A subcontract said that the subcontractor was bound by the main mechanical and electrical contractor’s assessment of the proper amount due under the subcontractor’s final account, if it did not dissent within 14 days. The court had to decide, among other issues, what notification of the valuation would trigger this time bar provision.
The judge considered the principles identified in the cases that have considered construction contract provisions relating to time limits and the permanent loss of rights. These principles applied, with even greater force, to the contractor’s final account assessment because the court was dealing, not with an interim application which might be capable of subsequent adjustment, but a final account entitlement which could be lost to the claimant for ever, if there had been a valid notification and no dissent.
In the judge’s view, if a contract clause notice has a draconian effect, the notice should make clear that it has been issued under that clause. The basic principle was that if a party is supposed to be notifying the other party that a sum is due, under a clause that provides for a deemed agreement that binds the parties unequivocally, then the sum due and the clause must be clearly set out in the relevant notice. The document said to trigger operation of the time bar clause was actually a purported assessment of the gross value of the work carried out and did not identify the amount due for payment. That required a calculation by reference to other figures and documents. It is not good enough to say that the recipient could have worked it out for themselves, particularly when, as in this case, the alleged calculation that, it was said, could have been done by the subcontractor, relied on later documents, some of which were not even in the subcontractor’s possession. There had, therefore, been no valid notification of the amount due to trigger the time bar provision.