精东影视

It鈥檚 high time that the awful payment rules in the Construction Act were scrapped. They are, by far, too complicated, heaving with technical traps and ambushes. Have a look at the case of Placefirst Construction Ltd vs CAR Construction (North East) Ltd; it was decided in the Technology and Construction Court on 24 January. Scratch your head as you go.

The whole idea of the Construction Act was to defeat those who paid late, or too little, or not at all. First base was not adjudication; instead it was to be an easy-to-follow and slick interim invoice, followed by a whinge from the other party and, if none, then bang: the invoice was payable. It is pipe up or pay up. But the Construction Act turns this simple idea into a rigmarole, which can be exploited by clever lawyers who wouldn鈥檛 know their perpends from their arris rails. Make the rules industry-driven, not lawyer-driven.

 Placefirst鈥檚 key subcontractor was CAR on the site at ESH Winning, Durham. The interim application for payment called for over 拢3m. Placefirst piped up, putting forward an amended valuation of 拢2,769,275 and saying this meant CAR actually owed it money, to the tune of 拢22,812. That鈥檚 a whinge.

A dispute was now on the table: CAR called for an adjudicator. It was a payment dispute, meaning that, as CAR saw it, Placefirst had failed to follow properly the rigmarole set out in the Construction Act, so as to deprive the payee of its invoiced sum. Folks often now call this approach 鈥渟mash and grab鈥� adjudication.

The adjudicator was presented with arguments about payment notices, and he was satisfied that the payer (Placefirst) had failed to follow the payment rules for notices. So he ordered it to stump up 拢867,031. Seemingly, Placefirst had failed to properly send either a payment notice or an effective pay-less notice. The technical rules for the pushback hadn鈥檛 been properly followed, or so it was said. My cause for concern is that the payment rules are so technical that it is too easy to argue whether things were done 鈥減roperly鈥�.

Guess what? Placefirst refused to comply with the adjudicator鈥檚 award ordering it to pay up.

They all came to court in Manchester equipped with high-end barristers 鈥� and guess what, again? The judge, the very experienced Stephen Davies, announced that the adjudicator was wrong.

The judge refused to enforce the award. Note though, he made specific mention that there was no criticism of the adjudicator. The barrister, in court, ran arguments that were not necessarily the same as advanced before the adjudicator. His adjudication award had contained careful and detailed reasoning on what was put to him. The technicalities that easily bamboozle users, payers, payees, adjudicators and occasional judges begin with clauses in the Construction Act (HGCRA, sections 109-113, and more in the Scheme for Construction Contracts) and there are more in the in-house homemade gloss that some folk adopt in their contracts.

CAR sent to Placefirst its detailed interim application for payment. It was on time and in apple-pie order. The rules, ordinarily and here too, require the payer to then send a payment notice back to the payee on time and describing its valuation. Alternatively, the payer can send a detailed pay-less notice later, just prior to when the cash should land. If it does neither, then the claimed interim sum by the payee is payable. It is deemed to be correct even if it is miles over the top. The adjudicator said Placefirst had fallen foul of the technicalities and had to pay up.

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Seemingly, the notice that Placefirst sent in response to the application for payment by CAR was a portmanteau notice covering both a payment notice and a pay-less notice all in one. Dear me, that won鈥檛 do, say the rules. You can鈥檛 send a pay-less billet-doux until a payment notice has materialised 鈥� if a payment notice has not yet come into existence, then there is nothing to pay less from!

I suspect that the adjudicator bought this argument, but the judge didn鈥檛. He said in the judgment: 鈥淚t seems to me that it would be an unfortunate outcome in a case such as this, if a contractor who sent two communications, both of which were in substance effective as payment notices or pay-less notices, had to be treated as ineffective because one was not properly described and the other was sent too late, due to the complexity of the [Construction] Act and (in my view) an unduly legalistic interpretation of its requirements,鈥� and then concluded by adding: 鈥淚 am happy to be able to reach a conclusion which does not have that effect.鈥� The judge and counsel had fairly found a method of giving the industry an industry interpretation of the payment rules.

So, let鈥檚 get rid. Instead, the process should be simplified to: (1) the payee only raises the itemised and detailed valuation; then (2) at any time before that cash is due to be paid, the payer can issue a detailed pay-less notice and that鈥檚 what gets paid; and (3) if no pay-less notice is given, it is the payee鈥檚 valuation that gets paid. Deal done? Industry stuff, not lawyer stuff.

Tony Bingham is a barrister and arbitrator at 3 Paper 精东影视s, Temple