Introduction

Both in Ireland and the United Kingdom, we are often asked to advise on whether payment notices are valid.

Under s4(2) of the Construction Contracts Act 2013 (CCA 2013) a payment claim notice must specify (a) the amount claimed, (b) the period, stage of work or activity to which the payment claim relates, (c) the subject matter of the payment claim, and (d) the basis of the calculation of the amount claimed. Under s4(3) of the CCA, if contesting the amount claimed, a response to a payment claim notice must specify (a) the amount proposed to be paid, (b) the reasons for the difference between the claimed amount and the amount proposed to be paid, and (c) the basis of how the proposed amount is calculated. Where the difference between the claimed amount and the proposed amount relates to a claim for loss or damage, the response must also specify (a) when the loss was incurred, (b) the particulars of loss, and (c) the proportion of the difference attributable to each particular.

In the United Kingdom, under s110A of the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996), a payment notice must specify (a) the amount the payer considers to be or to have been become due at the payment due date, and (b) the basis upon which that sum is calculated. Under s111(4) of the HGCRA 1996, a pay less notice must specify (a) the sum the payer considers due on the date the notice is served, and (b) the basis upon which that sum is calculated.

Jaevee Homes Ltd v Fincham (t/a Fincham Demolition) [2025] EWHC 942 (TCC)

In the context of the HGCRA 1996, the recent judgment of Jaevee Homes gave guidance in relation payment notices and pay less notices . The judgment made headlines for other reasons including that informal WhatsApp messages between the parties constituted a binding construction contract. We previously wrote a blog post on WhatsApp messaging in the context of contractual notices, which can be found here.

However, from a payment notice point of view, Jaevee Homes is important because it found that, in the absence of a payer’s payment notice, a payee’s invoice was a valid application for payment and became the payee’s payment notice by default.

In reaching this conclusion, the court referred to Advance JV v Enisca Limited [2022] EWHC 1152 (TCC), which set out the following in relation to notices:

‘[47] In summary, the approach to be taken by the court as gleaned from these authorities is as follows:

(i) In considering the true construction of a contractual notice (including notices under the payment regime in the Act … the question is not how its recipient in fact understood it. Instead “the construction of the notices must be approached objectively. The issue is how a reasonable recipient would have understood the notices”, i.e. a reasonable recipient “circumstanced as the actual parties were.”

(ii) The notice must be construed taking into account the “relevant objective contextual scene”, i.e. the court must consider “what meanings the language read against the contextual scene will let in” … This means that, amongst other things, the reasonable recipient will be credited with knowledge of the relevant contract .

(iii) The purpose of the notice will be relevant to its construction and validity …

(iv) The court will be “unimpressed by nice points of textual analysis or arguments which seek to condemn the notice on an artificial or contrived basis” … Instead, as Sir Peter Coulson says in paragraph 3.36 of his book on Construction Adjudication (4th ed. 2018), focusing specifically on Pay Less Notices:

“The courts will take a commonsense, practical view of the contents of a payless notice and will not adopt an unnecessarily restrictive interpretation of such a notice…It is thought that, provided that the notice makes tolerably clear what is being held and why, the court will not strive to intervene or endeavour to find reasons that would render such a notice invalid or ineffective”.

v) There is no principled reason for adopting a different approach to construction in respect of different kinds of payment notices (for example because some may give rise to more draconian consequences than others) … However:

“the particularly adverse consequences for an employer that follow from, say, a contractor’s unanswered application/payment notice are relevant to the test of the reasonable recipient”.

vi) To qualify as a valid notice, any payment notice must comply with the statutory (and, if more restrictive, the contractual) requirements in substance and form … Payment notices and Pay Less Notices must clearly set out the sum which is due and/or to be deducted and the basis on which the sum is calculated. Beyond that, the question of whether a notice is or is not a valid notice is “a question of fact and degree.”

vii) Over and above the question of whether a notice has achieved the required degree of specificity, will be the additional question of whether the document that is alleged to constitute a valid notice was in fact intended to be such and whether it is “free from ambiguity” … The sender’s intention is a matter to be assessed objectively taking into account the context.

viii) Although in Grove, Coulson J observed that payment notices must make plain what they are, there is no requirement for a particular type of notice, such as a Pay Less Notice, to have that title or to make specific reference to the contractual clause in order to be valid: “[t]he question is whether, viewed objectively, it had the requisite intention to fulfil that function.”

ix) One way of testing the validity or otherwise of a Pay Less Notice will be to see whether it “provided an adequate agenda for an adjudication as to the true value of the Works…”

Conclusions

To date, the Irish Courts have offered little by way of guidance in relation to payment notices and the above review may be useful. To ensure compliance, parties should be mindful of the payment notice / pay less notice requirements under the relevant contract and legislation.

In Jaevee Homes, the Court referred to Everwarm Ltd v BN Rendering Ltd [2019] EWHC 3060 (TCC), where a one-page claim did not meet the sub-contract requirements of a ‘final detailed statement of the Value of the Subcontract Works.’ The document submitted singly expressed a lump sum from which previous payments were deducted. However, the sufficiency of a notice may be guided by the pricing terms in the contract and surrounding circumstances. In Everwarm Ltd, the court noted that:

‘182 … in the case of a lump sum price contract, it may suffice simply to give the lump sum and deduct previous payments because there is nothing else that can be stated in order to specify the basis on which the sum is calculated.’