Tue 26 Apr 2022

Is a valuation a valid payment notice under the Construction Act?

In Tierney v G F Bisset (Inverbervie) Ltd [2022] SAC (Civ) 3, the Sheriff Appeal Court sought to determine whether the respondent’s third valuation was a valid payment notice in terms of the Housing Grants, Construction and Regeneration Act 1996 (“the Act”).


The case relates to payment for works carried out by the respondent, G F Bisset (Inverbervie) Ltd (“G F Bisset”), for the appellant, Laura Tierney (“Ms. Tierney”), at a luxury dog hotel in Aberdeenshire (“the Works”).

The parties’ contract was a “construction contract” in terms of the Act, however it was not subject to the terms of a standard form contract, nor was it comprehensive in its payment terms. The contract contained an estimate by G F Bisset, dated 8 September 2015, for the works, totalling £150,000.00 (excluding VAT). The estimate was accepted by the Ms. Tierney. The only express term in the contract as to payment was that G F Bisset’s “payment terms are fourteen days from the date of [their] valuations which are carried out on a monthly basis”.

Works commenced in September 2015. G F Bisset’s first valuation was submitted on 17 February 2016, and their second on 28 June 2016. By the time of the court action, both had been paid in full. G F Bisset’s third valuation was submitted on 17 November 2016 and was a point of contention in this litigation.

At first instance, Ms. Tierney commenced proceedings against G F Bisset seeking repayment for what she contended was an overpayment made in error and for damages in relation to a breach of contract. G F Bisset counterclaimed for payment of the sum sought within their third valuation, namely £40,572.34.

The Sheriff’s Decision

The Sheriff granted decree against Ms. Tierney for payment to G F Bisset of the sum counterclaimed for. The Sheriff rejected any argument that the third valuation was ineffective as a payment notice in terms of the Act, noting that had Ms. Tierney been dissatisfied with the specification contained within the notice, she could have served an appropriate payment or pay less notice.

The Appeal Decision

Ms. Tierney appealed on the basis that the Sheriff had erred in holding that the third valuation was a valid payment notice in that it:

  1. failed to specify the basis on which the sum had been calculated;
  2. failed to comply with the requirements of s110A(3) of the Act;
  3. was not in substance, form and intent a payment notice;
  4. did not provide reasonable notice that the payment period had been triggered; and
  5. was not issued in accordance with the contract.

In determining whether the Sheriff had in fact made an error, the Appeal Court noted under s110A(3) of the Act a notice must specify the sum that the payee considered to be/have been due at the payment due date, and the basis on which that sum was calculated. In this instance the Appeal Court determined that this specification had been met, and that Ms. Tierney had fair notice of the amounts claimed and what those amounts related to. The Court also took note of the fact that the contract between the parties was not subject to the terms of a standard form building contract, and that the specification made within the valuation was in fact in accordance with the payment requirements of the much less comprehensive contract which governed the parties’ relationship.

In response to Ms. Tierney’s allegation that the valuation was not issued in accordance with the contract, the Court noted that whilst the contract might state that valuations should be issued monthly, that had no bearing on G F Bisset’s right to give notice in line with s110A(3) of the Act where Ms. Tierney had failed to give notice in accordance with the s110A(2), as she was required to under the contract.

The Court refused the appeal, deeming the third valuation a valid payment notice in terms of the Act, holding that it contained sufficient specification giving Ms. Tierney fair notice of the sums claimed and what those sums related to.

This article was co-written by Josh Grieveson, Trainee Solicitor.

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