Executive Summary

This case concerns the lengths that the Court will go to enforce an adjudicators Decision. Febrey sought the enforcement of an adjudicator's decision and Bouygues sought a declaration as to the payment mechanism in the contract between the parties. It also appears from the Judgment that the Court gave a fresh decision on the facts, which was different to that decided by the adjudicator.

This decision is an important reminder to those administering payment processes to complete payment schedules carefully and to double check dates when issuing notices.

The facts

Under a Sub-Contract Febrey were to "submit…applications for interim payments on those dates stated in any schedules of dates for application for interest payment that may be contained in Appendix 8".

The payment schedule ("the Schedule") in fact appeared at Appendix 10 of the Contract which was entitled "Sub-Contract Payment Schedule – 21 day payment terms for 60%, 35 days for 40%" and provided the following dates:

  • 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 had to be served on 20 November 2015;
  • The final date for payment was 23 November 2015.
     

Bouygues duly served its Payment Notice on 23 November 2015 valuing Febrey's entitlement at minus £2,041.27.

Febrey commenced adjudication proceedings on the basis that the date of issue of the Payment Notice was not compliant with the Construction Act 1996, as the deadline was more than 5 days after the Due Date. In Part 8 proceedings, the question for Mr Jonathan Acton Davis QC (sitting as a deputy high court judge) to determine was whether the payment notice was valid on the proper construction of Appendix 10.

Summary

Having decided that the reference to Appendix 8 in clause 21 was an error and should have stated Appendix 10, Mr Acton Davis QC went on to consider what changes should be made to the Schedule to remedy the two ways in which it did not comply with the 1996 Act, namely that:

  1. The date for the issue of the Payment Notice was more than 5 days after the Due Date for Payment; and

  2. The issue of the Payless Notice was to be made before the Payment Notice date.


Incorporating the Scheme to supplant the non-compliant provisions, however, provided no assistance. Its effect was to render the date for service of the pay less notice (7 days before the final date for payment) as 16 November 2015, which was yet further in advance of the date for service of the payment notice.

Following the reasoning in Manor Asset Limited Bouygues argued that the only way to make the payment schedule compliant with the 1996 Act was to reduce the prescribed period for service of the pay less notice to nil, with the effect that the pay less notice could be served at any time up to and including the final date for payment.

In the alternative, Bouygues argued that issue could be resolved by changing both Pay Less Notice deadline and the Final Dates for Payment to be in line with the Scheme, with the effect that the dates would become:

  1. Payment Notice – 21st November 2015;

  2. Pay Less Notice – 26th November 2015;

  3. Final Date for Payment – 3rd December 2015.

In accordance with both of Bouygues' arguments, its Notice issued on 23 November 2015 was served in time.

Mr Acton Davis QC rejected both arguments and stated "that the context for the construction of Appendix 10 is the dates agreed by the parties." It was a clear express term of the Contract that the Final Dates for Payment for the 60% and the 40% should be 21 days and 35 days after the Assessment Date, respectively. He also referred to the previous dates in the Schedule and noted that, for the most part, Bouygues was to submit its Payment Notice and the Pay Less Notice on the same date in respect of the 60% payment. He could therefore see "no good reason why the parties would intend the consistent pattern…[to be] varied for October 2015".

In concluding that the deadline within the Schedule of 23 November 2015 to submit its Payment Notice was a "clear and obvious error", and should have read 20 November 2015, Mr Acton Davis QC held that Bouygues' Payment Notice was served out of time and Febrey's counterclaim for payment was successful.