UK: Fixing Your Mistakes: Henia Investments v Beck Interiors

Since 2011, Employer and Contractors have been living with the payment regime prescribed by the updated Housing Grants, Construction and Regeneration Act 1996. This regime amounts to strict liability for the payer – if relevant, compliant, notices are not issued, then the payer must pay whatever sums are claimed without deduction. But what if you issue the relevant notice a month later, against the next payment application. Can you fix your mistakes?

The recent judgment of the UK Technology and Construction Court, in Henia Investments v Beck Interiors [2015] EWHC 2433, looked at (amongst other things) the validity of payment applications by the Contractor and pay less notices issued by the Employer.

The judgment looked primarily at the timing of payment notices and the critical point related to the Contractor's ability to treat an out-of-time payment application from a previous month as an in-time payment application for the current month. The Court decided that this was not possible, and a fresh application had to be submitted.

One interesting analytical spin-off from the case related to the extent to which an Employer is able to use subsequent notices to correct failures in earlier notices.

Background to the typical payment provisions Payment provisions in construction contracts (such as the industry standard JCT and NEC forms) must comply with the mandatory provisions of the Housing Grants, Construction and Regeneration Act 1996 (as varied by the Local Democracy, Economic Development and Construction Act 2009) (the Act).

Typically, a monthly payment cycle will capture the following steps:

  • The Contractor issues an interim application, setting out the sums it considers due.
  • The 'due date for payment' is the date that the payment falls due (typically the later of a set monthly date and the date of receipt of an interim application). The 'final date for payment' is the date by which the payment must be made, a set period (usually 14 or 28 days) from the due date.
  • The Employer issues a payment notice, setting out its valuation of the works and the sums it considers due (which may or may not differ from the Contractor's application). This notice must be issued no later than five days following the due date for payment – pursuant to the Act, this cannot be extended by agreement.
  • If necessary, the Employer issues a pay less notice. Under the typical JCT provisions, this must be issued no later than five days before the final date for payment. This is a further opportunity to set out the sum the Employer considers due.

This cycle then continues usually every month for the duration of the project.

Use of a pay less notice to 'fix' a payment notice In Henia, Akenhead J confirmed that pay less notices are not limited in their application. If a payment notice was not issued in time or contained errors, the Employer has the further opportunity to record its valuation of the works in the pay less notice.

The Act describes the contents of the payment notice and pay less notice in near-identical terms, and so this interpretation must be correct. Although it seems somewhat odd to effectively give the Employer two bites at the cherry, it would be extremely onerous (particularly on large and complex projects) to restrict the Employer to the five-day period to challenge the Contractor's application.

Use of subsequent payment notices/pay less notices to 'fix' errors in a previous payment cycle The requirements on the Employer are strict – if neither a payment notice nor a pay less notice is issued reducing the amount it has been asked to pay, it must pay the sum applied for by the Contractor. In such circumstances, the usual way for the Employer to correct errors is for these to be addressed in the following month's valuation process.

Employers cannot use payment notices or pay less notices in a subsequent payment period to rectify a failure to issue correct payment notices or pay less notices in the previous months. In other words, if the Employer fails to issue either of the relevant notices in time, it must make payment of the sum in the Contractor's application. If the Employer does not make full payment and the Contractor does not exercise its right to bring an adjudication prior to the next payment, it cannot 'get off the hook' by issuing a pay less notice the following month.

However, an Employer can use subsequent payment and/or pay less notices to claw back sums that have been overpaid (whether due to a valuation error, a discovery of previous non-compliant work, or a failure to issue previous payment or pay less notices).

To illustrate:

  • If the correct valuation of application no. 1 was £1m, but a Contractor applied for £2m and no payment or pay less notice was issued, the Employer must pay the full £2m.
  • The following month, if the correct valuation by application no. 2 was £3m (i.e. a further £2m of work had been performed), the Employer can issue a payment or pay less notice with the correct valuation of £3m gross. That way, the Employer would only have to pay a further £1m, and could correct the error and over-payment.

The onus is therefore on the Employer to issue its notices correctly (i.e. on time); if it does not do so, it will need to pay up front and seek to claw back later.

The problem here really arises in circumstances where a Contractor becomes insolvent, or when the process happens at the end of a project or within the defects liability period. At that point, subsequent valuations may not contain enough value to claw back the overpayment. In those circumstances, an Employer would need to commence its own adjudication or Court/arbitration proceedings to claim the money from the Contractor (which is never as easy and, in an insolvency scenario, may not be possible in any event).

It must also be the case that an Employer cannot use the payment process to overrule an adjudicator's decision, which is binding (at least until a court overturns it). If the Employer's valuation of a piece of work was £1m and an adjudicator decided it should have been valued at £2m, an Employer could not seek to revalue this at £1m in subsequent payment notices. Its recourse in that scenario would be to go to court to seek to overturn the adjudication decision.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.