Harding (t/a M J Harding Contractors) v Paice & Anor

A payment notice regime is intended to secure prompt payment in construction disputes. The absence of a Pay Less Notice does not necessarily determine the parties’ financial entitlement for all time. A later adjudication must genuinely address a valuation or dispute which the earlier adjudicator left open. Permission to appeal requires a real prospect of success or compelling reasons, and the wider commercial importance of a contract is insufficient where the factual situation is unlikely to recur.

The judgment concerned the assessment of costs following an unsuccessful application for an injunction. The claimant had sought to restrain the defendants from pursuing a fourth adjudication, relying partly on non-compliance with an earlier adjudication decision and partly on the contention that the fourth adjudication concerned a matter already decided.

The non-compliance issue substantially fell away after the defendants undertook to pay the earlier award. The court rejected the remaining injunction ground. It then assessed the parties’ costs in accordance with their agreement and considered the claimant’s application for permission to appeal on issues concerning Pay Less Notices, valuation and paragraph 9(2) of the Scheme.

1. Costs. The parties’ agreement required the defendants to pay the claimant’s reasonable costs up to receipt of the defendants’ letter of 27 October 2014. Costs incurred in preparing the hearing bundle on 28 October fell outside that agreement and were excluded. The claimant’s costs were assessed at £13,497.50. The defendants’ recoverable costs after receipt of the letter were assessed at £5,610 after applying the agreed 25 per cent reduction.
2. Pay Less Notice. The absence of a Pay Less Notice did not convert a sum that might not be properly due into a sum properly due for all time. The purpose of the Scheme was to secure prompt payment, not to provide a permanent resolution of entitlement merely because a notice was absent or served late or in the wrong form.
3. Further valuation. Even if the defendants could rely on another mechanism for a further valuation, the fourth adjudication did not achieve that. The adjudicator in the third adjudication had expressly declined to state the proper value of the work.
4. Paragraph 9(2). The proposed construction that a second adjudication could concern a dispute which the first adjudicator had not decided had virtually no prospect of success. The wording required the first adjudicator to have decided the dispute, or the relevant aspect of it, before the restriction applied.
5. Permission. The claimant established neither a real prospect of success nor compelling reasons for an appeal. The contract’s wide use and the absence of binding authority were insufficient because the circumstances were unlikely to arise frequently. Permission to appeal was refused.