The Claimant, Bouygues (UK) Limited applied to the court against the defendant, Febrey   Structures Limited in dispute of whether the claimant had failed to serve a Payment or Pay Less Notice in time.

The claimant, the main contractor employed Febrey Structures Ltd, the sub- contractor to construct a concrete frame and structural topping for a new building at the University of Bath. The parties’ sub- contract was priced at just over £626,000 and incorporated the terms of the GC/ Works Sub-Contract.

Work started on site in March 2015 and there was no dispute until the defendant’s October 2015 payment application. According to the Appendix the relevant dates were as follows: the payment application was due on 23 October 2015; the valuation date was 2 November 2015; the due date for payment was 16 November 2015; the payment notice was to be served on 23 November 2015; the pay less notice was to be served on 20 November 2015; the final date for payment was 23 November 2015.

The dates followed the pattern of the previous months with the exception of the payment notice which was due three days later than usual. Had the payment schedule followed the timeline set out for all the previous months, the payment notice would have been due on the 20 November 2015.

In January 2016, the defendant referred the dispute to adjudication and argued that Appendix 10 did not comply with the Construction Act 1996 because the deadline for the payment notice was more than five days after the due date. The claimant accepted Appendix 10 did not comply with the Construction Act 1996 but argued that the payment notice was served in time because either the provisions of clause 21 applied or the non-compliant parts of Appendix 10 should be replaced by the relevant provisions in the Scheme for Construction Contracts 1998. The adjudicator found in the defendant’s favour.

The defendant applied to enforce the adjudicator’s decision and the claimant applied for declaratory relief.

Mr Jonathan Acton Davis QC found in favour of the defendant, but without recourse to the Construction Act.  The Judge held that the claimant had failed to serve any payment notice or pay less notice in time and accordingly its payment notice was invalid. The Judge rejected the claimant’s arguments and found that it was important to look at the parties’ intentions with regards to the Appendix. Since March 2015, the payment schedule had followed a specific pattern and there was no good reason that the parties would have intended for that pattern to be varied. Mr Jonathan Acton Davis QC concluded that the date for the payment notice in respect of the October 2015 application was an “obvious error”. It was held that the Appendix should be construed to reflect the parties’ express agreement that a payment notice was to be provided within 5 days of the due date.

This  case serves  a useful reminder to the practitioners that whilst preparing a payment schedule for inclusion in a construction contract, it is necessary not only to ensure that you have provided for contract overruns in that schedule, but also the correct dates for each and every monthly payment cycle.  It is also worth mentioning that the court will take a pragmatic approach to interpreting the dates given in payment schedules, especially where there is a “clear and obvious error”.  Interestingly, this is the second time this year that the TCC has reviewed payment schedules after Grove Developments Ltd v Balfour Beatty Regional Construction Ltd [2016] EWHC 168 (TCC).