For those of you that work on construction projects, you may not be aware that, in recent years, Pay Notices and Pay Less Notices have been at the forefront of a number of high profile construction cases. The Housing Grants Construction and Regeneration Act 1996 (as amended) ( “the 1996 Act”) have set the way for how adjudicators and courts will deal with disputes arising from failure to provide a valid pay less notice.
A Pay Less Notice (“PLN”) is a notice which a party under a construction contract can issue in order to pay less than the contractor or subcontractor has invoiced for. In order for the PLN to be valid, it has to fulfil the requirements as defined by the 1996 Act, namely S111 of 1996 Act.
The requirements are very clear, and freely available to all parties involved in contract or sub-contract; however, adjudicators and court are awarding more settlements because one party of the contract is still failing to carry out its obligations in accordance with the 1996 Act.
Some companies try to use tactics to avoid paying the interim invoices or final account, however, these tactics get them in hot water as they fail to realise that, without a valid pay less notice, those tactics fall short and when the matters are escalated, they end up paying more.
In the recent case of Adam Architecture Limited v Halsbury Homes Limited  EWCA civ 1735, it was held that the Act 1996 applies to final accounts as it does to interim payments. Therefore, any one entering into construction contract needs to be prepared to serve a pay less notice in any such eventuality if they wish to avoid having to make the payment in full after an adjudicators decision
It is paramount that you protect your position at all times.
For more information, please contact our Commercial Litigation Department who can provide specialist guidance and advice – call us or email by using the form to the right. This article was written by Maria Orfanidou, Solicitor at Pinney Talfourd LLP Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of October 2018.