REBECCA REDHEAD - Director of Legal Services, UK and Europe

KEVIN SLEGG - Senior Contracts Consultant

Following the recent article from our consultant Paul Whittle on Grove
Developments Ltd v Balfour Beatty Regional Construction Ltd [2016], here is
another view on the Judgment.
It can be argued that the court reached a surprising decision in this case. The agreement was that the contractor would
receive interim payments for the works that it had undertaken. As is common in construction projects, those involved with
the day-to-day running of the project sought to have clarity as to when the applications and payments would be made;
however, at the time of contracting they only turned their minds as to the periods up to the intended completion date.
The evidence referred to in the judgment does not appear to support the courts finding that the parties had decided
there would only ever be 23 interim payments regardless of progress of work on site it appears more likely they actually
didnt turn their minds to it.
Given that both parties seemed to recognise, in May 2015, that further interim payments should be due then this supports
the view that had someone put the matter (that if the completion date was delayed should there be additional interim
payments) to both parties at the time of contracting both would have said of course.
Furthermore, the situation that this judgment creates is that the employer could cause a delay, which could extend for
many months, but then benefit from this delay by having reduced payments for the period initially envisaged and having
the contractor fund the project during the delay period.
Instead, the court could have found one of the alternative positions:
1. That the contract recognised that the date of completion may be extended, but it failed to address what payment were
to be made and when and hence, during the extended period, the relevant provision of the Scheme for Construction
Contracts should have implied; the contract being deficient during this period; or
2. That the parties had agreed a payment cycle set-out in the schedule, with variations due to holiday periods and
weekends etc and hence this cycle should continue into the extended period.
Perhaps the court was concerned that the contractor may have been seeking a windfall given the size of its application and
furthermore was not impressed by the way it initially suggested to Grove the final date of payment was 18 September 2015
but then sought to argue that it was 7 September 2015 and hence Groves payless notice (issued on the 15 September
2015) was out of time.
Whilst one may have some sympathy with this view Grove would have had the opportunity to rectify any potential
overpayment in the next interim payment.
However, what this case does demonstrate very clearly is the need for parties negotiating contracts to be precise in what
they are agreeing to. It is frankly common for construction projects to be delayed and the contractor was remiss in not
insisting that there was an express statement included in the Schedule that if the project was delayed then additional
interim payments would be made.
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provide legal advice. You should not rely on any information contained in this article, or in the documents available through it, as if it were legal advice.
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