Jacob Austin 00:00:00 I'll Jacob Austin hear from QS.Zone. And welcome to episode 110 of the Subcontractors Blueprint, the show where subcontractors will learn how to ensure profitability, improve cash flow and grow their business. Today's episode, number 110, is all about the latest UK construction law cases that every subcontractor needs to know about. In a repeat of the feature that I brought you earlier in the year, spring case law coffee break, this is this autumn's case law coffee break, and I'll be bringing you some notable decisions from the past six months. That's April to September 2025, featuring some notable decisions from the Technology and Construction Court, the Court of Appeal and even the Supreme Court. We're talking payment disputes, adjudication, enforcement variations, extensions of time and contract interpretation. And we'll dig in in just a moment. But as ever, if you're new to the show, then please do subscribe for more user friendly advice on all things subcontracting. Now let's start with the principle that should be music to every subcontractors ears. Pay now and argue later.
Jacob Austin 00:01:26 The TCC has been hammering home this principle with absolutely no subtlety whatsoever. By way of example, in a case between VMA Services Limited and Project One London Limited, the subcontractor VMA had submitted an application for around about £106,000 and the contractor, Project one, failed to issue a payment notice or pay less notice in time. Instead, Project one decided to try and launch a true value adjudication to avoid paying up, and the adjudicator sided with VMA, essentially saying you haven't paid the notified sum yet, so you can't dispute it yet. The TCC then followed up by upholding that decision when it was later enforced, confirming that the court will make an award of the sums due to the responding party. So there was no need for a second adjudication to rubber stamp it. That case reinforces the pay now and argue later principle, reminding everybody that the timely payment, even if there's a dispute, is crucial to keep cash flowing, to keep businesses running. And in short, if you don't issue those required notices, you must pay the notified sum first before quibbling over the true value.
Jacob Austin 00:02:37 Another similar but different case upheld the same kind of decision between Lap Industries and First Formations Limited, in which Lap had sent an interim application for 120,000 and formations had failed to serve their notices. Lap one the adjudication, but formation still didn't pay and going on to court to enforce the decision. Lapua, faced with formation's defense that said there were multiple contracts that had been awarded and the adjudicator had effectively decided on more than one dispute, which is a jurisdictional play, to overrule the decision at all. And they also accused the adjudicator of considering information that's outside of either parties arguments. The TCC wasn't having it. The judge found that there was one contract, but the parties had expanded the scope of work over the course of the project, which is quite common in construction. And when it got to the argument of considering information outside of the arguments, the supposedly new issue, which wasn't one of laps original arguments themselves, had come from formations, information that they'd put forward in their defence. So in actuality, the adjudicator was more than entitled to consider that.
Jacob Austin 00:03:48 So formations were forced to pay up the TCC. In doing that, re-emphasize that the bar for challenging and adjudicators decision is high and they'll enforce. Adjudicators decisions in all but exceptional circumstances. So serve your notices or be prepared to break out the checkbook. The court isn't there to be a gatekeeper and a general appeal tribunal for adjudicators decisions, so you absolutely must pay up to an adjudicators decision. And if you still think you've been wronged, then you can challenge that position later. But not until you've exchanged the money. And I say this as well. This underpins your entitlement. If you don't receive a payment notice when one is due, then you're able to ask your contractor to pay up the full amount of your application, because under the Construction Act, your application then becomes the default payment. Notice there's no need for you to represent any further paperwork. You can just ask for the full amount to be paid and an adjudicator will back that position. Moving on next to variations and how even side agreements tie back into the main contract.
Jacob Austin 00:04:56 A couple of notable decisions show the importance of clarity when altering scope or settling valuation disputes. First, there's an interesting TCC decision on what counts as a valid variation instruction in Grain Communications Limited versus Shepherd Groundworks Limited. The issue was whether an email postponing works was a valid variation under a JCT framework work order. The subcontract, which was for groundworks, required variations to be in writing. Here the employer grain sent an email saying essentially, we're still planned to do this project, but not until next year, and we'll keep in touch on scheduling. Later, grain terminated the work order entirely, and the contractor, Shepherd, claimed for losses, arguing that the postponement email wasn't a proper variation but a cancellation. The matter was adjudicated on, and the adjudicator first agreed with the contractor, but when it came to the TCC, the judge disagreed. The court found that the email was an effective variation instruction, postponing the work and not a wrongful cancellation, and they said that the contract's variation clause wasn't meant to be read pedantic.
Jacob Austin 00:06:07 Basically, if the requirements like confirm in writing are met in substance, then it's a valid variation. The email didn't explicitly label itself variation or use any magic words, but it clearly communicated a change in schedule and it was written which was deemed to be enough. The judge pointed out that variation clauses shouldn't be applied overly technically. It's about the effect and the intent of the instruction, not whether it uses the word variation. The email made it evident that the start date was postponed, not canceled, and by saying we still plan to do this project, it effectively says it's not a cancellation. So Shepherd wasn't entitled to treat it as a breach. So that case confirms that an email can amend work and be treated as an instruction if it fulfills the contract's basic requirements, even if it's informally worded for subcontractors. That could be a silver lining, because it means you can rely on clear emails as binding instructions. You still need to be cautious about receiving verbal instructions, but the court here is saying instructions confirmed in writing.
Jacob Austin 00:07:16 Be that a letter or a written email, a valid means to trigger a variation, and it shows as well that the courts are willing to employ terms that consider emails as written information and take a common sense view to what the parties originally intended to do, rather than avoiding variations on a technicality. Our second variation related case delves into settlement agreements in ongoing projects, and specifically, whether resolving a dispute via a settlement creates a whole new contract or just amends the existing one. And so between London Echo, Holmes Limited and raised now. Ealing Limited, a contractor, Eco Homes and an employer raised now had a JCT contract that got into a dispute and signed a settlement agreement to resolve it. The JCT contract allowed adjudication, but the settlement agreement didn't and it was basically a payment plan for what was owed, referencing the termination of the original contract. When Res now didn't pay up. Eco homes went to adjudication under the original Contracts Adjudication Clause, treating the dispute as under the terms of the settlement agreement. Res now objected to this, saying wait.
Jacob Austin 00:08:28 The settlement agreement is a standalone contract with no adjudication clause, so the adjudicator has no jurisdiction. The TCC disagreed with this and this is a key point. The judge held that the settlement agreement was not a new contract, but a variation of the original contract. Therefore, original adjudication clauses still applied. The court gave several reasons for that. The settlement explicitly referenced the original JCT contract. Like the termination provisions and the notices, it preserved rights under the original contract and had an entire agreement clause that the judge interpreted as referring to the wrapping up of the old contract and not replacing it altogether. Commercially, it made sense the parties didn't intend to lose the handy adjudication method in their settlement, so Echo Holmes could enforce the adjudicators award. I would also argue if the judge had wanted to make the statement, if they'd decided it was a new contract altogether, that because they were still doing construction work, the Construction Act would have implied an adjudication right to that contract in spite of their not being won written. The right to adjudicate is heavily supported by the courts, most probably because it's seen as quicker and because it prevents the court from wasting time on little disputes.
Jacob Austin 00:09:48 The courts hate things that waste the court's time, and the judge in this decision referenced a growing judicial emphasis on encouraging alternative dispute resolution. So in plain English, judges want you to adjudicate, to sort things out quickly and without cases, crossing their desk so they'll interpret contracts in a way that keeps that option open wherever it's reasonable to do so. Okay, now it's time to talk about extensions of time and notice clauses. Not the most glamorous topic, but an important one, and one that could save or cost you a fortune. There is an important Court of Appeal decision between the Disclosure and Barring Service, DBS and Tata Consultancy Services in 2025, which tackled a classic contract clause. The old. If X happens, then Y must happen notification provision here. Tata was hit with a massive delay claim by the DBS for a late IT project. Tata argued DBS couldn't claim liquidated damages because DBS hadn't issued a required non-performance report when their milestone slipped. The contract said if milestone X is missed due to a contractor default, the authority DBS shall promptly issue an NCR and then DBS can choose remedies like delayed payments and so on.
Jacob Austin 00:11:12 That sounds like a clear condition precedent, but the trial judge wasn't so sure. On appeal, Lord Justice Coulson and colleagues made it clear yes, it's a condition precedent that if then structure was clearly intended to be conditional, DBS had to do step one issue the NCR, before step two charge delay costs. The Court of Appeal even dissected minutiae like a stray comma in the clause showing. Lawyers really will argue about anything. The DBS argued that the comma meant the NCR wasn't actually a part of the condition, but Lord Justice Lewisohn noted that the comma merely served to break up what was a 13 line sentence. It didn't change the meaning. In other words, don't think punctuation is going to save you from a clear if then requirement. But there was a wrinkle. The contract said the NCR must be issued promptly, but it didn't give a firm time limit. So does failing to issue a prompt notice void the right or entitlement to delay damages altogether? Well, the Court of Appeals stopped short of that. Lord Justice Lewisohn mused that if an NCR is issued late, it can still satisfy the condition, saying until a non conformance report is given, the clause cannot be relied upon, but once it has been served, it can be.
Jacob Austin 00:12:38 If the NCR was late and that caused further delay, then the contractor might get compensated for that. But the key action is that the notice is eventually served in the DBS case. They never served that NCR at all, so they lost out entirely. The court didn't definitively decide if a late notice is as good as a timely one, but it strongly hinted that late compliance is better than none at all. Perhaps to test that the DBS could have issued an NCR after the case and really tested how late the notice could have been and still relied on it, that would have made for interesting reading, at least for subcontractors and contractors alike. The big takeaway from this is that you need to read your contract clauses carefully. So if a clause says if X you shall do Y, then the courts are likely to enforce it as a strict condition precedent to your rights. For example, if there's a delay, you shall notify the contractor within seven days. Even though the phrase condition precedent isn't explicitly written, it has that you snooze, you lose.
Jacob Austin 00:13:41 Meaning and implication. Modern courts look at natural meaning and commercial purpose, not formalistic wording to decide if enosis clause is a prerequisite in the charter case notice hearing, the NCR cost the client over £100 million in counter claims. That's massive. So that tells you if you're a subcontractor and your contract says issue notices for extra time or money, then do it. Do it by the book and do it on time. The same clearly works in reverse. If the contractor has to issue a notice to you before he charges you with delays, then you have a ready made defence if they haven't issued it properly. This Court of Appeal decision provides fresh guidance on those if and then clauses, effectively saying they'll be treated as binding conditions, so you must follow them precisely. Okay. Final topic for today is a Supreme Court ruling that doesn't deal exclusively with subcontractors, but it will have ripple effects throughout the whole industry. This is the case between US Corporation and BW Trading Limited, and essentially ruled in May 2025 about liability for defective construction work and essentially answers who can sue whom for building defects discovered years later.
Jacob Austin 00:15:03 BW, part of a major developing group, had hired Urs as an engineering consultant to design high rise residential buildings. Years later, some serious structural defects came to light. That sounds like a brown moment. By that time, BW had sold the interest in the building to other investors, so BW technically didn't own them, but it paid to fix the defects themselves. Normally, once you sold a property, you might think you can't recover repair costs because you have no legal liability to the current owners or residents. And Urs, the consultant, argued exactly that. Since BW wasn't liable under the old Defective Premises Act, which had a six year limit that had passed and no one had sued BW that BW remediation was voluntary and basically an act that they did out of their own kindness. So others argued they shouldn't have to pay for it. But BW countered that they had to do the work because there were significant life safety issues, reputational risks that they weren't willing to take. And later the Building Safety Act 2022 extended a liability period to 30 years, which theoretically put BW back in the picture for making those repairs.
Jacob Austin 00:16:23 The Supreme Court sided firmly with BW, the developer, and it dismissed IRS's appeal on all four of its arguments, and the court made this decision based around two big points. Firstly, a professional services company like Urs Ars owes a duty of care to its client, the developer, in tort. Even if the developer has sold the building and isn't being sued by third parties at the time, others can't shrug their shoulders and say, well, you fixed it on your own. It's not our problem. Because the court noted that BW still faced real pressure, even without having an active lawsuit on a moral and safety front, as well as reputational damage at stake and potential personal injury liability if they ignored the significant defects. So, realistically, BW had no alternative but to remediate the building, and those costs were a foreseeable result of IRS's negligent design. Secondly, the court acknowledged the new Building Safety Act's role, even though BDS claim against Urs was around negligence and contribution to a defective end product. The fact that the new act would extend limitation on defects claims up to 30 years meant that liability to the new owners would spring back into life.
Jacob Austin 00:17:44 That reinforced that BDS remedial work wasn't a voluntary act. It was done with the very real and looming shadow of potential liability and forced by the law. So the Supreme Court effectively said, yes, developers can recover defect remediation from consultants, even if the developer no longer owns the building at the time of repair, and that the duty of care owed by us to its client and then the onward building owner may survive, particularly when public safety is the issue. There's another interesting point there in that the court has found the Defective Premises Act can make consultants liable to developers, and not just end users or the buyers of a building. It's not just a one way street. So if the developer is on the hook to a buyer, the developer should have a corresponding route to sue the responsible party, in this case, the negligent consultant. And here's why this matters to you as a subcontractor. This judgment strengthens the ability of owners and developers of a building to come after the project team for defects, even long after the project finishes.
Jacob Austin 00:18:55 And that could mean claims filtering down the contractual supply chain. So a consultant held liable, might turn around and sue a sub consultant or a subcontractor if they contributed to the defect with defective design. It also underscores the huge impact of the Building Safety Act 2022, which extends liabilities and duties retroactively. And the Supreme Court has basically endorsed that approach in principle through making the decision in this case. And that's why this has been called a landmark case. It's certainly a big win for developers, but it probably makes for a big fright for consultants and their insurers because the duration of their liability has just extended significantly. So the industry takeaway has got to be that quality and safety responsibilities need to be taken absolutely seriously, because they can come back to haunt you decades later. And there we have it for six months worth of construction law. That was pretty eventful, I thought. We've seen courts doubling down on adjudication, enforcement making sure that pay now argue later is an enforceable reality and not just a slogan. And we've been reminded that if your contract says jump through this hoop to get your extension of time, then you'd better get jumping and do it on time.
Jacob Austin 00:20:16 As well as the whistle stop walkthrough of the landmark Building safety case, some of the early decisions we mentioned ultimately empower you to enforce your rights. Whether that means getting paid what you're owed or having clarity on the use of adjudication when you need it. We've also seen that lawyers are literally willing to argue over the placement of a comma. And probably get paid handsomely for doing it. And with that, I'm going to call it a day on our autumn case law coffee break. I hope you've enjoyed the show today. My mission with the podcast is to help the million SME subcontractors working out there in our industry. If you've taken some value away from today's episode, then I'd love it if you'd share the show and pass that value on to somebody else who would benefit from hearing it. And of course, subscribe yourself if you haven't already. And thanks for tuning in. If you like what you've heard and you want to learn more, then please do find us at www.QS.Zone for more information or you can find me on all your favourite socials again at @QS.Zone.
Jacob Austin 00:21:19 Thanks. I've been Jacob Austin and you've been awesome!
