In the latest case involving interim applications and lack of payment notices, the Technology and Construction Court was tasked with ascertaining whether or not a communication from the contractor to the employer constituted a valid claim for payment by the contractor. The employer did not issue a pay less notice in response to the communication, so the question was an important one because it meant the difference between the employer having to hand over a substantial amount of money that it did not believe was payable. This is because legislation imposes a strict set of procedures in relation to interim payments under construction contracts.
The purported claim for payment by the contractor contained only a very modest update to its last application, with the addition of some equipment hire costs. That last application had been subject to an effective pay less notice from the contractor only a few days before the purported claim for payment was made. The calculations for the purported claim for payment were attached to an email which was rather opaque and was asking for the existing payment notice to be amended or updated.
The Court found that the communication was not a valid claim for payment. It did not state that it was an application for an interim payment and nor did subsequent correspondence, upon which the contractor also tried to rely, state that it was being provided as a default payment notice. Additionally, the employer had actually asked the contractor what the communication was supposed to be and the contractor’s response was inconsistent with the explanation it sought to advance at Court. The Court also considered it unlikely that even the contractor considered the communication as being a claim for payment at the point in time when it was made but was seeking to take advantage of subsequent events.
If the Contract describes what the application or payment notice should be called, then it should be called that it should align with any other contractual requirements too, otherwise the only effect it might ultimately have is to cause an unnecessary argument.
Caledonian Modular Ltd v Mar City Developments Ltd  EWHC 185 (TCC)