Payment notices, pay less notices & liquidated damages under JCT Contracts

Payment notices, pay less notices & liquidated damages under JCT Contracts

money maze (pounds)

Parties to a JCT contract must precisely follow the contractual requirements in relation to payment and avoid any ambiguity. In this post we consider a recent case where this did not happen: Henia Investments  v Beck Interiors.

 

This case examined the payment provisions under the JCT contract, and confirmed what a contractor needs to include in a payment notice. It also confirmed that an employer can issue a pay less notice in relation to a Contract Administrator’s valuation and that it is not necessary for the Contract Administrator to have operated the extension of time provisions to entitle the employer to deduct LADs.

The facts:

Henia had engaged Beck under the JCT Standard Building Contract (SBC). The works were delayed and the Contract Administrator issued a Non-Completion Certificate. Communications followed that Beck claimed were sufficient to trigger the extension of time provisions under the JCT.

The contract included the usual JCT requirements for payments and provided for due dates of the 29th of each month. This particular dispute concerned payment applications 18 and 19:

  • 28 April 2015— Beck submitted Interim Application No 18 for payment of £2,943,098.95 for works valued up to 30 April 2015 (six days late)
  • 6 May 2015— the Contract Administrator issued Interim Certificate No 18 for a sum payable of £226,248.95 (one day late)
  • Beck did not submit Interim Application No 19 in May 2015
  • 4 June 2015—the Contract Administrator issued its Interim Certificate No 19 for a payable sum of £18,893.53 (three minutes after midnight so three minutes late)
  • 17 June 2015—Henia issued a ‘Pay Less Notice’ of ‘£0’ based on Interim Certificate No 19 and its deductions of liquidated dam

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About the author:

Becky Johnson is a solicitor specialising in non-contentious construction law. Becky also has experience in advising in connection with construction disputes, including adjudication. Becky joined Lexis®PSL in 2014. She qualified as a solicitor at Olswang LLP in 2009 and subsequently joined Wedlake Bell LLP in 2011. Becky is experienced in advising clients across the construction industry including developers, funders, contractors, consultants and specialist sub-contractors in relation to all matters relating to construction projects.