Final means final... until it doesn't: a timely reminder on final statements under JCT D&B 2016

Background

The dispute arose from a JCT D&B 2016 contract entered into in August 2019, for the design and construction of a care home between Oakland Wantage Care Home Limited (the "Employer") and Stepnell Limited (the "Contractor"). The completion of works took place in April 2021, and subsequent disagreement ensued over the Contractor's final account statements.

In February 2022, the Contractor submitted a document described as a "final account projection" ("the February 2022 Statement"). The Employer's Agent disputed the Contractor's valuation of the February 2022 Statement the following month (March 2022).

Subsequently, in February 2024, the Contractor submitted a further Final Statement ("the February 2024 Statement") and commenced adjudication proceedings seeking payment of the sum set out in the February 2024 Statement, whereby the adjudicator determined that the February 2024 Statement was the correct Statement under clause 4.26.6 of the contract.

The Employer then issued Part 8 proceedings against the Contractor in September 2025 and sought declarations from the TCC that:

(i) the February 2022 Statement was the "relevant statement" for the purpose of clause 4.24 of the contract (and that notice was given in March 2022 disputing that sum); or alternatively

(ii) if the February 2024 Statement was the relevant statement, that the Employer already gave notice disputing the sums

(iii) therefore, prior correspondence from the Employer disputing the February 2022 Statement prevented the conclusivity of the February 2024 Statement; and

(iv) the Employer was therefore entitled to pursue a true value adjudication and/or court proceedings to challenge the Contractor's final account.

The key questions put to the TCC were:

(i) Which document was the contractual "Final Statement"?

(ii) Did the Claimant Employer give a valid notice of dispute to prevent the relevant Final Statement from becoming conclusive?

Decision

The TCC found that:

(i) The February 2022 document was not the Final Statement because it was expressly labelled as a draft, contained forecast figures and estimates, and indicated that further information was to follow. A reasonable recipient would not have regarded it as the contractual Final Statement.

(ii) Therefore, the February 2024 Statement was the relevant Final Statement under the contract.

(iii) The Employer's earlier correspondence could not constitute a notice disputing matters "in" the Final Statement, because the Final Statement had not yet been issued and was not in existence. The contract required notice disputing something contained in the Final Statement itself.

Key takeaways

An employer cannot validly challenge a Final Statement before that Final Statement actually exists.

Under clause 4.24.6 of the JCT D&B 2016 contract, the Final Statement will become binding and conclusive on the final payment due date unless one party has already notified the other that it disputes something related to the statement. In other words, if neither party raises a dispute before the due date for final payment, the figures and matters set out in the Final Statement will become final (i.e. conclusive) and cannot later be challenged.

It follows that correspondence prior to the issue of a final statement would not be valid notice for the purposes of clause 4.24.6 and any notice disputing a Final Statement must be served after a valid Final Statement has been issued.

It's important to exercise caution around any final account document that is in draft, particularly where they containing provisional or forecast figures, as these are unlikely to qualify as a contractual Final Statement, even if they do deal with the final account.