WHERE TO FROM HERE: what to do when an interim payment schedule runs out
Shona Frame and Madeleine Young
A recent TCC decision has considered a contractor’s entitlement to interim payments where dates in an agreed payment schedule had been exhausted prior to practical completion. Such situations are reasonably common in practice with parties often agreeing to extend payment cycles until practical completion. The present decision finds that there is no automatic right to extend a payment schedule in this way and no entitlement to additional interim payments arose beyond the last date in the payment schedule in this case.
Grove Developments Ltd v Balfour Beatty Regional Construction Limited
Grove Developments Ltd ("GDL") and Balfour Beatty Regional Construction Limited ("BB") entered into a JCT Design and Build Contract, 2011 edition, containing a series of bespoke amendments. One of those amendments was an agreed schedule of 23 interim valuation and payment dates, the last of which coincided with the Date for Completion of the Works as defined in the contract. Those 23 dates came and went along with the corresponding interim applications, valuations and payments. The Date for Completion of the Works (22 July 2015) also came and went yet the works were not, in fact, complete.
On 21 August 2015, BB issued a further interim application ("IA24") to GDL which was then followed by a series of communications between parties as to the correct mechanism for dealing with future interim payments given that the payment schedule did not extend beyond the original Date for Completion. No agreement could be reached and the TCC was ultimately asked to decide whether or not BB had a contractual right to make IA24 (or any subsequent application) prior to practical completion.
No entitlement to further interim payments
Unfortunately for BB, the court held that it was not entitled to further interim payments beyond those particular interim payments set out in the schedule to the contract, despite the fact that the works were not complete. It rejected an argument that it was commercially sensible to imply a term into the contract to this effect given that it was open to BB at the outset to negotiate and provide for the possibility of delay.
As a fallback position, BB argued that the absence of any right to make interim payment applications between the last date in the payment schedule and the actual date of practical