Legal Developments in Construction Law: October 2026

1. Court enforces Adjudicator's decision rejecting both parties' cases on liquidated damages rate

In BDP Construction Limited v Cygnet Behavioural Health Limited [2026] EWHC 1796 (TCC), the High Court granted summary judgment to enforce an Adjudicator's decision, rejecting challenges based on jurisdiction and breach of natural justice.

Background

BDP Construction Limited ("BDP") was engaged by Cygnet Behavioural Health Limited ("Cygnet") under an amended JCT Design and Build Contract 2016 for the construction of a hospital in Wolverhampton. Practical completion of the hospital was achieved on 18 July 2024. An adjudication was commenced regarding retention monies and the right to recover liquidated damages. In the adjudication, a dispute arose as to the applicable liquidated damages rate, BDP claimed the rate was £14,500 per week, while Cygnet contended it was £1,000 per day. The contract had never been executed, and each party relied on different versions of the contract amendments. The Adjudicator determined that neither party had proved the contractually agreed rate for liquidated damages and, consequently, that Cygnet was not entitled to claim liquidated damages. BDP sought to enforce the decision which Cygnet resisted on grounds of jurisdictional excess and breach of natural justice.

Jurisdiction

Cygnet argued that both parties had agreed there was a liquidated damages mechanism and the only dispute was as to the applicable rate, such that the Adjudicator's jurisdiction was confined to a binary choice between the two competing rates. Mr Justice Constable rejected this argument and held that the Adjudicator's jurisdiction was not expressly defined by reference to a binary outcome. The Notice of Adjudication sought a declaration that Cygnet's notice of deduction was invalid and it did not confine the Adjudicator to selecting one rate or the other. Critically, neither party had conceded the other's case in the alternative, Cygnet expressly stated that nothing in its Response should be taken as acceptance of BDP's position, and BDP likewise did not accept Cygnet's version. In those circumstances, it remained open to the Adjudicator to find that neither party had discharged its evidential burden, without exceeding his jurisdiction.

Natural Justice

Cygnet advanced two natural justice arguments. First, it contended that the Adjudicator departed from an agreed basis without notice to the parties. The Court dismissed this on the basis that no such agreement existed. Second, Cygnet argued that the Adjudicator was obliged to notify the parties in advance that he intended to reject both cases. The Court held that rejecting evidence already canvassed by the parties does not require advance notice; here, the Adjudicator was not proposing a novel positive answer that neither party had contended, nor relying on material not already before the parties.

The Court further held that, even if there had been a breach of natural justice, it would not have been material. Cygnet failed to identify what further evidence it would have introduced. Its alternative submission, that clause 2.29.2.1 permitted the employer to state a lesser rate, was held to have no reasonable prospects of success, since the Adjudicator had found no established contractual rate from which a "lesser" rate could be derived.

Key Points for the UK Construction Industry

• An Adjudicator is not confined to choosing between two competing positions merely because the parties have each advanced a single case. Unless there are clear words establishing an agreed jurisdictional ringfence, the Adjudicator retains the ordinary power to find that a party has not proved its assertion.
• An Adjudicator who rejects both parties' evidence on an issue already canvassed in the submissions is not required to give advance notice of that finding. The obligation to revert arises only where the Adjudicator proposes a positive answer not contended for by either party, or relies on material not already before the parties.
• Any alleged breach of natural justice must be shown to be material. A party resisting enforcement must demonstrate that the point it was deprived of the opportunity to argue had reasonable prospects of success.
• Parties to unexecuted construction contracts should take particular care to ensure that the terms they rely upon are clearly evidenced and communicated. Where competing versions of contract documents exist, each party bears the evidential burden of proving its case, and neither can assume the Adjudicator will default to its position.

BDP Construction Ltd v Cygnet Behavioural Health Ltd [2026] EWHC 1796 (TCC) (16 July 2026)

2. Court Dismisses Subcontractor's Third-party Rights Claim to Enforce Project Bank Account Provisions

In E & TL Jones (Civils) Ltd v Vale of Glamorgan Council [2026] EWHC 2054 (TCC), the High Court dismissed a subcontractor's claim to enforce Project Bank Account ("PBA") provisions in a main contract to which it was not a party, holding that the subcontractor could not satisfy the requirements of the Contracts (Rights of Third Parties) Act 1999 (the "CRTPA").

E & TL Jones (Civils) Ltd ("Jones"), a groundworks subcontractor, was engaged by ISG Construction Ltd ("ISG") under an NEC4 subcontract to carry out works on a school extension project in Penarth for the Vale of Glamorgan Council (the "Council"). The main contract between the Council and ISG incorporated Clause Y(UK)1, requiring the establishment of a PBA to protect subcontractor payments. ISG was obliged to establish the PBA and propose subcontractors as "Named Suppliers" via a Joining Deed. However, ISG never established the PBA or proposed any Named Suppliers before entering administration in September 2024, and the Council made seven direct payments to ISG totalling approximately £4.96 million. Jones was owed approximately £486,000 for certified but unpaid work and claimed damages from the Council for breach of Clause Y1.8, relying on the CRTPA.

The Court considered four main issues:

• The relevant provisions of the CRTPA and whether Clause Y1.8 conferred enforceable rights on Jones: Jones relied on s.1(1)(b) and s.1(3) of the CRTPA, which permit a third party to enforce a contractual term that purports to confer a benefit on it, provided the third party is expressly identified by name, as a member of a class, or by description. The Court accepted that Clause Y1.8 purported to confer a benefit on third parties generally but held that the relevant class was "Named Suppliers", not "Suppliers" more broadly. Since Jones had never signed the Joining Deed and was never proposed as a Named Supplier, it fell outside the class and could not satisfy s.1(3). The Court also rejected the argument that the Council's own breach caused Jones' inability to become a Named Supplier, holding that permitting this would circumvent the statutory requirements of the CRTPA entirely.
• The presumption of enforceability and rebuttal under s.1(2) of the CRTPA: Although the point did not strictly arise, the Court considered s.1(2) obiter. Applying the Supreme Court's guidance in PCSU v DEFRA [2024] UKSC 41, that the presumption of enforceability under s.1(1)(b) is a "strong one" and can only be rebutted where the parties had a positive common intention, demonstrated by express provision, inconsistent terms or necessarily implied terms, that the clause should not be enforceable by the third party. The Court held that the existence of direct rights under the Trust Deed was insufficient to rebut the presumption, as there was no inconsistency in obligations existing under both the main contract and the Trust Deed. However, the Court observed that this was of "little practical importance," as any third party qualifying under s.1(3) would already be privy to the Trust Deed with direct contractual rights.
• Whether direct payments constituted a breach of Clause Y1.8: The Court held that, as there were no Named Suppliers and no PBA, the obligation in Clause Y1.8 was a positive one premised on the PBA's existence so where the condition precedent had failed, the failure to pay into a non-existent PBA was not a breach. The Court further held that the Council was likely obliged to make direct payments where no PBA existed, as a prohibition would conflict with the general payment obligations in Clause 51.2 of the NEC4 core clauses.
• Causation and defences: Even assuming breach, the Court found no evidence that withholding direct payments would have caused the PBA to be established before ISG's insolvency. The delays in establishing the PBA were attributable to the Bank's internal processes, not any lack of incentive on ISG's part. The Court also noted that ISG, having requested and accepted direct payments, had waived any breach of Clause Y1.8, providing the Council with a defence under s.3(2) of the CRTPA.

The claim was dismissed in its entirety.

Key points for the UK Construction Industry

• PBA establishment and operation: Where a PBA has not been established and no subcontractors have been added as Named Suppliers, the employer is not in breach of PBA payment provisions by making direct payments to the contractor as the positive payment obligation is premised on the PBA's existence. Subcontractors and employers should take proactive steps to ensure timely PBA establishment.
• CRTPA claims in construction: Subcontractors seeking to enforce main contract terms under the CRTPA must carefully identify the class of beneficiaries to which they claim to belong. A subcontractor who has not completed the contractual joining mechanism (e.g., executing a Joining Deed) may fall outside the relevant class, regardless of the underlying commercial purpose of the clause. A party cannot rely on the other party's breach to circumvent the statutory requirements of the CRTPA.
• The enforceability presumption remains strong: The presumption of enforceability under s1.2 of the CRTPA is difficult to rebut. Parties wishing to exclude third-party rights should include express exclusion clauses rather than relying on the existence of parallel contractual arrangements.
• Practical steps: Subcontractors should insist on prompt execution of Joining Deeds and PBA establishment as a contractual condition of commencing work. Employers should monitor contractor compliance with PBA obligations and consider withholding payments where a PBA has not been established, to protect the interests of subcontractors and reduce exposure to third-party claims.

E & TL Jones (Civils) Ltd v Vale of Glamorgan Council [2026] EWHC 2054 (TCC) (04 August 2026)

3. TCC Enforces an Adjudicator's Decision that a Project Manager was Professionally Negligent in Rejecting Jurisdiction and Natural Justice Challenges

In Coventry & Warwickshire Development Partnership LLP v Avison Young (UK) Limited [2026] EWHC 2319 (TCC), the High Court granted summary judgment enforcing an adjudicator's award in a professional negligence claim against an NEC project manager. It rejected all grounds the project manager raised to resist enforcement.

Avison Young (UK) Limited ("AY") was appointed and acted as NEC project manager and supervisor from 2020 to 2023 on a 215-acre earthworks development at Gateway South, Coventry, where Buckingham Group ("Buckingham") was the contractor. The Employer, Coventry & Warwickshire Development Partnership LLP ("CWDP"), commenced an adjudication claiming that AY negligently over-certified sums due to Buckingham. CWDP said AY accepted reduced baseline volumes without evidence, relied on the wrong data source, and failed to identify defects. Buckingham's insolvency meant the overpayments could not be recovered. The Adjudicator awarded CWDP £8,729,179.33 including interest; AY refused to pay and CWDP commenced proceedings for summary judgement enforcement.

The Court considered four key issues:

• Jurisdiction and failure to address the dispute referred: AY argued that the Adjudicator had undertaken a different exercise from the dispute referred to him, namely, he carried out his own valuation exercise, instead of deciding breach of duty of requisite skill and care and any resulting loss. AY also argued that the Adjudicator had failed to first decide whether the sums certified fell outside the range a competent project manager could have certified. The Court rejected both arguments. The Adjudicator had identified the dispute correctly and then addressed breach, mitigation, the performance bond, retention, and defects by reference to the contractually required standard of skill and care. The Court found that at their best, AY's points amounted to showing that the Adjudicator "addressed the right question but did so in the wrong way," but that alone does not take a decision outside jurisdiction.
• Adequacy of reasons: AY described the Adjudicator's conclusion on breach as a "bare statement." The Court disagreed and found that read as a whole, the decision showed what had been decided and why. AY's " acceptable tolerance" point was an argument within the referred dispute, not a separate dispute that needed its own reasons. The Court also noted that a party able to set out in detail how an Adjudicator went wrong will find it hard to show that it could not understand the reasoning for what the Adjudicator decided and why.
• Natural justice and the G&T Assessment: AY argued that the Adjudicator breached natural justice by reaching his decision by relying on a Gardiner & Theobald termination assessment that neither party had advanced and hadn't given the parties an adequate opportunity to address. The Court accepted that both parties had disavowed that basis. However, the Adjudicator had given clear forewarning, explained why he thought the assessment relevant, invited submissions, and offered a meeting, and the parties had made detailed submissions. An adjudicator may reach a conclusion that neither party argued for, provided the parties had a fair opportunity to address it. AY chose not to put forward a fallback case, and natural justice did not require a second round of submissions. The natural justice challenges on the Adjudicator's approach to retention and defects also failed. Accepting parts of each party's case but not the arguments in full and reaching a decision based on the aspects he accepted, is a well-established approach and was "wholly unexceptionable and there was no question of unfairness."
• Severance: Once the natural justice challenges failed, the severance argument fell away. AY's alternative argument, that the retention finding was simply wrong, was inconsistent with the "pay now, argue later" principle of adjudication. A challenge that an Adjudicator's decision, or parts of it, are wrong in law should be brought through Part 8 proceedings. In any event, the retention finding was one link in a connected chain of reasoning towards a single award. The Court considered that what AY really wanted was a recalculation of the award based on a different conclusion, not severance. The Court was also not persuaded that the Adjudicator's finding was wrong, and held that severance was not appropriate in the current case.

CWDP was granted summary judgment enforcing the Adjudicator's decision in full.

Key points for the UK Construction Industry

• The Courts will continue to take a robust approach to enforcement of Adjudicator's decisions. They will examine "technical defences" sceptically, and will interfere only in rare and plain cases.
• An Adjudicator who answers the right question wrongly will still have a binding decision. Only answering the wrong question goes to jurisdiction. Courts will look at the substance of a decision, not its structure or semantics.
• Reasons can be brief and are read as a whole. An Adjudicator does not have to deal with every argument.
• An Adjudicator may rely on material or reach conclusions that neither party advanced, provided the issue was "fairly canvassed."

Coventry & Warwickshire Development Partnership LLP v Avison Young (UK) Ltd [2026] EWHC 2319 (TCC) (15 September 2026)

4. BSI Publishes Revised PAS9980:2026 Code of Practice for Fire Risk Appraisals of External Walls

On 30 September 2026, the British Standard Institution ("BSI") published a revised PAS9980:2026 code of practice for fire-risk appraisals of external walls ("FRAEW"). The revised code follows similar methodologies to the 2022 edition, but aims to reduce uncertainty and streamline aspects of the previous code to support more consistent assessments and reflect current good practice in FRAEW. The updated standard classifies external-wall risk as either low, tolerable, medium, or high, with professional judgement of assessors key to assessing whether remediation or mitigating measures are appropriate.

PAS 9980:2026 | 30 Sep 2026 | BSI Knowledge

5. New High Court Business and Property Division is Operational

The new Business and Property Division ("BPD") of the High Court began operations on 1 October 2026. In a large scale restructuring relevant Business and Property Courts formerly in the Kings Bench Division (namely the Commercial Court, Circuit Commercial Court, Admiralty Court, and the Technology and Construction Court) have merged with the Chancery Division to form the BPD. The new BPD is intended to create a modern structure for business and property litigation, improving clarity and access to justice. The new structure should support more flexible judicial deployment and simplified governance and leadership arrangements.

Modernisation of High Court structure comes into effect - Courts and Tribunals Judiciary

6. Extended Right-to-Work Checks to Affect the Construction Industry

While right-to-work checks and penalties have been a challenge to UK businesses for some time, new expanded rules in force from 1 October 2026 may have substantial ramifications for the UK Construction industry.

The expanded right-to-work compliance regimes extend liability for right-to-work checks to include sub-contractors and labour supply arrangements. This will likely heavily impact the Construction sector which often has extensive sub-contracting and supply chain mechanisms. The extended regime means that compliance with the right-to-work obligations for sub-contractors may extend to the main contractor and developer, including the financial penalties of £45,000 per illegal worker for a first-time offence and £60,000 for repeat breaches.

Border Security, Asylum and Immigration Act 2025

Code of practice on preventing illegal working: Right to Work Scheme for employers

7. MHCLG releases updated Approved Document B guidance on Fire Safety

On 16 September 2026 the Ministry of Housing, Communities and Local Government ("MHCLG") updated Approved Document B to include guidance on second staircases and evacuation lifts in taller residential buildings.

Fire safety: Approved Document B - GOV.UK

8. UK Government Issues Building Safety Levy Amendment Regulations

The UK Government has issued the Building Safety Levy (Amendment) (England) Regulations 2026 ("Amendment Regulations") amending the main Building Safety Levy Regulations which came into force on 1 October 2026. The Amendment Regulations provide further clarity around exemptions from the levy for Previously Developed land.

The Building Safety Levy (Amendment) (England) Regulations 2026