A contractor’s interim application 15, for over £1.5 million, was met with an employer’s prompt payless notice. Eight days later, the contractor sent in the  same claim, updated by the addition of a small variation valued at £6,643.25. The employer was puzzled by, and questioned, the status of the updated claim but did not serve a payless notice. In a subsequent adjudication, the contractor said that the claim was interim application 16 (though misdescribed as 15). The adjudicator agreed and awarded the contractor £908,695.61 (after taking into account the balance outstanding on a previous adjudication). But was the contractor’s application a valid payment claim or payment notice and, even if the adjudicator’s decision was wrong, could the court intervene?

The court said that, if an issue is short and self- contained, requiring no oral evidence or other elaboration other than what can be provided in a relatively short interlocutory hearing, the defendant may be entitled to have the point decided by way of a claim for a declaration. It needed to be emphasised, however, that the procedure would rarely be used, because it is very uncommon for the issue to be capable of being so confined.

The court then ruled that the contractor’s claim documents were not an interim payment application or a valid payee’s notice. Contractors seeking the benefit of the default provisions of the amended Construction Act must set out their interim payment claims with proper clarity. If an employer’s failure to serve a payless notice in time may make them liable in full for the amount claimed, they must be given reasonable notice that the payment period has been triggered in the first place. To decide otherwise on the facts of the case would encourage a contractor to make fresh claims every few days in the hope that, at some stage, the employer or their agent will take their eye  off the ball and fail to serve a valid payless notice, thus entitling the contractor to a wholly undeserved windfall.

Caledonian Modular Ltd v Mar City Developments Ltd [2015] EWHC 1855