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

Fecha: 16-Abr-2025

The Application of the 1996 Act and the Statutory Scheme to the Invoices

The Application of the 1996 Act and the Statutory Scheme to the Invoices

114.

The Claimant submits at paragraphs 20.2 to 20.4 of the Claimant’s Post-Hearing Submissions:

20.2

Further, even the Defendant’s interpretation were correct (which is denied), it did not provide “an adequate mechanism for determining either what payments become due under the contract, or when they become due” (paragraph 3 of the Scheme, applying s.110(1) of the Act) and hence the implied terms of paragraphs 2 to 4 Scheme would be substituted. It is not an adequate mechanism because:

(a)

On the Defendant’s case, it would have been entitled to issue payment applications in an unlimited number each month. There would be nothing to stop it from issuing these daily, or indeed several times per day or per hour. Each of those applications would have to be responded to by the Claimant in the form of payer payment notices and payless notices – and in the event that any one of the applications was missed, the notified sum in the application would become payable. That system would be unworkable and oppressive and is not an “adequate mechanism” for the purposes of the Act.

(b)

The Defendant’s alleged terms do not deal with how to determine what amount becomes due with each stage payment (invoice). It is alleged that invoices can be submitted when the Defendant wishes to do so. However, the question is, for what payments are they entitled to apply in the invoice? It is one thing to be entitled to submit an invoice whenever one chooses; it is another question what payments can be applied for in that invoice. If the Defendant’s answer were “the Defendant is free to apply for whatever sum it wishes in the invoice”, that is not an adequate mechanism for determining what payments become due in each stage payment. Under the Scheme, paragraph 2 provides the answer, namely the work done in the relevant period preceding the application. The Defendant’s alleged payment terms provide no answer, with the result that the Scheme applies in order to ensure an “adequate mechanism”.

(c)

For both or either one of the reasons above, the mechanism in paragraphs 2 and 4 of the Scheme must apply instead.

20.3

The suggestion that the Parties agreed that the due date for an invoice would be the date on which it was issued is simply not borne out in the WhatsApp exchange. Objectively, there is no indication that either party directed its mind to the due date, let alone that there were ad idem on the matter. There is no reason for the Court to find an agreed term where none existed on the facts because, in the absence of agreement, the due date is supplied by paragraph 4 of the Scheme.

20.4

The suggested final date for payment “28-30 days” after the invoice is itself an inadequate mechanism for payment and is contrary to the Act. S.110(1)(b) requires “a final date for payment” i.e. a singular date, not a date range. It would be unworkable in practice to say that the final date for payment could be as early as 28 days after the invoice

115.

Section 110 of the 1996 Act, to which the above submissions refer, provides:

Dates for payment.

(1)

Every construction contract shall—

(a)

provide an adequate mechanism for determining what payments become due under the contract, and when, and

(b)

provide for a final date for payment in relation to any sum which becomes due.

The parties are free to agree how long the period is to be between the date on which a sum becomes due and the final date for payment.

….

(1D) The requirement in subsection (1)(a) to provide an adequate mechanism for determining when payments become due under the contract is not satisfied where a construction contract provides for the date on which a payment becomes due to be determined by reference to the giving to the person to whom the payment is due of a notice which relates to what payments are due under the contract.

….

(3)

If or to the extent that a contract does not contain such provision as is mentioned in subsection (1)..., the relevant provisions of the Scheme for Construction Contracts apply.

116.

The Scheme for Construction Contracts provides:

Entitlement to and amount of stage payments

Where the parties to a relevant construction contract fail to agree—

(a)

the amount of any instalment or stage or periodic payment for any work under the contract, or

(b)

the intervals at which, or circumstances in which, such payments become due under that contract, or

(c)

both of the matters mentioned in sub-paragraphs (a) and (b) above,

the relevant provisions of paragraphs 2 to 4 below shall apply.

—(1) The amount of any payment by way of instalments or stage or periodic payments in respect of a relevant period shall be the difference between the amount determined in accordance with sub-paragraph (2) and the amount determined in accordance with sub-paragraph (3).

(2)

The aggregate of the following amounts—

(a)

an amount equal to the value of any work performed in accordance with the relevant construction contract during the period from the commencement of the contract to the end of the relevant period (excluding any amount calculated in accordance with sub-paragraph (b)),

(b)

where the contract provides for payment for materials, an amount equal to the value of any materials manufactured on site or brought onto site for the purposes of the works during the period from the commencement of the contract to the end of the relevant period, and

(c)

any other amount or sum which the contract specifies shall be payable during or in respect of the period from the commencement of the contract to the end of the relevant period.

(3)

The aggregate of any sums which have been paid or are due for payment by way of instalments, stage or periodic payments during the period from the commencement of the contract to the end of the relevant period.

(4)

An amount calculated in accordance with this paragraph shall not exceed the difference between—

(a)

the contract price, and

(b)

the aggregate of the instalments or stage or periodic payments which have become due.

Dates for payment

Where the parties to a construction contract fail to provide an adequate mechanism for determining either what payments become due under the contract, or when they become due for payment, or both, the relevant provisions of paragraphs 4 to 7 shall apply.

Any payment of a kind mentioned in paragraph 2 above shall become due on whichever of the following dates occurs later—

(a)

the expiry of 7 days following the relevant period mentioned in paragraph 2(1) above, or

(b)

the making of a claim by the payee.

117.

I have accepted the Claimant’s submission that the agreement between the Parties provided for only one application per month. For that reason, the point made at paragraph 20.2(a) of the Claimant’s Post-Hearing Submissions falls away.

118.

As to the second point, it is the Claimant’s case that the terms agreed to do not deal with how to determine what amount becomes due with each stage payment.

119.

The short WhatsApp agreement between the Parties made no provision as to how monthly instalments were to be calculated. In those circumstances the statutory scheme steps in to provide by paragraph 2 how to calculate the monthly instalments to which the Defendant was entitled. To that extent, I accept the submission in paragraph 20.3(b) of the Claimant’s Post-Hearing Submissions.

120.

On the authorities I have cited above, the Scheme steps in to fill the gap identified in the contract. It does not displace the other matters agreed between the parties which stand unless effectively displaced by the statutory arrangements.

121.

It seems to me that the calculation of the payments sought in the contested invoices complied with the provisions of paragraph 2 of the Scheme. Accordingly, it is of no significance that the provision for calculation of the amounts due by way of instalments, stage or periodic payments is derived from the Scheme rather than being agreed expressly between the Parties.

122.

I do not accept the submissions in paragraphs 20.3 and 20.4 of those submissions. In my judgment, the Defendant was free to submit an application for payment by way of invoice at any stage during each monthly cycle. To the extent that the invoice claimed sums due under the contract, those sums were due at latest 30 days after the invoice.