Surry and Sussex NHS Trust v Logan Construction  Building Law Reports TCC, Deputy High Court Judge Nissen
The Trust received an interim payment notice on 20 September claiming £1.1m. (This was during intense negotiations on valuation generally between the parties). The Trust’s response was to produce a Final Certificate showing a gross valuation of £4.9m, with detailed supporting calculations showing that the Trust considered that £14,000 was all that was due on an interim basis.
Logan went to adjudication alleging that had it served an interim payment notice and had not received a responding Notice to Pay Less. The adjudicator agreed, and ordered payment of £1.1m.
The Trust made the payment but then sought a declaration from the High Court that its Final Certificate correspondence counted as a Notice to Pay Less.
- Although the primary function of the communication from the Trust was to issue the Final Certificate, it was possible for one document to serve 2 different purposes; and the email contained all the information necessary to put a reasonable recipient on notice of the interim amount which the Trust proposed to pay and the basis on which that sum had been calculated.
- Although the communication was an email, sent by the Trust’s surveyor to the Trust and merely cc’d to Logan, this was nevertheless sufficient to constitute notice to Logan. A notice does not have to be addressed to the recipient!
- The meaning and effect of this document as a notice was to be determined by asking oneself what “the reasonable recipient” would have understood the communication to mean? The Judge ruled that a reasonable recipient would have understood that in producing a final certificate the Trust and its surveyor were carrying out a valuation of all the relevant aspects, and thus notifying their take on the value of the interim payment.
The Court took a very common sense approach. Although the Final Certificate communication was not labelled as a notice to pay less, jargon was not important; the substantial effect, and the underlying and obvious intention were. Using the concept of interpretation by reference to a “reasonable recipient” the concept of reasonableness has been reinforced again. This is a helpful, consciously “un-legalistic” approach which should be helpful in avoiding unnecessary disputes.
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