Grove Construction (London) Ltd v Bagshot Manor Ltd [2025] EWHC 591 (TCC) District Judge Baldwin (judgment 13 March 2025)

The claimant (Grove) was engaged by Bagshot Manor Development Ltd (BMDL) to design and build a residential development to be called Bagshot Manor. The development was completed in 2020 and upon the expiry of the rectification period in 2023, Grove claimed the retention. BMDL subsequently went into administration and, in July 2023, assigned the building contract to the defendant, (Bagshot). Notice of the assignment was given to Grove by Bagshot, albeit belatedly. The retention was not paid. Grove commenced adjudication proceedings against Bagshot who denied it was liable. The adjudicator declined jurisdiction. The following day, Grove issued a fresh adjudication notice and this time an adjudicator accepted the appointment.

Bagshot objected to the adjudicator’s jurisdiction on the grounds that it was not party to the original building contract and had no liability to Grove under the assignment. The adjudicator found in favour of Grove and awarded them the retention. Grove applied to enforce the award and Bagshot applied for a declaration under Part 8 of the Civil Procedure Rules (CPR) that it was not liable. Initially, the parties agreed that the two applications were suitable to be heard at the same time. At the hearing, Bagshot sought to resile from that position arguing that some evidence would be required in order to decide an issue arising under one of the clauses (clause 7.1) in the assignment. The judge decided the Part 8 claim did not require evidence and heard that claim first.    

The arguments

Bagshot said that the assignment was a conventional deed of assignment. It was trite law that only the rights and benefits accruing under a contract were capable of being assigned, and not the burdens, obligations and liabilities under the contract. The latter could only be transferred by a novation which would require the consent of all three parties, and that was not the case here. Furthermore, and in any event, the assignment did not contain a right of adjudication. Thus, any right to payment arose under the building contract and was against BMDL, not Bagshot.

They went on to make what the judge described as three cogent points:

(a) It was not within BMDL's power or gift to assign Grove’s rights of action.

(b) It made no sense to assign Grove’s rights to Bagshot.

(c) If Grove’s rights were somehow able to be assigned in this way, it would not only be an absurdity, but also of no assistance whatsoever to Grove.

The judge described Grove’s arguments as “somewhat tortuous and on occasion impenetrable”, summarised as follows:

The court was asked to note the specific description applied to the assignment, namely "of Construction Documents" rather than the interests conferred by those documents. The court was also asked to interpret (clause 3) as assigning BMDL's interests in all rights of action, not just those of the assignor, namely to include defending any claim arising out of a burden or an obligation originally on BMDL.

Finally, that this was a “clause 7.1 assignment” of the “whole, entire rights…”.

The court found no merit in these arguments. There was nothing in clauses 3, 4 or 7 of the assignment of any comfort to Grove. The original contract continued to subsist between BMDL and Grove, leaving Grove’s rights unaltered. Grove only had a right to refer a dispute arising under the contract and, it followed, only a dispute where BMDL was the other party to the adjudication. A dispute with Bagshot was not a dispute arising "under the contract" as defined in the cases cited to the court[1]. 

There was nothing from a “policy perspective” to make it “unconscionable” to allow a party to a contract to assign contractual benefits upon insolvency, the impact of which was simply one of the hazards of contracting.  

Held: The adjudicator lacked jurisdiction, the parties to this claim brought an adjudication while not being the parties to the contract. The adjudicator erred in law in finding that Bagshot had stepped into the shoes of BMDL, when no such obligations, burdens or liabilities under the contract had been transferred by the medium of the deed or otherwise. Accordingly, the application to enforce the award fell to be dismissed and Bagshot was entitled to its Part 8 declaration.

[1] MG Scaffolding (Oxford) Ltd v Palmloch Ltd [2019] EWHC 1787 (TCC), 185 ConLR 210 @ [25] – [26] and Steve Ward Services (UK) Ltd v Davies & Davies Associates Ltd [2022] EWCA Civ 153, [2022] BLR 268, 203 ConLR 57 @ [42]

Lapp Industries Ltd v First Formations Ltd [2025] EWHC 943 (TCC) Adrian Williamson KC (judgment 16 April 2025)

Lapp was engaged by First to carry out minor works at a property in London. The agreement for the works contract was informal, duly completed, invoiced and paid. First then asked Lapp to quote for demolition and enabling works on the upper floors at the same property, explaining that further works (not then capable of being specified) would be required and Lapp would be asked to quote for these works as the need arose. The initial quotation was accepted and work began on the upper floors of the property. Thereafter, First asked Lapp to quote for further works which they duly did and each quotation went for approval and, after acceptance, the quoted works were undertaken. The payment terms sometimes differed from those set out in the contract for the initial works.

In April 2022, Lapp submitted an application for a ‘payment on account’ of the further works in the sum of £100,000 plus VAT. First did not respond with a payment or pay less notice and failed to pay the sum applied for. Lapp commenced what is now called a ‘smash and grab’ adjudication. First challenged the adjudicator’s jurisdiction, submitting that there were numerous separate contracts and therefore the payment application could not meet the requirements of the Act and Scheme as it related to more than one contract. The adjudicator decided that there was a single contract and assumed jurisdiction. First then defended the adjudication on the merits, asserting that the application for a payment on account was not a valid payment notice and there was no entitlement to the payment sought.

The adjudicator received various submissions including that from First in which they continued to assert that the works related to different contracts with differing terms, and that the payment application was not a valid payment notice. First also claimed that the payment application/invoice had been withdrawn and replaced by a subsequent invoice for £450,000.

The adjudicator decided that there was a valid payment notice, that had not been withdrawn, and the sum claimed was the notified sum and awarded Lapp £120,000. First declined to pay and Lapp applied to enforce the decision.

Before the court, Lapp maintained its jurisdictional challenge based on there having been multiple contracts and no valid payment notice. They now also contended that there had been a material breach of the rules of natural justice.

Jurisdiction

After setting out the principles to be derived from case law on the proper approach to enforcement, the court looked at the witness statements and the adjudicator’s decision. First relied on the history of the letting of the works by a series of quotations and the differing payment terms. The court noted there was a large measure of agreement as to the factual matrix and concluded that the initial quotation for the enabling and demolition works and its acceptance formed the construction contract, it being envisaged that additional works would follow as necessary. The answer as to whether there was one contract with additions, or variations, or a series of separate contracts, was a question of interpretation to be viewed in the context of the factual matrix and what the contracting parties knew or could be assumed to have known at the time of entering into the agreement[1]. Applying this approach, the court concluded that there was a single contract with additions.  

The next question was whether the payment notice was valid. Once it was seen that the adjudicator had jurisdiction, the question of validity of the notice was one of fact which could not be challenged on enforcement.

Natural justice

The court reminded itself that it was not required to conduct a mini trial but to determine any issues that fairness required and which could be decided summarily. 

First tried to suggest that witness evidence would be relevant on the question of whether the payment notice was valid, but the court noted that a defence could not be based on speculation and the hope (like Mr Micawber in Charles Dickens’ David Copperfield) ‘that something would turn up’. First said that Lapp’s case as to the validity of the payment notice was not fully pleaded, but that argument was firmly rejected as not being the proper test for permission to defend.

First then argued that the adjudicator had embarked on a ‘frolic of her own’ by taking into account and basing her decision on what was described as a ‘previous course of dealing’ between the parties (i.e. that previous requests for advance payments on account had been made and paid). This said First, was not a point which had been argued or addressed in the adjudication. The court noted that the adjudicator had decided the question of validity in the round and the course of dealing was not “central to her reasoning”. In any case, the course of dealing was raised in the adjudication by First who could hardly now complain if it went against them.  The Judge then said:

“I do not accept that the adjudicator undertook any form of frolic. She had to consider whether the Application, which was headed "Application for interim payment" and sought an "on account" payment of £100,000 plus VAT, was a proper application in accordance with the contract between the parties and the Scheme. That is exactly what she did do…”

Finally, First said the adjudicator failed to deal with two of its defences, namely: (a) that the payment application did not comply with the requirements of Part II of the Scheme, (as it was a request for a ‘payment on account’); and (b) that the payment application had been “withdrawn” and superseded and could not therefore be relied on.

The court found that the adjudicator reached an overall view on the validity of the Application, taking into account all the contentions urged on each side. There was no breach of the rules of natural justice. First might not agree with the adjudicator’s reasoning, but that was nothing to the point.

In relation to the withdrawal issue, the adjudicator carefully noted the points made in her decision, from which it was apparent that she did appreciate there was an issue of implied withdrawal/estoppel/waiver arising out of the further invoice, but she rejected First’s case on this.

The court concluded by reinforcing the guiding principles that any failure to consider a defence had to be deliberate and not a mere oversight and that it had to have had a material effect on the outcome, neither of which was the case here. Summary judgment entered for Lapp.

[1] Investors Compensation Scheme v West Bromwich Building Society, [1998] 1 WLR 896 at 912

See Lapp Industries Ltd v First Formations Ltd (above)

Midas Construction Ltd v Harmsworth Pension Funds Trustees Ltd [2025] EWHC 1122 (TCC) (09 May 2025)

The claimant, Midas, was in administration with no notice of distribution issued and had appointed Pythagoras Capitol to recover two debts owed by the defendant, Harmsworth, in respect of two different building contracts between Midas as contractor and Harmsworth as employer.

There was no question that Midas had obtained a valid adjudicator's Decision, in its favour, that it was owed the sum of £1,551,528.00 by Harmsworth in respect of ‘the Sanctus Project’, which had been carried out more than three years before judgment. Harmsworth had refused to pay, claiming it was owed money by Midas under a separate contract (the Print Hall Contract). Midas then began an adjudication for a declaration that it did not owe the money claimed and succeeded.

Before commencing enforcement proceedings, Midas sought to engage with Harmsworth over the appropriate amount of security to be provided by them for Harmsworth’s costs of proceedings to finally determine the disputes under the two contracts. In the course of the engagement, Pythagoras asked Harmsworth to agree to enforcement of the Sanctus Project Adjudication Decision, subject to a stay of three months in which Harmsworth could commence Final or Overturning Proceedings. No such agreement was forthcoming, nor did Harmsworth respond to indicate what security it required.

In the ensuing enforcement proceedings, Midas agreed to provide security for costs but on the basis that it should relate only to proceedings to finally resolve the Sanctus dispute. Harmsworth objected that Midas was, in effect, requesting the court to stage the subsequent proceedings and dictate the order in which the two disputes should be decided but without staging the security accordingly.

The court agreed with and adopted the approach taken by His Honour Judge Parfitt in Styles & Wood[1].

Thus in assessing the amount of security the court would:

• Look carefully at the actual issues to be finally determined and reject a generic estimate of likely costs divorced from the actual issues. 
• Give credit for work already done in the adjudication and elsewhere, meaning that less costs were required than when a matter is considered and pleaded afresh with witness and expert evidence being gathered for the first time.
• Allow security for the likely recoverable costs rather than likely incurred costs.
• Be receptive to an incremental approach to adjust or increase security as required.

The court also had regard to the judgment of Constable J in Meadowside[2], so that as near as possible, the necessary safeguards must “seek to place the responding party in a similar position as if the company was solvent”. The court recognised that it was unlikely that this would be wholly achieved but “it certainly should be the aim of the Court insofar as practicable”. In those circumstances, the court rejected any suggestion that security be staged and declined to “case manage” the proceedings in any manner which preluded Harmsworth from bringing the two claims separately or together as they decided might be appropriate.

The court went on to assess the actual security separately for each of the two disputes at figures which were (“inevitably”) more than Midas had proposed and less than those put forward by Harmsworth.

[1] Styles & Wood Limited (in administration) v GE CIF Trustees Limited [2020] EWHC 2694 (TCC)

[2] Meadowside Building Developments Ltd (in Liquidation) and 12-18 Hill Street Management Company Ltd [2019] EWHC 2651 (TCC)