The importance of time: Elements (Europe) Ltd v FK Building Ltd

It is vitally important to comply with timescales in contracts. Additionally, parties need to take care when drafting those time limits.

In Elements (Europe) Ltd v FK Building Ltd [2023] EWHC 726 (TCC), the Court had to consider the meaning of ‘day’ in a Joint Contracts Tribunal (JCT) standard form contract – which is widely used in the construction industry – and its impact when a document was sent out of hours by email at 22:07. The point had not been the subject of any previous decisions so was a novel question for the Court.

Background facts

The contractor and sub-contractor entered into a sub-contract which incorporated the JCT Standard Building Sub-Contract Conditions (SBCSub/C) 2016 with amendments for remediation works at residential apartments in Salford.

The wording of the clause under consideration

The contract provided for the sub-contractor to make interim payment applications. Clause 4.6.3.1 stipulated that these payment applications were “to be received not later than 4 days prior to the Interim Valuation Date”.

It was agreed that the Interim Valuation Date was 25 October 2022.

The sub-contractor made its payment application by email on 21 October 2022 at 22:07.

The issue

The issue was whether the application had been made in time.

The contractor said that the application for payment was made late and was contractually invalid. It asserted that clause 4.6.3.1 meant that the application had to be received on or before the end of site working hours on 20 October 2022. Alternatively, before site closing on 21 October 2022. The contractor’s position was that submitting a document late at night was commercially unworkable and unbusinesslike.

The sub-contractor’s position was that the contractor’s argument required the notice to be served four ‘full’ or ‘clear’ days before and that no such language was used in the sub-contract. The sub-contractor relied on the rule in English law that when interpreting a contract, a day is treated as an indivisible whole and fractions of a day are ignored. Furthermore, the contract did not impose any restriction on the time of day when an application may be made or received.

The decision

The Court decided in favour of the sub-contractor. “4 days prior” meant that the 21 October 2022 was the fourth day prior to 25 October 2022. The notice could be served at any time up to 23:59. There was no time limit in the sub-contract, nor did it use the phrase ‘clear days’ so the sub-contractor had the whole day to serve the notice.

Implications

Calculating time limits can be tricky. Care must always be taken, and it is prudent to get someone to check calculations if the time limit is a fine one.

Some documents will specify not only a limit in terms of date but also time: so, for example, ‘by 16:00 on 21 October [2022]’. This is pretty much always the case in on-demand bonds. It is important for the draftsman to specify a time to avoid parties being bound by notices coming in after site or office hours. Easily negotiable, however, the onus is on the parties entering the agreement to specify such a requirement.

Finally, to avoid arguments such as in this case: don’t leave it until the last minute – or day, for that matter!