Payment Applications – Strict Approach Regarding What Constitutes a Valid Payment Application and Pay Less Notice
By Nita Mistry, K&L Gates , London
In Jawaby Property Investment Ltd v The Interiors Group Ltd [2016] EWHC 557 (TCC), refurbishment works were carried out under a JCT Design and Build Contract, 2011 edition with amendments. The procedure followed for the first six payment applications involved the contractor (“TIG”) emailing a valuation to the employer’s (“JPIL”) agent with supporting documents specified in the contract. The agent would then assess the sum due and issue a payment certificate.
For the seventh payment application, a different approach was taken. TIG provided a valuation that it described as an “initial assessment”. This suggested that it was not firm and final. In addition, the valuation did not value the works beyond 5 January, whereas previous valuations went up to and included valuation of the works up to the due date (8 January). Nevertheless, JPIL’s agent assessed the sum due in the usual way and issued a payment certificate, this time with a negative sum. TIG requested some clarification, to which JPIL’s agent responded by attaching a record of the site visit and valuation assessment. The courts considered whether the “initial assessment” issued by TIG was a valid payment notice and whether the certificate for payment issued by JPIL was a valid pay less notice.