March 2024

Legal Developments in Construction Law: March 2024


In this issue:

  1. Negative certificate and overpayment: can an employer get its money back?
  2. Loss and expense claim under a JCT contract: is lack of a notice fatal?
  3. Accountable person; could that be a  tribunal-appointed manager?  
  4. New competence framework for project managers
  5. Competence Steering Group 2024 final report: "A Higher Bar"
  6. Biodiversity 10% net gain requirement in force 

1. Negative certificate and overpayment: can an employer get its money back?

An adjudicator ruled that a contractor had been overpaid on an interim payment cycle and should repay the overpayment to the employer.  In proceedings brought by the contractor, however, the court had to decide whether or not there was a proper legal basis for the adjudicator to make that ruling.
In deciding that the adjudicator was entitled and right to make his ruling, the court said that textbook observations and case law supported the proposition that both a court and a (validly appointed) adjudicator may, subject to any contrary contract provision, undertake a true valuation assessment of sums included in an interim payment, whether specifically in relation to that interim payment or in relation to a subsequent interim payment, and, to the extent that they conclude that the interim payment was overstated and that the employer has overpaid, order or decide repayment of that overpayment, either under the contract terms, express or implied, or by way of restitution applying the principle of apportionment or the decision in Aspect v Higgins.

The case law considered made it clear that, unless there is something in the contract or some particular feature of the case militating against it, the general principle is that there is a right to repayment in these circumstances, whether by way of express or implied term or restitution, and whether there has already been a notified sum and/or a true value adjudication or not, and whether the issue arises within the same interim payment cycle or a later interim payment cycle.

This was consistent with the general principle, implicit in the typical building contract even if not express, that interim payments are only payments on account and any overvaluation can and should be corrected and any overpayment reclaimed, either in subsequent interim payment cycles or at final account stage including, if necessary, by a true value determination by any tribunal with jurisdiction, which includes a validly appointed adjudicator and a court.

Bellway Homes Ltd v Surgo Construction Ltd [2024] EWHC 269

2. Loss and expense claim under a JCT contract: is lack of a notice fatal?

Clause 4.20.1 of the 2016 Standard Building Contract with Quantities 2016 Edition, prepared by the Scottish Building Contract Committee, which has exactly the same wording as clause 4.20.1 of the JCT 2016 standard form, gives a contractor an entitlement to loss and expense, subject to compliance with clause 4.21, which requires notice to be given in respect of a loss and expense claim.  But what if no notice is given?  Is that fatal to a claim?

Noting that the standard form clause fell to be regarded as one which has been negotiated and drafted by skilled professionals, the Scottish court said that, on its face, the language used in clause 4.20.1 was clear and straight-forward. It indicated that the contractor’s entitlement to reimbursement was “subject to… compliance with clause 4.21”. It was difficult to construe this language other than as creating a condition precedent.  To construe the clause as the contractor contended would involve deleting or ignoring this critical phrase.

The contractor’s entitlement was dependent on compliance. Overall, in the court's opinion, clauses 4.21.1 to 4.21.3 set out a practical and workable set of steps for notification and provision of information by the contractor and the obligation to comply with clause 4.21 was not an unduly onerous one. Benefits, in the form of timely and well administered contract administration, can reasonably have been anticipated as accruing to both parties from compliance.

The court also noted that constructions of differently worded clauses were of limited assistance in construing the clause but considered the approach taken to the notification of loss and expense claims in earlier editions of the JCT standard form to be a useful aid to construction in this case. The pre-existing position in respect of JCT 63 and 98 was that the notification provisions created a condition precedent to the contractor’s entitlement.  The material clauses were worded differently in both the JCT 63 and JCT 98 standard forms but there appeared (according to the guidance notes published by the Scottish Building Contract Committee for Standard Building Contract) to be no suggestion that any significant change was intended in the 2016 edition.

3. Accountable person: could that be a tribunal-appointed manager?

A manager of an estate of higher-risk buildings was appointed in 2016 under a Management Order made by a tribunal under s.24 of the Landlord and Tenant Act 1987.  But did that make the manager an Accountable Person under the Building Safety Act?

The First-Tier Tribunal, Property Chamber, said that it did not.  It was common ground that as the manager did not hold a legal estate in any part of the estate buildings, he could only be an Accountable Person if he was under a "relevant" repairing obligation in relation to any part of the common parts.  Under the Management Order the manager was under a repairing obligation in relation to the common parts but, to be under a “relevant” repairing obligation, as defined in the Building Safety Act, the manager would need to be required under a lease, or by virtue of an enactment, to repair or maintain any part of the common parts. 

The Tribunal ruled that the manager had no obligations “under a lease” because his powers and duties derived from the Management Order and not under a lease.  It also concluded that the manager was not under a repairing obligation in relation to the common parts "by virtue of an enactment".  These words, according to the Court of Appeal, are directed to cases in which specific provision is made in legislation.  No primary or secondary legislation obliged the manager to repair or maintain any part of the common parts and he was therefore not required to do so "by virtue of any enactment".

The Tribunal also referred to the views, expressed in correspondence, of the Department for Levelling Up, Housing and Communities.  It said that it did not attach any weight to those views; the views of civil servants as to the meaning of a statute are not a useful aid to construction.


4. New competence framework for project managers

Working Group 10 (Project Managers) of the Competence Steering Group has developed a competence framework to establish core competence criteria for project managers working in the built environment in England. 

The framework is intended to be complementary to the British Standards Institution suite of documents, BSI Flex 8670 and PAS 8671, 8672 and PAS 8673, and is for use by:

  • professional institutions, regulators, enforcing authorities, licensing bodies and awarding organisations to assess the competence of project managers;
  • individuals to determine their own competence limitations and to identify areas of development; and
  • construction organisations undertaking new build, refurbishments, repairs, maintenance and improvements to buildings, in identifying individuals competent to undertake the role of site supervisor.

It is expected that existing professional vocational, education and technical training will take into account the competence requirements of the framework when designing or reviewing education and training syllabuses.


5. Competence Steering Group 2024 final report: "A Higher Bar"

"A Higher Bar - Achieving a competence-led built environment", the third report published by the Construction Industry Council on behalf of the Competence Steering Group, is the final report in the CSG’s trilogy and should be read in conjunction with its 2019 and 2020 reports.

In discussing the Building Safety Act and the new competence duties the CSG says that it recognises "that the sector is not ready for the significant changes and continued support will be needed."


6. Biodiversity 10% net gain requirement in force

Biodiversity net gain, aimed at ensuring development will result in more or better quality natural habitat than there was before development, is now mandatory (see Schedule 7A of the Town and Country Planning Act 1990 (added by Schedule 14 of the Environment Act 2021)).  Developers must deliver a BNG of 10%.

Developers, local planning authorities and land managers wanting to sell in the BNG market will need to understand the new requirements.



The content of our publications and/or events provide information on legal issues and developments of interest to our clients and friends. They are not intended to provide legal advice or be a substitute for obtaining legal advice for your specific matter. You should not act upon any such information without first obtaining your own legal advice. Please also read the Mayer Brown legal publications Disclaimer.

Related Services & Industries

Stay Up To Date With Our Insights

See how we use a multidisciplinary, integrated approach to meet our clients' needs.