond.
46. Thus, even if Mr Oram is right about clause 1, and a breach is required to trigger
a claim under the Bond, even under clause 2, then there has been a breach. That
was precisely what Peter Gibson LJ said in Perar: see paragraph 27 above. For
what it is worth, the ABI guidance notes which accompanied the Model Form
expressly referred to this passage in the judgment of the Court of Appeal to
conclude that, as a result:
“If, by reason of the insolvency, that debt is not discharged (which is, for
obvious reasons, usually the case) the Guarantor will be liable up to the Bond
Amount for that debt. The failure of the Contractor, following insolvency, to
pay the sum due will be a breach of Contract which will be protected by the
Bond.”
47. Accordingly, it seems to me that Perar is a complete answer to the breach point:
if (contrary to my primary view) a breach by County is required to trigger the
Bond, then such a breach has occurred in this case. That is how the Bond was

intended to work. Indeed, it is as a result of this that the ABI guidance suggests
that there is no need to amend the model form of the Bond to stipulate that
insolvency or automatic determination will be treated as a breach of contract. On
this basis, the defendant’s stance might be regarded as somewhat surprising because,
on the face of it, it is seeking to undermine the guidance notes of its own
professional body.
(c) The Termination

48. Mr Oram’s response was to submit that there was arguably no breach at all,
because the validity of the original termination (for slow progress and/or
suspension) was disputed (albeit long after the event) by County’s solicitors in
their letter of 12 April 2017. But in my view, that was not an answer. The building
contract makes clear that the employer can terminate the contractor’s employment
for default or for insolvency. What is more, if the contractor becomes insolvent
then that automatically triggers the clause 8.7 ascertainment process, regardless
of whether or not a notice of termination had been given by the employer: see
clause 8.5.3 of the building contract. On that basis, the prior notice, and the
arguments about it raised so much later by County’s solicitors, are immaterial.
49. As part of his argument, Mr Oram submitted that, although it was “evidentially
awkward” that County’s solicitors had not raised the point at the time, and had
instead waited for over a year, the fact that they had asserted that the claimant had
repudiated the contract by serving a notice two days early, and that this had
happened a few days before the insolvency event, meant that the contract had come
to an end and there was no obligation on the part of County to pay the clause 8.7.5
debt. In my view, that argument fails for two reasons.
50. First, I consider that this argument is contrary to the scheme provided for in
clauses 8.5 and 8.7 of the JCT Standard Form. Those provisions are designed –
amongst other things – to ensure that, no matter what could be argued about prior
events, the insolvency of the contractor gave rise to a clear and certain process
which culminates in the notification of a debt pursuant to clause 8.7.5. This process
was designed to prevent a contractor in the position of County from avoiding the
consequences of their insolvency by seeking to argue, long after the event, that
the contract had come to an end prior to their insolvency and that, in consequence,
these clauses no longer applied.
51. Secondly, I am confirmed in that approach by the decision of the Court of Appeal
(which is of course binding on me) in Wilson and Sharp Investments. In the
passages identified at paragraph 31 above, Gloster LJ expressly rejected the
argument that clauses 8.5.3 and 8.7.3 have no operation in circumstances where
the employment had already been terminated on other grounds. Although the facts
were different, the Court of Appeal made it plain that these clauses were intended
to operate after the termination of the contract, without qualification. Indeed, at
paragraph 49 of her judgment, Gloster LJ expressly identifies one such situation:
“after a termination by the contractor…on the grounds of repudiatory breach.” I
respectfully agree with those conclusions.
52. Thus, the arguments belatedly raised by County’s solicitors as to the validity or
otherwise of the termination notice go nowhere. As from the date that County
became insolvent, whether or not the employer had given notice of termination,

and regardless of belated arguments as to repudiation, clauses 8.7.3-8.7.5 applied

in any event. CAG certified that the debt had been calculated in accordance with
those clauses, so County were in breach because they failed to pay it. Thus, subject
to what I say about Declaration 2, the defendant is liable to pay the debt (subject
to the cap introduced by the maximum amount recoverable) as damages under the
Bond.
6.3 Conclusions
53. For these reasons, I find in favour of the claimant in respect of the interpretation
of the Bond. But I do not grant Declaration 1 as drafted. Declaration 1(a) omits
any reference to the debt and non-payment, and Declaration 1(b) is erroneous
because, even if breach is required, the relevant breach is the non-payment of the
debt, and not the circumstances which led up to the termination.
54. I am sure that counsel can agree a Declaration which succinctly summarises my
conclusions on this topic.
7. Declaration 2: Is the Debt Due or can it be Challenged?
7.1 The Original Debate

55. The original debate under the umbrella of Declaration 2 ranged far and wide.
At one point, the defendant was suggesting that the claimant needed either to get
a judgment against County, or at least get County’s agreement that they were liable
for the debt, before any claim could be made under the Bond. That is wholly
incorrect: the decisions in Tower Housing and Paddington Churches make plain
that what is required to trigger a claim under the Bond is the completion of the
ascertainment exercise under clause 8.7. Once that has happened, a claim can be
made under the Bond.
56. Once the process under clause 8.7 of the building contract is concluded, it is
not only quite unnecessary for the claimant to pursue County before making a
claim against the defendant, but it is also unnecessary for the claimant to have any
further communication of any kind with County. The claimant can look to the
defendant for payment.
57. Any other result would destroy the commercial value and purpose of the Bond.
The Bond is required to provide the claimant with the ability to recover at least
some of its losses against a solvent party. It would circumvent that commercial
purpose if the claimant was then required to issue separate proceedings against
that insolvent party (and get the necessary permission to do so) and/or to reach an
agreement with the insolvent party, in order to establish either liability or quantum
under the Bond.
7.2 Is The Notified Debt Conclusive?

58. In the oral submissions before me, the point in respect of Declaration 2 narrowed
down to a short, albeit important, point. Ms Bodnar’s submission was that the
authorities referred to above, particularly Tower Housing and Paddington Churches,
made plain that what was required was the ascertainment of the figure in accordance
with the contract. Once that had happened, a claim could be made on the Bond.

59. In response, Mr Oram said that the judgment in Paddington Churches also noted
that, although a claim could be made in those circumstances, the surety could
defend himself against the claim by advancing any of the arguments as to the
quantum of the debt (a challenge to “the accuracy of the employer’s statement”)
which would have been available to County. He points to the fact that clause 8.7
does not say that the ascertainment and assertion of the debt was in some way
conclusive, and compares that with the provisions relating to, for example, the
Final Certificate, which do contain various conclusivity provisions.
60. In my view, Mr Oram is right on this topic. It is only necessary to consider what
the position would have been under the building contract to see that, as a matter
of principle, the debt figure can be challenged by the defendant. Let us assume
that the debt was asserted by CAG, and that County had then produced a twenty
page critique of the accounting and quantity surveying methodology that had been
adopted, in order to demonstrate that only 20% of the sum asserted was actually
due. County could not be shut out from advancing that defence. There is nothing
in the contract to say that they could not challenge the figure, and there are no
provisions which indicate that, as soon as the figure was asserted, it was due and
payable in the amount asserted, without any ability to challenge. And if County
could have made that challenge, then so too can the defendant.
61. Of course, because these are Part 8 proceedings, I cannot go further than to say
that, as a matter of contractual interpretation, the debt figure of £621,798.38 asserted
on 10 March 2017, is not necessarily conclusive. I cannot go on to reach any other
conclusions. But it is appropriate to observe that, on the facts of this case, the
defendant may be in difficulties in mounting a challenge: other than the general
words of challenge in the latter of 12 April 2017 (“in any event the sums claimed
by Ziggurat are disputed”), County have been entirely silent on how and why the
debt figure may be wrong. The defendant has not set out any case at all on that
topic. In addition, in view of the margin (that is to say, the difference between the
debt asserted of £621,000 odd, and the maximum amount of the Bond of
£382,519.06) any arguments on quantum may not avail the defendant over-much.
62. It follows from all this that the words of Declaration 2 are inapt. They do not
address the actual debate between the parties. It was eventually agreed that the
claimant did not have to pursue County and did not have to reach an agreement
with them. The claimant can rely on the debt in its claim against the defendant
under the Bond but, to the extent that Declaration 2 was seeking to suggest that
the debt was conclusive and could not be challenged by the defendant as a matter
of principle, then I reject that argument.
63. As above, I am sure that counsel can agree a succinct Declaration which
summarises the views expressed on this subject.
8. Declaration 3: The Need to Start Fresh Proceedings

64. As noted above, this Declaration has been agreed and it is therefore unnecessary
for me to consider it further.

Commentary
C1 The proliferation of reported decisions about “on-demand” performance bonds
in the last few years might have led the unwary reader into concluding that the
conditional bond had become, like the telex message and Pears Cyclopaedia,1 a
thing of the past. But it is not so, as the case under consideration demonstrates.
The contractor carrying out the construction of some student accommodation in
Newcastle provided a “performance guarantee bond”, which although it was in
standard Association of British Insurers Model Form, had one important exception:
cl.2 was a bespoke addition. As Coulson J observed (at [23]), a bond of this sort
is an instrument of secondary liability, with the result that the surety cannot be in
a worse position, as against the employer, than the contractor. His Lordship then
referred (at [26]) to the decision of the Court of Appeal in Perar that the automatic
termination of a contract in JCT form following the insolvency of the contractor
did not amount to a breach of contract, with the result that there was no right to
immediate payment under the bond merely because the contractor did not continue
to execute the works. Insolvency alone did not therefore give rise to any payment
entitlement.
C2 The difficulty faced by the plaintiff in Perar was that the bond provided that
any proceedings against the Surety to recover any claim had to be served within
six months after 1 March 1992 and required the employer to give written notice
within 14 days after any breach or default. The contractor went into administrative
receivership on 7 June 1991 before the works were completed, and the works not
been completed within the six-month period specified. Proceedings were issued
on 14 August 1992 on the basis that the contractor had been in breach of its
obligation to carry out and complete the works. At first instance His Honour Judge
Michael Rich QC, raised the point that the contractor that as a result of an automatic
termination of the contractor’s employment upon its insolvency, it had been under
no obligation to continue with or complete the works,2 and the Court of Appeal
upheld this decision.
C3 In doing so, the court had to be deal with the point that the bond referred to
“breach of or default in any of the terms and conditions contained in the said
Contract”. The plaintiff contended that effect had to be given to that wording by
distinguishing between a “default” and a “breach”, with the result that the
contractor’s non-fulfilment of its obligations under the contract amounted to a
default justifying a call on the bond. The Court of Appeal rejected this distinction
and held that “default” meant the same thing as “breach”, leading the late I.N.
Duncan Wallace Q to describe this construction as “flatly contrary to the obvious
business purpose of the bond”3 and to observe:
“This decision robbed the bond of all commercial value and whether on a
contra proferentem or officious bystander or business efficiency basis seems
open to question.”4
1
The final edition was published on 31 August 2017.
2
It should be disclosed that your commentator was counsel for the plaintiff in that case.
3
I. Duncan Wallace, “Loose Cannons in the Court of Appeal: On Demand Per Icuriam?”, (1994) 10 C.L.J. 190,
195.
4
A. Hudson and I.N. Duncan Wallace (eds), Hudson’s Building & Engineering Contracts, 11th edn (London:
Sweet & Maxwell,1995), Vol.II, p.1512, para.17-012.

Nevertheless, Peter Gibson LJ did make the observation relied upon by Coulson
J in the case under consideration that had a claim been made under the express
contractual terms relating to termination
“it may well be that these proceedings would have been avoided, as plainly
any such demand if properly made under the bond, provided such claim was
timeous”.
The obvious problem with that approach was, of course, that the time limit in
the bond for bringing proceedings would have expired before any account could
be drawn up on completion of the works, permitting the plaintiff to make such a
demand. This remains a problem with the JCT forms. Paddington Churches,5
referred to by Coulson J at [28], confirmed that the employer’s statement under
the JCT with Contractor’s Design 1981 edition was required before the damages
could be said to be ascertained and there was no liability under the bond until those
damages had been ascertained. The position is different under the successor to the
Infrastructure Conditions of Contract (which defines insolvency as a default)
where the engineer certifies the appropriate sum whether or not the works are
completed under a separate contract and may issue an interim certificate that
becomes a debt due to the employer.6 It should be added that the real mischief of
thePerar case lay in the adoption of a specific period running from a certain date
during which proceedings claiming on the bond had to be issued. By way of
contrast, the ABI model form of bond contemplates the insertion, as the expiry
date of the bond, of an event such as the issue of a certificate of practical completion
and there is authority to suggest that practical completion of the works by another
contractor would not constitute practical completion under the contract so as to
extinguish the liabilities of the guarantor: see Glasgow City Council7 and De Vere
Hotels.8
C4 The contractual limitation period difficulty did not arise, however, in the case
under consideration because following completion and the making good of defects,
an account was prepared in accordance with the building contract, which indicated
a balance due to the employer, and a demand for that sum was made less than a
year after the act of insolvency ([11] and [12]) and there does not seem to have
been any applicable time limit. Coulson J found (at [34]), under cl.2 of the bond,
that the damages payable by the guarantor to the employer included “any debt or
other sum payable to the Employer under the Contract following the insolvency”,
and on the facts, there was a debt payable under the building contract. In doing so
he rejected the guarantor’s argument that that the only trigger for the obligation
to pay was a breach, not an insolvency event ([40]–[43]). This is consistent with
an inference that could be drawn that the wording of the relevant provision of the
bond had been specially drafted to address the Perar point about an act of
insolvency not being a breach. In the event this amendment of the standard form
proved unnecessary, given the court’s decision that there had been a breach.
5
Paddington Churches Housing Association v Technical and General Guarantee Co Ltd [1999] B.L.R. 244; 65
Con. L.R. 132; (2000) 16 Const. L.J. 216.
6
Infrastructure Conditions of Contract, 2014 edn., cl.15.6.
7
Glasgow City Council v Excess Insurance Co Ltd 1986 S.L.T. 585.
8
De Vere Hotels Ltd v Aegon Insurance Co (UK) Ltd [1997] EWHC Technology 354.

C5 The Tower of Babel is thought to have been a ziggurat, the building of which
gave rise to the confusion of tongues.9 Perhaps we can hope to encounter less
confusion about the effect of insolvency provisions and performance bonds as a
result of this decision.
9
Genesis ix, 1–9.

Construction Law Journal: 2018 Vol. 34 No. 1

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Construction Law Journal

2018 Vol. 34 No. 1

(2018) 34 Const. L.J. 1–84 T.C.L.R. T1–T20

■■ Concurrent Delay: What is All the Fuss About?

JOHN BISHOP, LLB JENNIE PRICE, LLB

MICHAEL FURMSTON SALLY ROE, BA

LORD JUSTICE MAY, MA

© 2018 Thomson Reuters and Contributors

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors 1

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors 3

What is concurrent delay?

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

How is concurrent delay treated?

Common law jurisdictions

England and Wales

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

Despite no judicial consideration or decision on the treatment of concurrent delay

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

recognised this approach as the “general rule in construction and engineering

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

Civil law and Shari’a jurisdictions

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

United Arab Emirates

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

address concurrency in Saudi Arabia. Analyses of contractual obligations are often

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors 19

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

II. Analysis of the existing adjudication usage and judicial

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

Table 1: Number of adjudications by claim value in NSW, Qld, Vic and WA

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

This comparison shows that in 2010/11 and 2011/12 respectively, adjudication

Table 2: Mean adjudication fees reported in Qld, WA and NSW

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

Range of claims ($) Mean fees for adjudication ($)

Judicial reviews of adjudicators’ determinations

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

Table 4: Number of applications for judicial review of adjudicators’

Table 5: Number of applications for judicial review of adjudicators’

III. Two systems under the one legislation

“Big end” versus “small end” of town

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

it is no coincidence that high rates of quashings of adjudicators’ determinations

WCM more suitable for dispute resolution of larger claims

A proposal for a dual process of adjudication based upon size

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

IV. Timeframes on key process steps

Overall timeframes under the current ECM and WCM legislation

Figure 1: Typical ECM payment and adjudication scheme timeline

(2018) 34 Const. L.J., Issue 1 © 2018 Thomson Reuters and Contributors

Figure 2: Typical WCM payment and adjudication scheme timeline28