E & TL Jones v Vale of Glamorgan Council: TCC dismisses subcontractor's project bank claim

The Technology and Construction Court has dismissed a subcontractor's claim against a local authority for more than £480,000, ruling that it never acquired the contractual standing needed to enforce protections built into a project bank account that was never actually established.

In E & TL Jones (Civils) Ltd v Vale of Glamorgan Council [2026] EWHC 2054 (TCC), His Honour Judge Keyser KC, sitting in the Business and Property Courts in Wales, rejected a claim brought under the Contracts (Rights of Third Parties) Act 1999 following the collapse of main contractor ISG Construction Ltd.

The dispute arose from a school extension project in Penarth. The council engaged ISG under an amended NEC4 contract worth almost £21 million, which included provision for a project bank account, a mechanism intended to protect subcontractors by holding payments due to them on trust pending distribution. E & TL Jones was appointed as ISG's groundworks subcontractor in May 2024. Although the contractual machinery required ISG to establish the account within three weeks of the main contract's start, delays attributed to its bank, compounded by ISG's own deepening financial difficulties, meant the account was never set up before ISG entered administration in September 2024, owing the subcontractor sums it has no realistic prospect of recovering.

In the meantime, the council had continued making payments directly to ISG rather than into the never-established account, including instalments that incorporated sums owed to the subcontractor for completed work. E & TL Jones argued that these direct payments breached the main contract's payment clause, and that as a member of the class of subcontractors intended to benefit from the project bank arrangements, it was entitled to enforce that clause against the council under the 1999 Act.

Judge Keyser rejected this analysis at its first stage. The relevant contractual mechanism protected only "Named Suppliers", a defined status that a subcontractor acquired solely by formally signing a joining deed once proposed and accepted for addition to the trust arrangements. Because ISG never proposed any subcontractor for that status, and no joining deed was ever signed, E & TL Jones remained merely a "Supplier" throughout, a broader category the judge found fell outside the class the disputed clause was intended to benefit. An argument that the council should be prevented from relying on this gap, because the direct payments themselves had removed any incentive for ISG to complete the process, was also rejected, the judge holding that a claimant cannot use the alleged breach it seeks to rely on as a means of satisfying the statutory threshold for standing in the first place.

Although this conclusion was sufficient to dismiss the claim, the judge went on to find that no breach had in fact occurred, since the payment obligation was conditional on the account's existence and could not sensibly be read as prohibiting payment altogether merely because that condition had not been met. He further found, had the question arisen, that the claimant could not have established that the council's conduct caused its loss, given clear evidence that the account's non-establishment stemmed from delays at the bank and the collapse of ISG's own sale process, rather than any lack of financial pressure on the contractor.

The claim was dismissed in full.