Here the court found an implied term in a building contract to allow it to comply with the Housing Grants, Construction and Regeneration Act 1996 (Construction Act). The amended JCT minor works contract provided for final payment to be made 72 hours after receipt of an invoice. However the pay less notice provisions had not been amended, meaning that service of a pay less notice had to occur prior to the issue of the invoice (being 5 days before final date for payment). When the employer served a pay less notice on 28 October, 5 days after an invoice issued on 23 October, the contractor started an adjudication, claiming the notice was invalid.
The adjudicator found for the contractor, deciding that the notice should have been served on 21 October, before the invoice was issued. The employer issued court proceedings for a declaration (i) that the decision was unenforceable as the adjudicator had breached the rules of natural justice, and (ii) as to the correct date for service of a pay less notice. The judge enforced the adjudicator's decision, noting there had been no breach of the rules of natural justice. He then went on to consider the correct date for service of a pay less notice. Although the contractual provision was unworkable, substituting the provisions of the Scheme would be of no assistance, as these would also provide for the pay less notice to be provided prior to receipt of the invoice.
The court therefore held that the only solution was to find that the parties had impliedly agreed the prescribed period for service of the pay less notice was 'nil', meaning it could be served right up to the final date for payment. This solution was not one that had been proposed by the parties, but represented perhaps the best outcome, where relying on the Scheme would not solve the problem. It is likely there will be only rare occasions where it will be appropriate to imply a term in lieu of importing the Scheme.
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Manor Asset Ltd v Demolition Services Ltd [2016] EWHC 222 (TCC)
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