5) Payment Notices - Hybrid Contracts: C Spencer v MW High Tech [2020] EWCA Civ 331 The Court of Appeal upheld the ruling of O’Farrell J regarding the application of the payment provisions of the Act in relation to hybrid contracts, that is, contracts for the execution of both construction operations within the ambit of the Act, and non- construction operations falling outside the Act. The starting point was the Act and whether the contract contained compliant payment provisions. If the agreed terms complied with the Act, the conventional view was that the Act had no longer had any direct relevance to the rights and obligations of the parties. S. 104(5) of the Act expressly recognised that there would be hybrid contracts, but it did not provide that a hybrid contract had to contain a term requiring the separate or distinct notification and breakdown of sums due in respect of construction operations only. There was nothing in the terms of the sub- contract which had required either side to have differentiated in their payment notices or payless notices between the sums notified for construction operations and the sums notified for non-construction operation. The agreed terms showed it was the intention of the parties to do the opposite. The court of appeal was of the view that where the contract contained an Act compliant payment scheme that was intended to apply to both construction operations and non- construction operations, a payment notice need not identify separately the sums due in respect of the construction operations. It was sufficient that the notice complied with the terms of the contract.
Moreover, this being a contract for milestone payments, the need for separate notices for works subject to the Act and works not subject to the Act, would have created its own difficulties. In the circumstances of the present case, the payment provisions in the sub-contract had complied with the mandatory provisions of the Act and there was no requirement on either side to notify and break down sums due in respect of construction operations only[1].
[12] Cleveland Bridge (UK) Ltd v Whessoe-Volker Stevin Joint Venture [2010] EWHC 1076 (TCC) applied; Severfield (UK) Ltd v Duro Felguera UK Ltd [2015] EWHC 2975 (TCC) applied
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