Banner Holdings v Colchester Borough Council [2010] EWHC 139 (TCC)

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Provisions of a construction contract that limit the right of the adjudicator to vary or overrule a decision to terminate will fall foul of s.108 of the Housing Grants Construction and Regeneration Act (“the Act”).  In such a case, the adjudication provisions of Part I of the Scheme for Construction Contracts (“the Scheme”) will be implied into the contract between the parties.  The Scheme will be implied in its entirety, rather than in a piecemeal manner, even if only a few of the adjudication provisions in the contract fail to comply with the Act.

Technology and Construction Court, Mr Justice Coulson


Banner Holdings Ltd (“Banner”) was engaged by Colchester Borough Council (“CBC”) to build a visual arts facility in Colchester.  The contract incorporated the GC Works/1 Form of contract and the provisions of Model Form 24.  Condition 56(1) of the contract entitled CBC to determine the contract for cause (e.g. Condition 56(1)(a), which included failure to execute work in a workmanlike or proper manner).  Condition 56(8) entitled CBC to determine the contract at will and went on to say that if CBC purported to determine the contract under Condition 56(1) in circumstances where no ground for such determination had arisen, then such determination would be deemed to be a determination at will.  Condition 59(8) of the contract addressed the scope of the adjudicator’s powers and provided that the adjudicator had the power to vary or overrule any decision previously made under the contract by CBC, other than “(c) provided that the circumstances mentioned in Condition 56(1)(a) or (b) have arisen, ……decisions of [CBC] to give notice of determination under Condition 56 (1)”.  There were disputes between the parties and CBC purported to determine the contract on the grounds of, among other matters, alleged workmanship defects.  Banner disputed the validity of the determination and commenced proceedings in the TCC challenging the determination.  Two days before the first Case Management Conference in the court proceedings CBC issued a Notice of Adjudication seeking, amongst other things, a declaration that the contract had been validly determined.  Banner subsequently issued a new claim form in the TCC seeking a declaration that the adjudicator had no jurisdiction to decide the dispute that had been referred to him. 


The Court addressed the following issues:

  • Whether, as Banner contended, the effect of Condition 59(8) was that the adjudicator had no jurisdiction to vary or overrule any decision made by CBC with respect to the determination (thereby effectively depriving the adjudicator of jurisdiction to decide the dispute).   
  • Whether, if Banner was right about Condition 59(8), then, as CBC contended, the Condition did not comply with s.108 of the Act because it denied the right to adjudicate the issue.
  • If Condition 59(8) did not comply with the Act, whether the whole of Condition 59 (the dispute resolution clause) should be replaced by the Scheme (the whole replacement approach) or whether just the offending clause should be replaced with those parts of the Scheme that are necessary to replace it (the piecemeal approach).
  • If the Scheme did replace Condition 59, in whole or in part, did Paragraph 20(a) of the Scheme (which provided that the adjudicator could not open up revise and review a decision if the contract stated that the decision was final and conclusive) deprive the adjudicator of jurisdiction to decide the dispute?


The Court held:

  • Condition 59(8) did not, on its true construction, affect or limit the adjudicator’s jurisdiction in this case; any decision as to the validity or otherwise of the determination under Condition 56(1) would not modify or overrule the original decision to determine.  Further, Condition 59(8) was expressly worded so as to ensure that, if, as was likely, Banner wished to argue that the decision was not in accordance with Condition 56(1), and was therefore a deemed determination at will, they were entitled so to argue in the adjudication and seek the various financial consequences that would flow from such a result.
  • If the court was wrong about this, and Condition 59(8) did prevent CBC from referring the dispute to adjudication, then the Condition fell foul of s.108 of the Act.
  • The court noted in passing that the contract also contained provisions which purported to state that the adjudicator’s decision remained valid even if issued after the statutory period for making his decision had elapsed: Banner accepted that this did not comply with the Act given previous authority on the point (see Epping Electrical Company Limited v Briggs & Forrester Plumbing Services Limited [2007] EWHC 4 (TCC) and Aveat Heating Limited v Jerram Falkus Construction Limited [2007] EWHC 131 (TCC)).
  • Although it was not necessary to rule on the point, the court was of the “tentative view” that if one or more of the adjudication provisions in a contract did not comply with s.108, the whole of the Scheme should apply, regardless of how many (or few) of the provisions failed to comply with the Act.  In coming to this conclusion the court preferred the stance taken in John Mowlem v Hydra Tight Ltd [2002] 17 Const LJ and Aveat Heating, cases which adopted the whole replacement approach, above the stance taken in two Scottish cases Ballast plc v The Burrell Company (Construction Management) Limited [2001] BLR 529 and Hills Electrical and Mechanical plc v Dawn Construction Limited [2004] SLT 477, which said the provisions should apply in a piecemeal fashion.
  • Paragraph 20(a) of the Scheme would not have prevented the adjudicator from deciding the dispute.  That Paragraph was concerned with decisions or certificates that were made final and binding by the terms of the contract itself, such as a final certificate not challenged during the prescribed period of the contract.  Accordingly, the true purpose of Paragraph 20 was to ensure that the adjudicator could not go behind the finality given to thus particular decsisions or certificates.  This was a very different thing from the proposed limit to the adjudicator’s jurisdiction in Condition 59(8).  In any event, if this was not the case, Paragraph 20 would itself fall foul of s.108 of the Act for the same reasons as set out in relation to Condition 59(8).
  • Accordingly the adjudicator had the necessary jurisdiction to decide the dispute referred to him and the proceedings for a declaration to the contrary would be dismissed. 

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