The Construction Act does not apply to all construction works. Sometimes a construction contract is for both included and excluded construction works. In this situation, the Act says, disarmingly simply, that it only applies in so far as the contract relates to ‘construction operations’ as defined in the Act. But where does that leave an application for payment for both sorts of works, without distinguishing between the two?
A steelwork contractor for two power generation plants submitted a hybrid payment application. No valid payment or payless notice was served in time and the contractor issued adjudication proceedings for the part of the application that it said related to construction operations under the Act. Enforcement of the adjudication award for the full amount was refused, because of jurisdiction issues, and the contractor issued separate court proceedings and asked for summary judgment for a further reduced part of the original application.
Not only do payment notices under the Act have to set out the sum considered due and the basis of calculation but recent cases have said that, to engage the default mechanism of the Construction Act, the payment notice must be clear and unambiguous. The court ruled that the original application was not a valid payment notice because it did not state the reduced sum subsequently claimed in the court proceedings as due, or show its basis of calculation, and it was not clear and unambiguous. Because this was a hybrid contract, it was imperative that the claimant spelled out the fact that, regardless of the position in relation to excluded operations, this was a payment notice (with all that that entailed) in respect of the claim for construction operations. The reduced payment claim was arguably a revised claim, that required a fresh payment notice and may in fact have included items that fell outside the Act.
Severfield (UK) Ltd v Duro Felguera UK Ltd  EWHC 3352