Systems Pipework Ltd v Rotary Building Services [2017] EWHC 3235 (TCC)

Mr Justice Coulson reflects on his decision in Costain Ltd v Tarmac Holdings Ltd [2017] EWHC 319 (TCC) and expresses a concern that the pendulum has swung too far in favour of the notice requirements imposed on paying parties, particularly in relation to the notification of Final Accounts.  This concern provides a valuable context for this judgment but is not pursued to conclusion in this case.

Fundamentally a case regarding the proper interpretation of contract terms and notice provisions.  Justice Coulson clearly sets out his thoughtful review of a series of cases that raise points of interpretation relative to the application of notice provisions dealing with the payment process, including some extracts of his own previous judgments, that collectively amount to compelling evidence in favour of setting a high threshold for ensuring detailed notice provisions are satisfied by both parties.

Whilst Justice Coulson acknowledges that his judgment may be seen by some as an overly-strict interpretation, he also illustrates that the Contractor was clearly attempting to avoid an argument on the merits of the Final Account by seeking to rely on an interpretation of a clause that on analysis they had failed to comply with in any event.  On the facts of this case Justice Coulson stated that it is a prerequisite for the sum due and the contract clause under which it is being notified to be clearly set out in the relevant notice.

This case consolidates and reinforces the developing jurisprudence in favour of a strict interpretation and enforcement of contract notice provisions that relate to the payment process.  The paying party will be held to a high standard when they seek to rely on notice provisions as a tactic to avoid the correct administrative requirements of the contract.


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