Walker Morris has published the following useful article on the requirements to ensure an application is made at the right time, if you intend to adjudicate upon it.

In Caledonian Modular Limited v Mar City Developments [2015] EWHC 1855 (TCC) the Technology and Construction Court (TCC) agreed with the paying party’s argument that documents served by the claiming party did not amount to a valid Application for Payment because they did not state on the face of them that they were intended to be an Application for Payment.

The Facts

Mar City Developments Ltd (MCD) engaged Caledonian Modular Ltd (CM) to carry out construction works at a site at Greenpoint, North London.

CM brought adjudication proceedings on two occasions claiming payment for work it had done. On both occasions, the adjudicator ruled in CM’s favour. MCD did not dispute the findings of the first adjudication, but objected to the second adjudicator’s decision on the basis that the documents served by CM on 13 February were not a valid Application for Interim Payment.

MCD contended that it had never understood that the documents dated 13 February were intended to be an Application for Interim Payment and that the relevant Application was actually received by them on 19 March.

MCD then issued a Pay Less Notice, dated 26 March, which was validly served and was not time barred. MCD agued that if they had known that the documents dated 13 February were an Application for Interim Payment, they would have issued a Pay Less Notice accordingly.

Were the documents dated 13 February a valid Application for Interim Payment?

The TCC held that the documents dated 13 February were not valid as CM had not made it clear that the documents were intended to be an Application for Interim Payment. Moreover, when MCD asked CM for clarification as to the meaning of the documents, CM failed to adequately disclose their intent.

Was CM entitled to make an application on 13 February?

The Court suggested that CM was not entitled to make an Application for Interim Payment in February, given that the alleged Application was made only 8 days after CM received a validly served Pay Less Notice relating to a previous Application. Contractors cannot simply issue new claims over a short period of time in the hope that the Employer will ‘take his eye off the ball and fail to serve a valid Pay Less Notice’. Such actions are contrary to the purpose of the Construction Act 1996 and the Scheme for Construction Contracts 1998. The Court found that the parties should have followed the 28-day payment cycle which they had previously agreed upon.

Comment

If a Contractor wishes to make an Application for Interim Payment then they must clearly state this intention in the documentation sent to the other side.

The case is a warning against abuse of the adjudication process. It encourages all parties to abide by agreed timescales and not to pursue payment through inundating the other side with claims over a short period of time.

 

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