Advance JV v Enisca Limited

Under the statutory construction payment regime, a pay less notice must be referable to the payment notice identifying the notified sum for the relevant payment cycle. A notice expressly directed to a later application cannot ordinarily be treated as a response to an earlier application merely because the contractual time windows overlap or its figures suggest that no payment is due. Validity is assessed objectively by reference to the reasonable recipient, the contract, context and purpose. The notice must comply in substance and form, state the sum and basis of calculation, and be sufficiently clear and unambiguous. No particular label or contractual clause reference is required. The court must take a practical approach, but that does not permit a notice to be repurposed for a different payment cycle.

Advance JV brought a Part 8 claim seeking a declaration that its Pay Less Notice was valid in respect of Enisca Limited’s Application 24. An adjudicator had decided that Advance had issued no effective Pay Less Notice against that application and had ordered Advance to pay £2,717,992.88.

The parties’ NEC3-based subcontract adopted payment provisions intended to comply with the Housing Grants, Construction and Regeneration Act 1996. Advance had issued no payment certificate for Application 24. It later issued a document expressly referring to Application 25, enclosing a payment certificate for that later application. The central issue was whether that document was nevertheless, objectively construed, a valid Pay Less Notice for Application 24.

The Part 8 claim was dismissed and the declaration was refused. Advance remained bound by its undertaking to comply with the adjudicator’s decision and pay the adjudicated sums within seven days.

1. The payment regime under sections 110, 110A, 110B and 111 of the Housing Grants, Construction and Regeneration Act 1996 operates through successive payment cycles. The notified sum is identified by the applicable payment notice. A payer may pay less only by a timely Pay Less Notice satisfying the statutory and contractual requirements. The obligation to pay the notified sum does not prevent a later true-value challenge.
2. Payment notices are construed objectively. The question is how a reasonable recipient, with knowledge of the contract and the relevant contextual background, would understand the notice. The court must consider its purpose and take a commonsense, practical approach. It should avoid artificial or contrived objections, while recognising that adverse payment consequences inform the reasonable-recipient assessment. A notice must comply in substance and form, state the sum and calculation basis, and be objectively intended as the relevant notice. No particular title or contractual-clause reference is required, but the notice must be sufficiently clear and unambiguous.
3. A Pay Less Notice under section 111(3) must be referable to the payment notice identifying the notified sum for the relevant cycle. The fact that the statutory or contractual time windows for consecutive cycles overlap does not permit one notice, referable to one assessment date, to respond to two different applications.
4. Advance’s Pay Less Notice expressly referred to Application 25 and was sent with the payment certificate for that application. It used the assessment date and valuation for Application 25. It contained no indication that it responded to Application 24 or remedied the absence of a certificate for that application. The reasonable recipient would therefore have understood it as a response to Application 25, not Application 24. It could not provide an adequate agenda for an adjudication concerning the earlier cycle.
5. Surrey and Sussex Healthcare NHS Trust v Logan Construction (South East) Ltd ([2017] BLR 189) was distinguishable because the factual and documentary context there supported treating an email and attachment as a Pay Less Notice despite the absence of an express label.