BALFOUR BEATTY REGIONAL CONSTRUCTION LTD v GROVE DEVELOPMENTS LTD

[2016] EWCA Civ 990, Court of Appeal, Longmore, Jackson and Vos LJJ, 13 October 2016

Interpretation of contract - Role of commercial sense - Entitlement to interim payments after contractual date for practical completion

The claimant, Grove Developments Ltd, employed the defendant to design and construct a hotel and serviced apartments in London. The contract was based on the JCT standard form Design and Build Contract 2011, subject to a number of bespoke amendments. The contract specified 22 July 2015 as the date for practical completion of the works but practical completion was not in fact achieved until 26 July 2016. Under the contract the parties elected for stage payments and the contract provided that the stages were to be agreed within two weeks from the date of the contract. The parties failed to reach agreement in that timescale. But after six weeks they agreed a schedule according to which the claimant would make interim payments to the defendant in 23 valuations, which were to conclude on 16 July 2015. The procedure for making interim payments worked smoothly until July 2015. Two months or so before the latter date it was apparent to the parties that the work would not be completed on time. In these circumstances the parties initially anticipated that interim payments would continue beyond July 2015 but they were in disagreement about the appropriate dates for applications, valuations and payments.