Grove v S&T | mysite

S&T (UK) Limited v Grove developments limited

Citation: [2018] EWCA CIV 2448

Grove Developments Ltd ("Grove") engaged S&T (UK) Ltd ("S&T") under a JCT Design and Build Contract 2011 to design and build a hotel at Heathrow Airport for £26 million.
Practical completion was due on 10 October 2016, but S&T achieved it only on 24 March 2017.
On 31 March 2017, S&T submitted interim application 22, claiming around £14 million.
Grove did not serve a payment notice by the contractual deadline but later issued documents on 13 April 2017 (including a valuation and payment certificate). On 18 April 2017, Grove served a pay less notice stating that nothing was due, citing deductions for liquidated damages.
S&T argued Grove’s pay less notice was invalid, and the adjudicator agreed, ordering Grove to pay £14 million. Grove sought a court declaration that its notice was valid and that it could adjudicate to establish the true valuation.

Validity of pay less notice:
The Court of Appeal upheld that Grove's pay less notice was valid. It held that referencing another document (the detailed spreadsheet sent earlier) was sufficient and met the statutory requirement to "specify" the sum and the basis of calculation.

Right to adjudicate on true value:
The Court confirmed Grove's right to adjudicate on the "true value" of S&T’s interim application even if a payment was compelled under a default mechanism (due to lack of notices). This overruled previous conflicting High Court decisions (e.g., ISG v Seevic).

Liquidated damages:
The Court upheld Grove’s compliance with the necessary notices for withholding liquidated damages and confirmed its entitlement to them.

Outcome:
S&T’s appeal was dismissed. Grove’s pay less notice was valid, it could commence a valuation adjudication, and it was entitled to deduct liquidated damages.

Objective interpretation of notices:
Notices should be interpreted from the perspective of a reasonable recipient in context, allowing references to separate documents if sufficiently clear.

Right to adjudicate true value despite payment obligations:
Even if an employer must pay a "notified sum" due to lack of notices, they can later adjudicate to determine the correct value of works and seek recovery of any overpayment.

No finality from absence of notice:
Failure to serve a payment or pay less notice does not conclusively determine final entitlement to sums; it only triggers immediate payment obligations to support cash flow.

Emphasis on cash flow:
The statutory payment mechanism ensures cash flow, but does not preclude later correction through adjudication or litigation on the true valuation.

Flexible approach to specifying calculations:
Referring to accompanying or earlier clear documents can satisfy the requirement to "specify" sums and bases of calculation in pay less notices.