Banner Holdings Ltd V Colchester Borough Council

The approach to be adopted if a term of a construction contract does not comply with the adjudication or payment provisions required by the Construction Act
 

 

BANNER HOLDINGS LTD V COLCHESTER BOROUGH COUNCIL
Technology and Construction Court
Coulson J
29 January 2010
 

 
One of the issues which Coulson J had to consider was the approach to be adopted when an express contractual term did not comply with the adjudication or payment provisions required to be included in any construction contract by the Construction Act. He stated that the wholesale approach of replacing all the terms, regardless of how many (or how few) failed to comply, with (all) the provisions of the Scheme for Construction Contracts was more likely than not to be the correct approach, at least in respect of the adjudication provisions.
 
Section 108(5) provided that if the adjudication provisions in a contract did not comply with the Act, the adjudication provisions of the Scheme for Construction Contracts applied. This had led to a debate in the cases about whether this meant that the Scheme as a whole applied (the “wholesale approach”) or the process was limited to incorporating those parts of the Scheme which were necessary to replace those express terms which did not comply (the “piecemeal approach”). In two Scottish cases, namely Ballast v The Burrell Company (2001) and Hills Electrical and Mechancial v Dawn Construction (2003), which was concerned with payment terms, the piecemeal approach was favoured. In two English TCC cases, namely Judge Toulmin’s decision in John Mowlem v Hydra-Tight (2002) and Judge Havery’s decision in Aveat Heating v Jerram Falkus Construction (2007) it was held that the piecemeal approach was incorrect and if the express terms did not comply with the Act, the Scheme applied wholesale. It was suggested in Keating on Construction Contracts (8th Edition, paragraph 17.014) that the Scheme would apply in its entirety in these circumstances. It should not be for the court to have to piece together a compliant set of provisions from two different sources, which process would not make for certainty. Section 114, on which Lord Clarke relied in Hills Electrical and Mechancial v Dawn Construction, was concerned with payment provisions. It was perhaps unsurprising that that part of the Act was worded in the way that it was because section 110(3), which was also concerned with payment, provided that if “or to the extent that” a contract did not contain such provision as was required by section 110(1) or (2), the relevant provisions of the Scheme for Construction Contracts were to apply.
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