Layngross
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Dr Derek Ross has recently updated his website at LayngRoss.com, and is intending to take a more active interest in Facebook, Linkedin and Twitter in the coming year.

Derek is a Past Master of the Worshipful Company of Arbitrators.  He is on the FIDIC President’s List of Adjudicators and the Irish Government's Panel of Construction Contract Adjudicators, amongst other panels.  He is a Chartered Arbitrator, Accredited Mediator & Conciliator, Registered Adjudicator and Dispute Board Member, who accepts domestic and international appointments as the neutral person in each of these construction dispute resolution disciplines.  He is also a Chartered Civil Engineer, well versed in resolving technical, contractual and quantum disputes in the construction industry.  

If you feel Dr Ross can assist you, please call him for a no obligation discussion on +44 1932 856463, or simply reply to this email with your details.

Below is an article he has written, which he hopes you will find of interest.


SUBSTANCE, FORM AND INTENT


Since the Housing Grants, Construction and Regeneration Act 1996 was amended in 2011, UK construction contractors' entitlements to payment have been wholly dependent upon timely service of payment notices within strict time limits.  Currently a paying party has two opportunities to substitute its own value for the value stated within a working party's application for payment, failing which the working party is entitled to be paid the sum for which it has applied.   Despite the paying party's two opportunities, this amendment represents a major improvement of working parties' statutory rights, which they have not been slow to exploit.  Thus current payment disputes in the UK construction industry are as likely to be about the effect of the payment notices that have been served, or not served, as the case may be, as they are about the proper value of the work carried out by the working party.

Several High Court judgments since 2011 have made it clear that if the working party wishes to take advantage of the current legislation, its applications for payment must be unambiguous with regard to substance, form and intent.  Thus, in the absence of a payment notice on behalf of the paying party voluntarily acknowledging an obligation to make an interim payment, the statutory interim payment regime can only be activated by the working party's service of a properly drafted interim payment application, intended to be taken as such.

Equal treatment of the parties suggests that the validity of paying parties' payment and pay less notices ought to be construed on the same basis of substance, form and intent.  Satisfying the intent requirement posed a problem for Surrey & Sussex Healthcare NHS Trust ('the Trust') in its recent dispute with Logan Construction (South East) Limited ('Logan') (see [2017] EWHC 17 (TCC)).  In that case, the principal purpose of the CA's notice dated 21 September 2016 was to advise Logan of the build-up and value of the CA's Final Certificate, rather than to act as a pay less notice, albeit the notice had been issued in time to be effective as such.  This arose because the CA mistakenly (in the judge's opinion) regarded Logan's latest interim payment application as out of time and void.  Nonetheless, as the CA had also stated in his covering email that the details of the Final Certificate were the same as would have been stated in any final Interim Certificate that may have been issued, the judge held in context that the CA also intended his Final Certificate to put Logan on notice that the Trust intended to pay less than Logan's latest interim application for payment, if such notice was necessary.  Accordingly, the judge found that the requirement of intent was also satisfied in this instance.  Thus the Trust was spared the need to make a so-called 'smash and grab' interim payment in excess of the final payment due under the CA's Final Certificate.  Judgement well worth reading.

Dr Derek Ross

6 February 2017

Please Note: The foregoing article has been prepared by Dr Derek Ross for the general interest and benefit of readers.  It is not intended to be a definitive analysis of the law or of other matters discussed.  Neither does it create a client relationship between the recipient and Dr Ross.  Thus no liability is accepted in respect of any reliance placed on any statements made in the foregoing article.  Proper advice ought always to be taken before deciding to take, or not to take, action in respect of a specific issue.

 

© 2017 Dr Derek Ross & Layng Ross Construction Disputes Resolution.

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