4) Pay Less Notice – requirements – Advance JV v ENISCA Ltd [2022] EWHC 1152 (TCC) Mrs Justice Joanna Smith DBE (judgment 16 May 2022) This was a part 8 application by Advance for a declaration concerning the validity of its Pay less Notice (PLN) in respect of two payment applications (AFP24 and AFP 25) by ENISCA. An adjudicator decided Advance did not issue a valid PLN against AFP 24 and awarded ENISCA £2.7m. In the court application it was agreed that if Advance was not entitled to the declaration sought, it would pay the adjudicator’s decision in 7 days so that there was no need for ENISCA to apply to enforce the decision. The contract was an NEC3 subcontract with bespoke amendments. It was agreed by the parties and accepted by the court that the payment terms complied with the requirements of the Act. That being the case, the court was concerned with the contractual provisions except in one important respect – the payment cycle. The contract provided for an assessment date by which ENISCA had to make its monthly application for payment; Advance was to issue a payment certificate within 21 days of the assessment date; the due date was 21 days after the assessment date; the final date for payment was 21 days after the due date.
On 22 October 2021 ENISCA submitted AFP24 by email for a gross value of £5,131m (£1.4m more than the previous month). The net payment applied for was £2.717m. No payment certificate (which would have been due by 12 November 2021) was provided by Advance and no document was sent which expressly sought to respond to AFP24. On 19 November 2021, the next assessment date, ENISCA submitted AFP25, in the gross sum of £5.217m (an increase of £85,600 odd over AFP24). On 25 November, one day before the window for giving a PLN in respect of AFP24), and within the certification period for assessment date for AFP25, Advance uploaded to the electronic document system for communications, a package which included a payment certificate for the assessment date of 19 November 2021, i.e. the assessment date referable to AFP25. Attached to it were a spreadsheet detailing the assessment, and advances alternative assessment, a PLN and ENISCA’s own AFP25.
The PLN was headed and clearly identified as such and contained the reference for AFP25.
Advance’s case was that the PLN could be relied on as a valid notice in response to AFP24. That it satisfied the timing and content requirements of the Act and, properly construed, a reasonable recipient would have understood Advance did not intend to make any further payment in respect of AFP25 or AFP24. After setting out the provisions of sections 110, 110A, 110B and 111 of the Act, the court emphasised that there was an overriding obligation to pay the notified sum. This did not preclude a subsequent challenge to the true value by either party, but in the meantime the notified sum was to be paid. The court recognised this could have draconian consequences for party who failed to serve a PLN. But that was the acknowledged effect of the statutory provisions.
Any PLN was to be served no later than 7 days before the final date for payment.
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