The calculation of days in a construction contract is important to avoid any adverse consequences of failing to comply with a contractual deadline. This includes incurring the risks of “smash and grab” adjudications. The calculation of days was explored in the case of Elements (Europe) Ltd v FK Building Ltd [30.03.23].
By a JCT Standard Building sub-contract (the sub-contract), FK Building Ltd (FK) acting as main contractor engaged Elements (Europe) Ltd (Elements) as sub-contractor to carry out remediation works as part of the design and construction of a 156 residential apartment scheme in Salford.
Clause 184.108.40.206 of the Sub-Contract Conditions provided that the sub-contractor may make a payment application in respect of an interim payment to the contractor “so as to be received no later than four days prior to the Interim Valuation Date for the relevant payment...”
Item 10 of the Sub-Contract Particulars provided that the “Interim Valuation Date was the 25 of each month or the nearest business day in that month”.
The Specification provided that:
Elements issued its Payment Application No. 16 (the Application) on 21 October 2022 seeking £3,950,190.53. FK argued the Application was submitted late and was therefore contractually invalid. They further argued that any failure by FK to serve a pay less notice in time did not lead to any obligation by FK to make payment to Elements.
On 5 December 2022, Elements served a Notice of Adjudication on FK. At the adjudication, FK disputed that sums were due pursuant to the Application for five reasons.
On 17 January 2023, the Adjudicator delivered his decision and rejected all of FK’s arguments. The Adjudicator awarded Elements the sums claimed in the Application plus interest and the Adjudicator’s fees.
On 25 January 2023, FK emailed a Part 8 claim form to Elements which addressed whether the Application was served in time. As no payment had been made by FK pursuant to the Adjudicator’s Award, Elements issued its adjudication enforcement Part 7 claim. On 13 February 2023, the Technology and Construction Court (the TCC) made an order giving directions and listing the adjudication enforcement and Part 8 proceedings together.
At the hearing, FK argued that upon its correct construction, Clause 220.127.116.11 meant that the Application (which had an Interim Valuation Date of 25 October 2022):
- Needed to be received on or before the end of site working hours on 20 October 2022, alternatively;
- Needed to be received on or before the end of site working hours on 21 October 2022.
FK argued that Clause 18.104.22.168 should be construed such that the payment application required to be received on or before the end of site working hours on whichever is the correct day. This would then best meet the reasonable commercial expectations of the parties.
Elements argued that Clause 4.6.3 did not confirm that any notice is to be served four 'clear' or 'full' days. Elements relied upon the rule in English law that, when interpreting contracts, a day is treated as an indivisible whole and fractions of a day are ignored. Elements submitted that unless provided for explicitly otherwise, 'day' simply means 'day' and should be distinguished from 'full' or 'clear' days.
The TCC held:
- The sub-contract made no reference to "clear" days. Hence, the sub-contract could not be sensibly construed as meaning "clear days" when that was not the language used.
- A payment application required to be received by FK no later than 21 October 2022 could be made to be received at any time on 21 October 2022, up to 23 October 2022, because the law did not count in fractions of a day.
- The part of the Specification setting out the site opening hours did not import a restriction upon the words "four days" in Clause 22.214.171.124. Not only was there no wording within the sub-contract to suggest it could, it was obviously irrelevant when tested against other references to "days" within the sub-contract.
Therefore, the application was made so as to be received on 21 October 2022, which was not later than four days prior to the Interim Valuation Date, and was therefore valid.
This case highlights the importance of issuing notices on time and how days are calculated in construction contracts.
If it is intended that notices should only be served during working site hours on days when a site is open, then this needs to be clearly stated in the drafting of construction contracts.