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In the matter of Placefirst Construction Limited -v- CAR Construction (North East) Limited (2025) EWHC 100 (TCC), Hill Dickinson successfully acted for Placefirst Construction Limited (“PCL”) in its claim for declaratory relief and the consequential nullification of an adjudicator’s decision requiring PCL to pay a notified sum. 

What is a Notified Sum?

Given the recent finding that technical payment (often referred to informally as “smash and grab”) adjudications accounted for around 63% of all claims referred to adjudication in recent years (2024 Construction Adjudication in the United Kingdon: Tracing trends and guiding reform (Kings College London, the Adjudication Society)), those in the industry will be all too familiar with the smash and grab concept and what constitutes a “notified sum”

This notified sum regime has been the subject of countless adjudications and subsequent litigation in the TCC and beyond. 

The facts in PCL vs CAR

The key facts of the case are as follows:

• PCL employed CAR to carry out certain works pursuant to an amended JCT design and build 2016 form of subcontract (“the Contract”).
• As per the terms of the Contract, CAR was required to submit an interim application for payment (“AFP”) no later than the 25th of each month.
• PCL was required to issue a payment notice not later than five days after the “due date” (as defined by the Contract), with the amount as specified in such payment notice to be paid on or before the “final date for payment” (as defined by the Contract).
• PCL was also entitled to issue a pay less notice no later than two days before the final date for payment.
• On 24 July 2024, CAR submitted an AFP by email for works valued up to 31 July 2024.
• On 31 July 2024, PCL sent an email enclosing a “Payless Notice” and a separate excel document titled “Valuation 30”, contending that no payment was owed to CAR.
• It was averred by CAR that a payment notice had not been issued, and that the pay less notice had been issued by PCL in advance of the date when it could have properly been issued under the Act and the Contract. 
• It was therefore CAR’s position the amount claimed in CAR’s AFP (i.e., the notified sum) was due and payable on the final date for payment.
• PCL’s position was that it had issued both a valid and effective payment notice and pay less notice.
• The dispute was referred to adjudication, with the adjudicator deciding in favour of CAR.
• PCL subsequently issued part 8 proceedings seeking declarations that, amongst other things, the Valuation 30 document enclosed with the email on 31 July 2024 constituted a valid and effective payment notice and that the pay less notice issued on the same date was equally valid and effective. 
• CAR thereafter issued its own proceedings and made an application for summary judgment to enforce the adjudicator’s decision.
• At a joint directions hearing convened by the court, PCL were successful in arguing that, in line with established principles and the TCC Guide, its claim concerned short and self-contained issues which could be determined without the need for disclosure or witness evidence, and on a summary judgment application, such issues were those that it would be unconscionable for the court to ignore.
• It was therefore determined by the court that it was appropriate for its part 8 claim to be disposed of at the same time as hearing CAR’s application for summary judgment.

The key issues

The key issues for the Court to determine were as follows:

Was the payless notice valid and effective?

• Pursuant to s110B(4) of the Act, a payee’s application for payment will be regarded as the default payment notice in circumstances where a payment notice is not given by the payer, that is if (as in this case) the contract permits or requires this AFP to be made before the date on which this payment notice can be given.
• In deciding whether the pay less notice issued by PCL was valid and effective, the Court was required to determine at what point an application for payment would be regarded as the payee’s notice in default, and therefore in respect of s111(5)(b) of the Act, when a pay less notice could be issued.
• It was submitted by PCL the effect of s111(5)(b) and s110B(4) of the Act when read together was that, if an AFP was to take effect as a payee’s notice in default, such application would take effect as the default payment notice on the date when it was issued (meaning that effectively the date of a default payment notice was contingent on whether or not a payer notice was issued). 
• The contrary position advanced by CAR was that, as s110B(2) permitted a payee (default) notice to be given at any time “after” the date on which the payment notice was required to be given, the AFP would not be “deemed” the default payment notice until after this date, meaning the pay less notice was invalid, as it was issued before this point in time.

Was the Valuation 30 document issued with the payless notice sufficient to constitute a valid payment notice?

• In determining this point, the Court was required to consider, as contended by PCL, whether the Valuation 30 excel document attached to PCL’s email on 31 July 2024 was intended as a separate document (i.e., not merely a document supporting the pay less notice attached), and if so, whether in substance, the Valuation 30 document in its entirety, or any of the worksheets within, which included a “payment certificate”, comprised the payment notice, and that such payment notice could be served simultaneously with a pay less notice and under the cover of the same communication.
• CAR raised various arguments in support of its contention that Valuation 30 did not constitute a valid payment notice, with its position in essence that this document was purely subsidiary (and its purpose being to provide the supporting detail only) to the pay less notice which it alleged had been issued prematurely, rendering it invalid.

The decision

Insofar as whether PCL had issued a valid and effective pay less notice, the court found that there was nothing in the Act which provided that an AFP is deemed or otherwise treated as a payee notice in default only after the period for the payor to give a payment notice had elapsed. Instead, where no valid payment notice is served, any such AFP is to be regarded as a payee notice in default, and a pay less notice is required to be given not before the date of the payee notice in default (i.e. the AFP).

In practical terms therefore, the only requirement in respect of the timing of a pay less notice (where a payment notice has not – or is alleged to have not been served) is that the pay less notice is issued after the date of the AFP and not before.