What a difference a day makes – The Technology and Construction Court provides guidance on calculating notice periods under JCT

In Elements (Europe) Limited V FK Building Limited¹ newly appointed Technology and Construction Court (“TCC”) Judge, Mr Justice Constable, considered the payment application notice provisions in a Joint Contracts Tribunal (“JCT”) sub-contract and held that; a “day” is not the same as a “clear day” and if a contract specifies a day for performance of an obligation, then the party performing the obligation has until the end of that day.

The Court also gave guidance on when it was appropriate for parallel Part 8 proceedings to be heard, that may affect the enforceability of an adjudication award.

Background

The defendant, FK Building Limited (“FK”) was a main contractor who engaged the claimant, Elements (Europe) Limited (“Elements”), to carry out remedial works at an apartment block in Salford under a JCT Standard Building Sub-Contract Conditions SBCSub/C 2016 Edition with bespoke amendments (the “Sub-Contract”).

Elements brought an application for summary judgment to enforce an adjudicator’s decision against FK following a payment dispute. FK made a tandem Part 8 application relating to the validity of the payment application which was the subject matter of the payment dispute. FK argued that the application was invalid because it was received late and therefore it would be unconscionable for the Courts to enforce the decision.

The Sub-Contract

The Sub-Contract terms provided that Elements could make a payment application in respect of an interim payment:

“4.6.3.1. so as to be received not later than 4 days prior to the Interim Valuation Date for the relevant payment…”

The relevant interim valuation date was 25 October 2022 and the parties agreed that Elements emailed the payment application to FK on 21 October 2022 at 22:07, and this was received by FK between 22:07 and 22:08 on the same day.

However, FK contended that the meaning of clause 4.6.3.1 of the Sub-Contract was that the application:

• needed to be received on or before the end of site working hours on 20 October. If receipt occurred sometime on 21 October, this would be between three and four days before 25 October - not four “clear” days before 25 October; and
• alternatively, if 21 October was the correct day, the application should have been received on or before the end of site working hours on 21 October because the Sub-Contract specification stated that the site would only be open until 6:00 pm on weekdays, and 1:00 pm at weekends.

Findings of the Court

The Court held that the meaning of a “day” was different to “clear days” because words will be construed according to their natural language and usage. As clause 4.6.3.1 did not refer to “clear days” then the parties did not mean clear days – therefore, the 21 October was the correct date, being four days prior to 25 October.

With regard to the timing of the application, the Court confirmed that the law does not deal in fractions of a day – if a contract specifies a day for performance of an obligation, then the party performing the obligation has until the end of that day. Whilst the parties could agree a specific time in their contract for service, this had not been done in the Sub-Contract. The site working hours in the specification were not relevant to the meaning of “days” in clause 4.6.3.1.

Despite FK arguing that it was commercially unworkable and unbusinesslike to serve a notice so late in the day, the Court held that it actually provided certainty for the parties to know that receipt could take place at any point up to 23:59:59 on the specified day in order to be effective.

Was Part 8 appropriate?

The recent case of A&V Building Solutions Ltd v J&B Hopkins Ltd² , together with the TCC Guide, sets out the factors to consider when deciding if a parallel Part 8 application is appropriate. In summary:

• the issue which arose in the adjudication is short and self-contained and the defendant continues to contest it
• the issue does not require any oral evidence, or any other elaboration beyond that which is capable of being provided during the interlocutory hearing for enforcement; and
• the issue is one which, on a summary judgment application, it would be unconscionable for the court to ignore

Elements relied on the case of Hutton Construction Limited v Wilson Properties (London) Ltd³ as authority for imposing an additional factor that there is a requirement that the point or points raised by way of Part 8 have to be shown to be “obviously wrong”

The Court held that the case of Hutton did not impose a higher Part 8 “test” and the Court should be guided by the principles outlined in the bullet points above. The issue at hand was deemed to be ”short and straight-forward” and as such, when combined with the lack of challenge by FK of the evidence put forward by Elements, Part 8 proceedings were appropriate.

Key take aways

• words shall be construed using their natural language and usage – the word “day” does not mean “clear” day without expressly saying so
• the law does not recognise a fraction of a day and this cannot be implied where it was not expressly agreed between the parties
• if a contract specifies a day for performance of an obligation, then the party performing the obligation has until the end of that day
• in considering whether parallel Part 8 proceedings which might affect the enforceability of an award should be heard, the Court will be guided by those key factors identified in A & V Building Solutions and the TCC Guide

_{[1]           [2023] EWHC 726 (TCC)
[2]           [2023] EWCA Civ 54
[3]           [2017] EWHC 517 (TCC)}