Under a Scottish construction contract, a pay less notice, like all good pay less notices, had to specify the sum considered due and the basis on which that sum had been calculated. A pay less notice issued by the employer stated that the sum considered due was zero and, in subsequent Scottish court proceedings, the employer said that, as the retained amount was small and a very large amount of work was necessary to remedy defects, it was enough to say that the remedying of the defects would require a sum well in excess of the retained amount. The basis for the zero sum was therefore sufficiently stated. But was it?

The court said that from none of the information provided could the reasonable recipient work out the basis on which the zero figure was calculated. There was no calculation from which to understand how that figure was arrived at. There was no specification from which to make any sense of the figure. There were no figures, and thus no basis substantiating the zero, in the pay less notice or in any of the other documentation on which the employer relied.

So what does a basis of calculation look like? The court considered that a proper basis of calculation would need, at least, to set out the grounds for withholding and the sum applied to each of these grounds with, at least, an indication of how each of these sums was arrived at.

Muir Construction Limited v Kapital Residential Limited at:

https://www.scotcourts.gov.uk/docs/default-source/ cos-general-docs/pdf-docs-for-opinions/2017csoh132. pdf?sfvrsn=0