The TCC confirms ‘days’ means ‘whole calendar days’

In February, a member of our team reviewed the Court of Appeal case of A & V Building Solutions Ltd v J & B Hopkins, 2023 [EWCA Civ 54] where the Court held that an application for payment submitted one day after the date specified in the sub-contract, actually wasn’t so late as to be invalid.

Following on from that, the recent summary judgement decision in Elements (Europe) Ltd v FK Building Ltd [2023] EWHC 726 (TCC) – also centres around the validity of a payment application. This time the judgment provides us with further clarification as to what constitutes as a ‘calendar day’, and confirms that it is the whole day and not limited to business hours.

The application was brought by Elements (Europe) Ltd (“Elements”) against FK Building Ltd (“FK”) following an adjudicator’s award in their favour for the sum of £3,950,190.52. FK did not dispute that the award was enforceable, but rather, that the application on which the award was made was invalid because FK received it late.

FK, as main contractor, engaged Elements to carry out certain remediation works to a large number of residential apartments in Salford under a JCT Standard Building Sub-Contract incorporating Sub-Contract Conditions SBCSub/C 2016, which was subject to a schedule of amendments (“the Sub-Contract”).

The Sub-Contract provided that

“4.6.1. During the period up to the due date for the final payment fixed under Clause 4.22.1 … the monthly due dates for interim payments shall in each case be the date 12 days after the relevant Interim Valuation Date …”

4.6.3. Where Clause 4.6.2 does not apply, the Subcontractor may make a payment application in respect of an interim payment to the Contractor either:

4.6.3.1. so as to be received not later than 4 days prior to the Interim Valuation Date for the relevant payment …“

• The first Interim Valuation Date was 25th June 2021. Subsequent Interim valuation dates were on the same date every fortnight [sic] for a period of two months, and then the same date in each month or the nearest business day in that month.

The Application:

• Elements issued its application 16 (“the Application”) by email to FK on 21 October 2022, timed at 22:07.
• Elements claimed the sum of £3,950,190.53 in the Application.
• The email was received in the recipient’s inboxes between 22:07 and 22:08 that day.
• FK did not respond to the Application, and no pay less notice was served.
• FK did not pay and consequently Elements served a notice of intention to suspend the Sub-Contract works if payment was not received within seven days.
• Elements then referred the matter to adjudication.

Adjudicator’s Decision:

• During the adjudication, Elements used factual evidence to show that on the date that the Application was sent, some of FK’s recipients were checking their emails after 22:08 and saw that the email had been received, and was opened.
• The adjudicator determined that FK was required to pay Elements the sum of £3,950,190.53.

Part 8 Claim

FK’s Argument

FK stated that in order for the Application to be valid, it needed to be received on or before the end of site working hours on 20 October 2022; or alternatively, on or before end of site working hours on 21 October 2022 (i.e. not later than four days prior to the Interim Validation Date (“the IVD”) which was agreed as 25 October 2022). This was in order to best meet the reasonable commercial expectations of the parties. 

Elements’ Argument

In contrast, Elements submitted that the Application was required to be served four ‘days’ prior to the IVD which should be distinguished from ‘full’ or ‘clear’ days and that the Sub-Contract imposed no restrictions as to the time of day by which an application would be deemed validly served.

Further, Elements relied on the fact that previous applications were received after site working hours, and that it was normal for members of the quantity surveying team – and senior management – to work long hours, including weekends and evenings.

Interpretation of ‘day’

In considering the application for summary judgment, the Mr Justice Constable accepted that ‘day’, in this scenario, did not mean ‘clear’ days, but calendar days i.e. midnight to midnight. Lester v Garland (1808) 15 Ves 248 established that the Courts do not deal in fractions of a day. 

In consequence; for the Application to be validly served, FK needed to receive it by no later than 23:59:59 hours on 21 October 2022.

Conclusion

Receiving an application, or notice after “normal business hours” does not automatically make the application or notice invalid. It is up to the parties to include defined time periods within the contract particulars, or for any notices issued under a contract to include specific provisions as to how those notices should be served, and when service will be deemed dependant on the method of service.

The Birketts view

Whilst the judgment is perhaps unsurprising, it acts as a useful reminder for parties to carefully consider procedural requirements under their contracts, and ensure that contract terms are amended to reflect working practices. If notices should only be deemed validly served during normal business hours, make this clear in the contract!