In Elements (Europe) Ltd v FK Building Ltd,[1] the Technology and Construction Court (TCC) considered the meaning of "days" in a Joint Contracts Tribunal (JCT) subcontract, holding that an interim payment application could be received at any time up to 11.59pm on the required day.

The TCC noted that the parties had settled their dispute after receiving the draft judgment. Nonetheless, it considered it appropriate to hand down the decision given that it relates to the "proper construction" of an important element of a widely used JCT standard form, which had not previously been considered by the courts. We consider below the practical guidance offered by this case as to the Court's interpretation of "days" in circumstances where a contract specifies a day / number of days for performance of an obligation, or service of a notice or application.

Background facts

  • FK Building Ltd (FK) engaged Elements (Europe) Limited (Elements) as subcontractor to carry out remediation works on three buildings, comprising a residential apartment scheme in Salford. The contract incorporated the JCT Standard Building Sub-Contract Conditions SBCSub/C 2016 Edition, with bespoke amendments.
  • Clause 4.6.3.1 dealt with the timing of interim payment applications, providing that these must be "received not later than 4 days prior to the Interim Valuation Date for the relevant payment…".
  • Elements sent its Interim Payment Application No. 16 (IA16) to FK by email on 21 October 2022 at 10.07pm. The relevant interim valuation date was 25 October 2022.
  • FK did not issue a pay less notice, and disputed that any sums were due pursuant to IA16, arguing that IA 16 had been received late.
  • Elements commenced adjudication proceedings in December 2022. The adjudicator rejected FK's arguments and determined that FK owed Elements the sum of £3.9 million.
  • FK continued to withhold payment and commenced Part 8 proceedings, seeking final determination in the Courts. Elements issued Part 7 enforcement proceedings. The Court dealt with the Part 7 and Part 8 proceedings together.

The dispute

FK's arguments centred around the semantics of clause 4.6.3.1 which, it contended, meant that Element's interim payment application, sent by email on 21 October at 10:07pm, had been submitted late.

Meaning of "4 days"

FK submitted that Clause 4.6.3.1 required interim payment applications to be received:

  1. four 'clear' or 'full' days prior to the interim valuation date; and
  2. on or before the end of site working hours, on whichever is the correct day.

As such, it argued that IA16 should have been received on or before the end of site working hours on 20 October 2022. Alternatively – if it was wrong about clear days being required –IA16 should have been received on or before the end of site working hours, i.e. before 6.00pm, on 21 October 2022.

Elements denied both arguments, on the basis that no such language is used in Clause 4.6.3.1. Applying the rule founded in Lester v Garland (1808), Elements submitted that unless otherwise provided for, 'day' simply means 'day' and should be distinguished from 'full' or 'clear days'.

In relation to the argument regarding site working hours, Elements denied FK's contention that allowing applications to be submitted until 11.59pm on the requisite day would be "commercially unworkable and unbusinesslike". Elements submitted that the payment mechanism had in fact been operated by both parties outside of site opening hours, and referred to evidence showing that FK had been checking its emails on or after IA16 had been sent on the evening of 21 October 2022. As such, it argued that the application had, for all intents and purposes, been given and received according to the conditions of the subcontract.

The TCC's decision

Mr Justice Constable rejected FK's arguments and held that IA16 was valid.

Were clear days required?

The argument that "4 days" meant four clear or full days (i.e. that "X must be done, at the latest, on the fifth day prior to date A") was quickly dismissed. The Court held that this is a well-known concept and that the subcontract could not be sensibly construed as meaning 'clear days' when that is not the language used.

Was IA16 received on time?

As for the second argument, it was found that the payment application could be made so as to be received at any time on 21 October 2022, regardless of the lateness of the hour. The Court referred to a long line of established authority, including Lester v Garland, that the law does not count in fractions of a day. The general rule is that "where a contract specifies a day for performance of an obligation, the obliged party has until the end of that day to perform it."

The Court rejected FK's argument that being able to submit a document at 11.59pm on the deadline was "commercially unworkable and unbusinesslike". It held that "regarding actual 'receipt' on a particular day (whether early in the morning or late in the evening) as being effective receipt on that day provides considerable certainty, and is therefore plainly a more businesslike construction (should that be relevant at all) than effectiveness being dependent upon an unexpressed restriction relating to working hours which will necessarily be subjective to the parties".

Accordingly, the Adjudicator's decision that FK owed the sum of £3.9 million under IA16 to Elements was held to be enforceable.

What are the wider impacts of this ruling?

In this case, the TCC observed that it is, of course, open to parties – as they often do – to stipulate in their contract that particular documents need to be provided within a specific time period. In Kersfield Developments (Bridge Road) Ltd v Bray and Slaughter Ltd [2017], for example, the contract provided that notices must be delivered by hand or sent by email before 4.00pm. If delivered / sent after 4.00pm on a business day, they were deemed to have been served the following business day. In that case, since the relevant notice was sent after 9.00pm on a Friday, it was deemed served on the following Monday.

However, where no cut-off time is expressly stated, reference to a "day" will mean up to 11.59pm on that day. In Elements (Europe) Ltd v FK Building Ltd, the absence of any express wording meant that Elements' interim payment application could be received at any time up to 11.59pm on 21 October 2022.

This case serves as a reminder to parties to make clear provision within their contracts in circumstances where they wish to include a specific deadline. Parties should also be reminded of the importance of issuing pay less notices on time, even if they dispute the validity of the underlying payment application.

If you have any questions about this article, please get in touch with Ashley Pigott.

Footnotes

[1] Elements (Europe) Ltd v FK Building Ltd [2023] EWHC 726 (TCC)