The TCC considers the meaning of ‘days’ vs. ‘clear days’

When providing judgment on a range of matters, the Courts will often need to look at the ‘construction’ (i.e., the meaning) of contractual terms and conditions which are core to the issues in dispute. This can range from complicated formulas to the construction of a particular sentence or may even boil down to a single word.

In Elements (Europe) Ltd v FK Building Ltd [2023] EWHC 726 the Court determined the meaning of the word ‘days’ within a JCT Standard Building Sub-Contract Conditions SBCSub/C 2016 Edition (which incorporated bespoke amendments).

It should be noted that the parties settled before judgment was handed down. The Court proceeded to hand down judgment as it concerned a point which had not previously been the subject of judicial consideration and was considered to relate to an important element of this JCT standard form contract, which is widely used in the construction industry.

Background to the matter

Elements (Europe) Ltd (‘Elements’) commenced proceedings seeking summary judgment against FK in respect of an adjudication decision in the sum of almost £4 million.

FK brought a related Part 8 claim concerning two points relating to the validity of the payment application on which the adjudication decision rested. It being FK’s position that the payment application was received late.

The JCT subcontract said that the subcontractor’s payment application should be received “…not later than 4 days prior to the Interim Valuation Date for the relevant payment…”. The Interim Valuation Date was agreed to be 25 October 2022.

The payment application in question was issued on behalf of Elements via email on 21 October 2022 timed at 22:07. There was no dispute that the email and its attachment was received on the same date that it was sent.

It was FK’s position that the payment application was submitted late as it was not received on or before the end of site working hours on 20 October 2022 (being 4 clear days before the Interim Valuation Date) or alternatively, on or before the end of site working hours on 21 October 2022. FK’s Counsel placed particular emphasis on the use of the word “received” in the relevant clause. It was argued that the application needed to be received on or before the end of site working hours because such met the “reasonable commercial expectations of the parties”.

In contrast, it was Elements’ position that the subcontract imposed no restriction on the time of day in which a payment application could be made or received. Further, Elements contended that the construction of the clause simply meant that a payment application made via email is received when it arrives in the inbox of the intended recipient (which is determined as a matter of fact).

The issue before the Court was whether the phrasing 4 days meant 4 clear days, such that 4 full days are required between receipt of the payment application and the Interim Valuation Date.

The Court’s decision

The Court accepted that ‘clear days’ is a well-known concept and, with reference to the Oxford English Dictionary, means “‘a day or days, with no part occupied or deducted”.

The Judge proceeded to construe the words of the subcontract according to their natural language and held that it could not be sensibly construed as meaning ‘clear days’ when that was not the language used. Accordingly, the Court determined that Elements’ payment application could have been validly served should it have been received by FK at any time on 21 October 2022 up to 23:59:59. Elements’ payment application was therefore found to be validly made and the adjudication award was to be enforced.

Comments

Parties should give particular consideration as to the contractual terms and requirements surrounding the service of any notices. If the intention is for payment applications to be served within a defined period, then the contract should reflect this, in specific terms, so as to alleviate the potential for disputes surrounding service to arise at a later date.

If it is intended for applications for payment to be submitted within, for example, ‘business hours’ then parties would be well advised to state in explicit terms within their construction contract, what those business hours are considered to be.

Speak to our specialist Construction and Engineering lawyers

Our specialist team at IBB is on hand to advise from the outset, whether it be in respect of the drafting of the contract itself or assisting in respect of a dispute which has materialised.

If you have any questions about this blog, please speak to one of our construction team on 03456 381381 or email construction@ibblaw.co.uk.

Alternatively, contact Samantha Beasley on 01895 207283 or Samantha.Beasley@ibblaw.co.uk.