HT-2024-000423 - [2025] EWHC 942 (TCC)

Whether the Invoices were intended as notices under the Scheme / Act

The law is that the document must make “plain” that it is a payment application (payee’s default notice) and that the question is whether, viewed objectively, it had the requisite intention to fulfil that function [Claimant’s Skeleton at [68]].

There is nothing in the evidence in this case to indicate that the Defendant was aware of the existence or provisions of the Act / Scheme, let alone that his intention was operate those provisions when producing and submitting the Invoices. There was no Act-compliant set of agreed payment terms (indeed, no payment terms were agreed at all) and no mention of the Act / Scheme was ever made. The evidence indicates that the Defendant was aware that he was issuing invoices too quickly, but was indifferent to this: when challenged that the second Invoice was too soon, he replied., “Well I know I have to wait 30 days now or what ever it is and I’ve finished all inside sections… So will you please pay me something mate”. (Footnote: ⁷)

The Defendant argues that the Claimant understood the Invoices to be applications for payment. The evidence does not support that. The Claimant of course recognised the invoices as requests for payment (in general terms), but the contemporaneous evidence shows that the Claimant considered that the Invoices were not compliant. The Claimant noted internally that the Invoices were being issued too quickly and it then wrote to the Defendant to put him straight on the payment mechanism and dates: see the Claimant’s Skeleton at [34]-[35].

The Claimant’s final argument is that the invoices were not, generally, intended as payment notices pursuant to the Scheme or the Act. This argument is incorrect:

Overall, this was a simple contract between two small entities for demolition works expected to take around 12 weeks. The Claimant’s arguments as to the requirements of the Contract, the application of the Scheme and the requirements for the Invoices are divorced from the factual context and, with respect, the reality as to how these sorts of contracts can and do operate.

The Claimant never complained at the time that the invoices were unclear or needed more information. The Court has made clear that the sort of contrived, technical complaints relied on by the Claimant should not be accepted. If the Court did now mandate such a strict approach, the reality is that very few contractors like the Defendant would ever be able comply and, contrary to the intent of Parliament, the right to interim payments which the Act and Scheme specifically seek to provide for where not agreed, would be lost because compliance with those implied terms would be so complicated and technical that a party seeking payment is unlikely to have ever complied with it. The whole purpose of the Scheme is that it fills a gap where payment terms are not agreed, often therefore it is not understood at the time to apply. Any analysis of compliance must be carried out in that context.

Alternatively, even if the Claimant is correct that the Defendant was limited to one application each month, 3 of the 4 invoices were still valid:

It follows that even if the Claimant is successful on its “monthly applications” argument, declaration (3) in the Claim Form [MB/4] should be limited to a declaration that Invoice 1081 did not constitute a valid application for payment. Invoices 1078, 1079 and 1083 were issued one application a month and were valid.