Jawaby Property Investment Limited v The Interiors Group Limited is the latest in the past year’s run of “smash and grab” claims by contractors seeking awards for sums claimed in alleged interim payment applications. We considered the court’s approach to such claims in a previous article (Payment notices: a balance redressed?) at the end of 2015. The TCC’s approach in the recent Jawaby case reinforces the message delivered in Caledonian Modular Ltd v Mar City Developments last year: payment notices require to be clear and unambiguous to be valid and for payment to follow.
- In terms of an amended JCT 2011 design and build contract, The Interiors Group (“TIG”), as contractor, was to submit an interim application for payment, accompanied by supporting documentation providing a breakdown of their valuation for the works on the 8th day of every month. This would then be followed by a certificate for payment from the employer, Jawaby, detailing the sum to be paid;
- On 7 January 2016, in response to a request by Jawaby, an email was sent by TIG attaching a breakdown referred to as an ‘initial’ assessment for valuation; this was at odds with the way that previous Interim Applications had been dealt with, not least because it was not brought up to the due date, which would have been 8 January 2016;
- Jawaby contended that this was not a valid Interim Application for Payment for several reasons - including that email transmission did not comply with the requirements for service under the contract; the email was not described as an Interim Application; it did not state a sum considered to be due and it was not accompanied by supporting documentation as required by the contract.
The judge held that Jawaby’s argument rejecting the electronic transmission of the alleged Interim Application was unfounded because electronic service of valuations was not expressly nor impliedly excluded by the relevant clause and, in any event, Jawaby had accepted six prior valuations as Interim Applications via email.
Ultimately however, the judge considered that the “initial assessment for valuation” sent by email on 7 January 2016 was not a valid Interim Application. The judge’s reasoning was that this type of “initial” application had never been dealt with or accepted as a valid Application by Jawaby before and the “reasonable recipient of the Valuation would not have regarded it as unambiguously informing it that this was an Interim Application for the purpose of Clause 4.8.1.”.
This decision echoes Mr Justice Coulson’s comments in Caledonian Modular and is a clear indication of the court’s reluctance to give effect to alleged Interim Applications for Payment containing ambiguities. Clarity is key. Although both Caledonian Modular and Jawaby relate to contractor’s applications, the requirement for clarity applies equally to Payment Notices and Pay Less Notices on behalf of the employer. Care should therefore be taken to ensure that all contractual notices comply with the contract requirements and are clear, unambiguous and served timeously.