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As we know from the raft of recent cases, where an employer fails to serve a pay less notice in respect of a contractor’s interim application for payment and does not then pay the sum applied for, the bog standard response of the contractor is to refer the dispute to adjudication. These have become known as a ‘smash and grab’ or ‘technical knockout’ adjudications. What is far less common though is for a contractor to start court proceedings and then make an application for a summary judgment on the sums it has applied for. However, in a very recent case [1], the contractor did, for some reason, decide that summary judgment [2] was the preferred option.

Issue

The contract between the contractor (Volkerlaser Limited) and the employer (Nottingham City Council) was based on the Association of Consultant Architect’s (ACA) Standard Form of Contract for Term Partnering 2005, amended in 2008 (TPC 2005). This is a term partnering contract designed to be used on multiple projects for a set time period. In short, the court had to decide whether the bespoke payment terms complied with the Construction Act. [3]

Decision

The court held that the contractor’s summary judgment application failed on the basis that it had not made a valid application for payment. The court noted that (a) the interim application was not made at the end of a month during which the contractor had either commenced or completed a ‘task’ and (b) the contractor had also failed to issue a VAT invoice, which were required to trigger the final date for payment.

You might think that, if a contractor was required to make an interim application ‘at the end of each calendar month’, this would mean the application should be made on the last working day of each month. Not so, according to the court. Instead, the court noted that this wording meant ‘within 3 or 4 working days [of the end of the month]’ subject to how the parties had treated monthly interim applications previously.

Comment

We have seen a number of alternate routes contractors use to seek payment where payment/pay less notices have not been served by employers (see for example the statutory demand and winding up petition).

This recent case is another example, whereby instead of commencing an adjudication the contractor decided to commence TCC proceedings and apply for summary judgment. Ultimately, in this case the employer was, on the facts, able to persuade the court that there was a reasonable prospect of successfully defending the claim and therefore the employer was granted permission to defend the contractor’s claim (the employer no doubt breathing a sigh of relief on the basis that the contractor’s claim is for just under £2m plus interest).

It will be interesting to see if the case proceeds or whether the contractor decides to side-line the

Court proceedings in favour of commencing an adjudication, which remains an avenue available to the contractor and which is likely to be a quicker and more cost effective route to a recovery (or at least a decision one way or the other!).

For more information, email blogs@gateleyplc.com.

[1] Volkerlaser Limited v Nottingham City Council [2016] EWHC1501(TCC) (7 July 2016) (Westlaw)

[2] In summary, being a short procedure by which the court can enter judgment on all or part of a

case where there is no reasonable prospect of it succeeding without the need for a trial.

[3] Housing Grants, Construction and Regeneration Act 1996

 

This blog is intended only as a synopsis of certain recent developments. If any matter referred to in thisblog is sought to be relied upon, further advice should be obtained.

Tagged Application (http://talkingconstruction.gateleyplc.com/tag/application/), Contract

(http://talkingconstruction.gateleyplc.com/tag/contract/), Contractor

(http://talkingconstruction.gateleyplc.com/tag/contractor/), Court

(http://talkingconstruction.gateleyplc.com/tag/court/), Employer

(http://talkingconstruction.gateleyplc.com/tag/employer)

 


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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.