Justin Mendelle, head of construction at Sharpe Pritchard, discusses a recent case that highlights the importance of employers serving timely payment or pay less notices.

Background

ISG Construction Ltd was engaged by Seevic College to carry out certain works. The form of contract was the JCT Design and Build Contract 2011. ISG issued its interim application for payment no.13, for a sum of around £1.1 million. Seevic remained silent in that it did not make the required payment, nor did it serve a payment notice or pay less notice.

There were two adjudications in respect of payment no.13. The first adjudication was launched by ISG and they were awarded the value of interim application no.13. The second adjudication was launched by Seevic just four days before the date of the decision of the first adjudication. Here, ISG’s works were revalued at around £315,000, which Seevic proceeded to pay.

ISG then commenced enforcement proceedings in respect of the decision made in the first adjudication.

Decision

The court refused to enforce the decision of the second adjudication, where the adjudicator had effectively revalued ISG’s interim application. This is because under the contract, the sum due to ISG on an interim application was either the amount stated in the application or the lesser amount as stated in Seevic’s payment notice. However, Seevic did not serve a payment notice or a pay less notice. The effect of this was that the amount stated in ISG’s interim application for payment no.13 was deemed to have been agreed as the value of the works by Seevic.

The judge further concluded that both adjudications had made decisions on the same dispute. The adjudicator in the second adjudication did not have jurisdiction to decide the value of the works, keeping in mind that the interim payment was deemed as agreed by Seevic, and that the sum of this had already been awarded to ISG in the first adjudication.

For more information on construction law, please contact Justin Mendelle on 020 7061 5948 or email email hidden; JavaScript is required.

This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published.