Compliance with the Detail is Essential

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A recent court decision has highlighted the importance of following the right procedures in the management of payments under building contracts.

An employer disputed a payment application from a contractor and issued a 'pay less' notice.

The timing of the payment application and subsequent pay less notice are important in the case. The payment application was for more than £1 million and was issued in August 2016.  The deadline for serving a pay less notice was 14 August 2016.

The notice was issued on the evening of Friday 12 August. However, the contract stated that any notices regarding payment that were delivered after 4:00pm were deemed to have been delivered on the next business day.

In adjudication, it was ruled that the payment must be made. The notice was deemed to have been served on Monday 15 August, which was after the deadline for serving a valid pay less notice under the contract.

The employer appealed to the High Court and made the assertion that the contractor's payment application was insufficiently clear to be valid. This argument was easily defeated and the Court upheld the adjudicator's decision that the pay less notice was served late and was therefore invalid.

Kersfield Developments (Bridge Road) Ltd. v Bray and Slaughter Ltd.