Grove v Balfour

GROVE DEVELOPMENTS Limited v BALFOUR beatty regional construction limited

Citation: [2016] EWCA Civ 990

Background Facts

The project was for the design and construction of a hotel and serviced apartments at Greenwich Peninsula, London, under a JCT Design and Build Contract 2011 with bespoke amendments.
The parties originally chose Alternative A (stage payments), but they failed to agree on stages. They later adopted a schedule of monthly interim payments ("Tumber Schedule"), running up to July 2015, the original date for practical completion.
The project overran beyond July 2015. BB issued application 24 for payment after that date. Grove argued that no further interim payments were due beyond the last agreed schedule (valuation 23).
BB argued for continued interim payments or for application of the statutory Scheme for Construction Contracts.

High Court decision:
Found in favour of Grove, holding BB had no contractual right to further interim payments after valuation 23.

Confirmed that the contract, as amended by the Tumber Schedule, provided for only 23 interim payments, up to the original expected completion date in July 2015.
There was no implied term allowing further interim payments after valuation 23.
The parties’ arrangement complied with the Construction Act 1996 (specifically s.109 on stage payments), so the statutory Scheme did not apply.
No new or supplemental agreement was concluded through subsequent correspondence or conduct to extend interim payment rights.

Outcome:
BB’s appeal was dismissed; Grove succeeded in confirming no further interim payment entitlement.

Freedom to structure interim payments:
Parties can agree a finite series of interim payments tailored to specific project milestones or dates. Courts will enforce such agreements as written.

Strict approach to implied terms:
Courts are reluctant to imply terms unless necessary to give the contract business efficacy and if the term is obvious and clear. Even if the agreed scheme appears commercially disadvantageous in hindsight, the court will not rescue a party from a bad bargain.

No statutory right to indefinite interim payments:
Section 109 of the Housing Grants, Construction and Regeneration Act 1996 allows parties flexibility to define payment arrangements. If a contract provides for a payment regime (even if limited), the statutory Scheme will not override it.

Importance of clarity in payment schedules:
If parties do not specify future interim payment mechanisms clearly (e.g., post-scheduled payments), the courts will not fill the gap.

Objective interpretation over commercial common sense:
Even if a payment regime appears uncommercial (e.g., no further cash flow during a delayed completion period), the court will uphold clear contractual wording over speculative commercial intentions.