Here the court refused to grant an injunction restraining contractor Space from presenting a winding up petition against the employer COD. The employer had failed to pay 3 applications for payment (nos. 6, 7 and 8, submitted during October, November and December 2015), and had subsequently served invalid payment notices (served out of time) and no pay less notices. The contract was a JCT D&B 2011. On 29 January 2016, Space wrote to COD, citing clause 8.9.1 of the contract and confirming that COD's non-payment meant it was in default. Space also confirmed its intention to suspend further performance of the contract unless payment was made within 7 days. No reply was received nor payment made and on 9 February Space wrote again to confirm that it was suspending works and enclosing a statutory demand for GBP 680,000.
Space had in fact left site at the end of 2015, and COD engaged another contractor to progress the works during the period of suspension. Space wrote again on 15 February to confirm that this course of action amounted to a repudiation of the contract, which was accepted. In the alternative, Space relied on the operation of clause 8.9.3 which allows termination where a notified default has not been remedied. COD then purported to terminate the contract in subsequent correspondence. It subsequently alleged that it had a large counterclaim which would extinguish Space's claim.
The court found that Space had validly terminated the contract, and therefore that COD's attempt to terminate the contract was ineffective. It also found no evidence that COD had a counterclaim of any substance. The court therefore dismissed the application, leaving Space to present the winding up petition.
Whilst this yet again shows the dangers for employers who fail to comply with payment notice requirements, it is unusual insofar as Space did not adopt the more straightforward, and speedy, route of adjudication.
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