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Administering Big Construction Contracts is a Job for Professionals

Hospital or OfficeConstruction contracts are often replete with detailed provisions in respect of time limits and payment schedules and that is one good reason why their administration is best entrusted to professionals. The point was strikingly made by one High Court case concerning a hospital refurbishment project.

An NHS trust engaged a building company to perform the works at a cost of almost £4.4 million. Following practical completion of the works, agreement could not be reached as to the final sum due under the contract. The company raised a purported interim payment notice (IPN), seeking over £1 million, and the NHS trust replied with a pay less notice (PLN), contending for a figure of less than £15,000.

Both documents were sent by email and a dispute arose as to the validity of each of them. A contract adjudicator decided that the IPN was valid but the PLN was not. That meant that the trust became automatically liable to pay the full sum sought by the company, having failed to serve a valid PLN within the time limit specified in the contract.

After the trust launched proceedings, the Court agreed with the adjudicator that the IPN was valid. It was free from ambiguity and stated in terms that it was an IPN. However, the Court went on to also uphold the validity of the PLN and granted the trust declaratory relief to that effect.

The trust’s contentions as to the sum payable were clear from the relevant email and its attachments. When read together, they revealed the trust’s intention to dispute the amount claimed by the company. The Court’s decision opened the way for further adjudication proceedings in respect of the sum due.