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Payment Notices or more accurately, failure to give Payment Notices!

The subject of an article called Payment Notices – Where do we stand now? was included in Pyments InFocus magazine (Edition 2, Spring 2019). The article was a ‘tongue in cheek’ review of how case law was developing the Payment Notice provisions first introduced by the Housing Grants Construction and Regeneration Act in 1996.

Since writing that article, the world has become a very different place. In particular, the last 18 months has been a very strange time during which we have seen:

            • an outbreak of a ‘pneumonia of unknown cause’ in China,
            • the ‘silent spread’ of disease across Europe, North America and the African continent,
            • half of humanity placed in some form of quarantine,
            • our Prime Minister in intensive care unit,
            • eating out to help out,
            • social distancing,
            • covid secure workplaces,
            • a reversal of normal etiquette requiring anyone entering a bank to wear a face mask regardless of whether or not they intend to carry out a robbery,
            • exotically named vaccines such as AstraZeneca, Pfizer and Moderna.

However, amongst all the changes, one thing has remained reassuringly unvarying:

Payers fail to raise Payment Notices and / or Pay Less Notices.

I have done some research to see if matters have improved since the original article was published and can report the industry maintains an impressive consistency in its failure to raise the necessary paperwork. Here are some examples:

  • J.Tomlinson Ltd v Balfour Beatty Group Ltd [2020] EWHC 1483 (TCC).
  • Rochford Construction Ltd v Kilhan Construction Ltd [2020] EWHC 941 (TCC) and
  • J&B Hopkins Ltd v Trant Engineering Ltd [2020] EWHC 1305 (TCC).

The reader will note a recurring theme. The payee makes application for payment, the payer fails to issue a compliant Payment Notice or Pay Less Notice and the Adjudicator decides the application for payment is the ‘notified sum’ which the payer must pay (“pay now, argue later”).

Whilst paying parties have come up with increasingly cunning plans involving complex legal arguments to avoid payment, the courts with very few exceptions enforce the Adjudicator’s decision.

With the distractions of the last 18-months one might argue it is understandable payers could overlook a Payment Notice, but I would disagree. To quote a well-known judgement; “…….failure to serve a payless notice…….can have draconian consequences”.

I can offer some free advice……. “Make sure you issue the Payment Notice”.

Should you require more detailed advice, please don’t hesitate to contact Chris Kevis.

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