Payment and pay less notices are a key tool in managing cash flow in construction contracts. Used correctly, they negate the potential for a ‘smash and grab adjudication’, where failure to serve a valid notice leaves the paying party liable for the full amount of the payee’s application.

In the recent case of Placefirst Construction Ltd v CAR Construction [2025], both the format and timing of payment and pay less notices were called into question. Ultimately, the Court took a commonsense approach in keeping with the “fast and fair payment” ethos of the Construction Act.

What happened?

CAR were employed as subcontractors by Placefirst under an amended JCT Design and Build 2016 subcontract for a project in Durham.

CAR submitted its monthly application for payment in line with the contract provisions. Placefirst responded with an email containing two attachments: a document labelled “pay less notice” and a separate Excel worksheet titled “Valuation 30” which Placefirst argued was a payment notice.

In a smash and grab adjudication, CAR contended that the two documents constituted a single pay less notice, but the pay less notice was invalid because it had been served too early (i.e. before the service of a payment notice confirming the notified sum).

The Adjudicator found in favour of CAR and the dispute went to the TCC for enforcement.

What did the court decide?

• The judge found in favour of Placefirst and refused to enforce the Adjudicator’s decision.
• The Valuation 30 worksheet was clearly intended as a separate payment notice and not merely in support of the pay less notice. It didn’t matter that it was labelled as something else.
• While a pay less notice cannot be issued before an application for payment, it can be issued any time after. Payment and pay less notices can be served simultaneously in a single communication, provided they are separate notices.

Why is this important?

It’s rare for a Court to intervene and overturn an Adjudicator’s decision. But many will see the Court’s decision in this case as consistent with the ethos of the Construction Act – requiring a paying party to wait until after  the deadline for issuing a payment notice has passed before issuing a pay less notice would slow down the payment process.

The decision shows the Court’s willingness to adopt a practical approach and focus on the intent and clarity of notices rather than strict formalities. That said, it’s always better for notices to be unambiguously clear and in keeping with contractual requirements – ensure clarity, avoid disputes.

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This article contains information of general interest about current legal issues, but does not provide legal advice. It is prepared for the general information of our clients and other interested parties. This article should not be relied upon in any specific situation without appropriate legal advice. If you require legal advice on any of the issues raised in this article, please contact one of our specialist construction lawyers.

© Hawkswell Kilvington Limited 2025

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Rebecca Jackson | Legal Director