Wed 05 May 2021

Pay Less Notice - Not Issued

I've not issued a Pay Less Notice does that mean I can't seek to have the true valuation of an application determined at adjudication?

In short, not necessarily.

Generally, unless your contract expressly states that any certification of a sum is final and binding, it is possible that such certification (e.g. an interim valuation, or an unchallenged payment application) can be opened up and reviewed by an adjudicator, arbitrator or the court.  If your contract makes no provision either way, it is likely that the Scheme will apply. The Scheme expressly allows an adjudicator to open up, review and revise any decision taken or certificate issued.

However in the case of Grove Developments Ltd v S&T (UK) Ltd the English Court of Appeal took the view that a paying party who had not served a pay less notice, but had paid the sum set out in the payment application, could adjudicate to determine whether the sum paid was the true value of the works claimed by the payee.

This means that a party would have to pay the full notified sum before referring a true valuation to dispute to adjudication.  It is always more difficult to get money back from a company once it has been paid and it is therefore important that payless notices are served on time and in the correct format.  If a pay less notice is served it allows a true valuation dispute to proceed without paying the higher notified sum in the payment notice/default payment notice first.

Should you require assistance with any aspect of a construction contract, we have a large and experienced construction team who would be happy to discuss this with you.


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