Reinwood Ltd appealed the court’s finding that L Brown & Sons Ltd had validly determined its employment under the contract on the grounds that Reinwood had continued to fail to pay the amount properly due under an interim certificate by the final date for payment.

Reinwood and Brown entered into a contract for the construction of 59 apartments in Manchester. The form of the contract was the JCT Standard Form of Contract, 1998 Edition, with Quantities, incorporating amendments 1 of 1999, 2 of 2000 and 3 of 2001.

The project suffered a number of delays. Brown applied for an extension of time. The architect issued a certificate for non-completion under clause 24.1 of the contract and then issued an interim certificate for payment.

Reinwood issued a notice under clause 24.2 that it intended to deduct monies from the interim certificate for liquidated and ascertained damages for non-completion. It issued a second notice confirming this intention in accordance with clause

The architect granted an extension of time.

Reinwood did not make any further payment and Brown purported to serve a notice of default. Some time later Reinwood failed to make payment pursuant to another certificate. Brown served a notice of determination relying on the previous notice of default. Reinwood claimed that Brown had unlawfully terminated the contract and was in repudiatory breach because the previous notice of default had been wrongly given.

The issue was whether an employer under a JCT building contract was entitled to deduct the amount of damages specified in the notice of intention where the certificate of non-completion was cancelled by a subsequent grant of an extension of time.