A noticeable lack of Notices part 1: Harding v Paice and Springall
We all know the scenario. An Employer inadvertently misses serving a Payment or Pay Less Notice and the Contractor is now baying for blood. But that’s not a problem for the Employer as they can rectify the decision by adjudicating for the proper value of the works, right?
The “Notified Sum” regime in the Local Democracy, Economic Development and Construction Act 2009 (“the Act”) has been with us for some time. But, despite much blood, sweat and tears over the same, there has been little judicial clarification of many of its more opaque points, particularly with how work should be valued where no certificate has been provided.
However, three recent cases have now cast some light on this issue:
- Harding v Paice and Springall
- ISG Construction Limited v Seevic College
- Galliford Try Building Limited v Estura Limited
This week, we take a look at Harding v Paice and Springall.
Harding v Paice and Springall  EWHC 3824 (TCC)
Mr Paice and Ms Springall (“Paice”) were property developers that instructed Mr Harding (“Harding”) to carry out works pursuant to a JCT Intermediate Building Contract 2011. The relationship between the parties broke down and works were suspended in November 2013. In the end, Harding terminated his employment in January 2014.
Harding submitted his account, being effectively the final account given the termination, for the works which requested payment of some £397,912.48 plus VAT. Paice failed to serve a compliant Payment or Pay Less Notice in response. The matter was referred to adjudication, which was decided in favour of Harding given the lack of a compliant Notice.
Paice commenced a second adjudication regarding the account hoping that the value decided in the second adjudication would be less than the first. Harding countered, applying for an injunction on the basis that the failure to serve a Pay Less Notice meant that the sum in the final account had become the amount that was “properly due”. Moreover, the account had already been referred to adjudication, and the dispute was, therefore, the same, or substantially the same, as one already decided.
In his decision, Edwards-Stuart J stated that the adjudicator’s award was based solely on the basis of a lack of Notice, and was not a valuation of the amount that was “properly due”. This was a separate issue.
The contract stated that on termination, Harding was entitled to the sum “properly due”. Edwards- Stuart took the view that the absence of a Pay Less Notice did not convert the applied for sum into that amount as this would prevent payment of the proper amount via either adjudication or litigation. Accordingly, Paice had the right to have the works properly valued.
However, this did not detract from Paice’s obligation to pay the sum ordered in the first adjudication, so they had to pay Harding the sum of £397,912.48 and seek an overpayment through reimbursement.
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