Construction Adjudication Cases: Part 5 of 2020

the contractual payment period and payless or payment notices given on the basis of a longer contract period might prove to be out of time. As always, clarity of payment terms is essential. It is surprising how often terms that are meant to require the submission of an invoice, misfire. The Act refers to a payment application and where the due date is fixed by an event, such as the requirement for an invoice, this must be clearly spelt out and made a condition precedent to payment if that is what is intended. More obviously, where payment applications are to be made by reference to a payment schedule, such a schedule must be included, with provision as to what is to happen if the contract overruns the last scheduled date. 4) Stay of Action Pending Payment of Award: Donald Insall Associates Ltd v Kew Holdings Ltd [2020] EWHC 1862 (TCC) judgment 15 July 2020 Kew was a SPV registered in the Cayman Islands. Its only asset in the UK was a property that it intended to convert and refurbish. It retained DIA to provide architectural services in connection with the project. In 2018 DIA obtained an adjudicator’s award for unpaid fees of just over £200,000. Kew failed to pay. In February 2019 DIA obtained summary judgment for the amount awarded together with interest, the adjudicator’s fees and costs. The judgment remained unsatisfied despite DIA obtaining a charging order over the property, made final in May 2019. By March 2020, proceedings for an order for sale were ongoing when Kew commenced the current proceedings against DIA, claiming damages of £2m for professional negligence in respect of the services provided by DIA.

for payment provision to fix a time period, albeit that that might itself depend on an event to fix the due date, noting the distinction between subparagraph (1A), which allows an adequate mechanism for the determining of the due date, and subparagraph (1B), which refers to "how long a period is to be between the date on which a sum becomes due and a final date for payment". That suggested that while a due date could be fixed by reference to, say, an invoice or a notice, the final date had to be pegged to the due date, and be a set period of time, and not an event or a mechanism. That also made sense given that it would be important for the payer to be exactly certain how much time it had in which to serve a payless notice. The Part 8 application failed.


This case may have significant implications. Even where the due date for payment can be triggered by an event, such as the time of the making of a payment application, the court decided that the final date for payment must be calculated from the due date and not the happening of an event. This interpretation of s 110 of the Act would mean that the final date for payment may not be linked to an event that is moveable, such as the submission of an invoice. The outcome was determined by the finding that the payment notice was out of time, so that the conclusion about the final date for payment was obiter and “reached with some diffidence”. It may be that another court would come to a different conclusion. In the meantime, there is a risk for payers whose contracts fix the final date for payment by reference to the timing of the submission of an invoice or similar moveable event since the 17 day period for payment under the Scheme will often be shorter than

Made with FlippingBook - Online Brochure Maker