Lessons from Oakland v Stepnell on JCT Final Accounts – The Importance of a Valid Final Statement – Draft Doesn’t Mean Final
The Technology and Construction Court has recently considered two important issues concerning the final account provisions under the JCT Design and Build Contract 2016. In Oakland Wantage Care Home Ltd v Stepnell Ltd [2026] EWHC 1530 (TCC), the Court was asked to determine when a contractor’s submission constitutes a contractual Final Statement and whether previous correspondence disputing elements of the final account was sufficient to prevent that Final Statement becoming conclusive. The judgment serves as a useful reminder that the courts will adopt an objective approach when interpreting contractual notices and that parties must comply strictly with the contractual mechanism for disputing a Final Statement.
Background
Oakland Wantage Care Home Ltd engaged Stepnell Ltd under an amended JCT Design and Build Contract 2016 for the design and construction of a 65-bed care home. Practical Completion was certified on 26 April 2021, triggering the contractual final account process.
During 2022, the parties engaged in extensive discussions concerning the contractor’s final account. In February 2022, Stepnell submitted documentation setting out its valuation of the final account. The Employer’s Agent responded the following month, disputing a number of the sums claimed.
Almost two years later, Stepnell submitted a further statement in February 2024. In a subsequent adjudication, it was determined that this later submission constituted the contractual Final Statement and, because no valid Final Payment Notice or Pay Less Notice had been issued in response, the contractor became entitled to payment of the amount claimed.
The employer subsequently commenced Part 8 proceedings, arguing that the February 2022 submission had in fact been the contractual Final Statement. Alternatively, it contended that, even if the February 2024 document was the relevant statement, the disputes raised during 2022 were sufficient to prevent it becoming conclusive.
Was the February 2022 Submission a Final Statement?
The Court reaffirmed that contractual notices must be interpreted objectively. The relevant question is not what the sender intended the document to achieve, nor how the recipient actually understood it, but how a reasonable recipient, with knowledge of the contractual and factual background, would have interpreted it.
Although the February 2022 submission referred to the final account and was accompanied by correspondence expressing a desire to conclude the parties’ negotiations, the Court considered that the document itself demonstrated that it remained provisional. It was expressly described as a “Draft FA”, contained forecast figures and budget estimates, identified several items as requiring further assessment and indicated that additional particulars would be provided at a later date.
Taken together, these features meant that a reasonable recipient would not have understood the earlier February 2022 submission to be the contractor’s definitive Final Statement for the purposes of clause 4.24 of the contract. Instead, the Court concluded that the later February 2024 submission was the contractual Final Statement.
Could Earlier Correspondence Prevent Conclusivity?
Having concluded that the February 2024 submission was the relevant Final Statement, the Court then considered whether the employer’s earlier correspondence disputing various valuation items was sufficient to prevent that statement becoming conclusive.
The employer argued that it had already challenged the contractor’s entitlement during the parties’ negotiations and that those disputes should satisfy the contractual requirement to dispute the Final Statement.
The Court rejected that argument. Clause 4.24.6 requires an employer to give notice disputing “anything in the Final Statement” before the due date for final payment. The Court held that this wording necessarily requires the Final Statement to exist before such a notice can be given. Correspondence exchanged before the Final Statement was issued could not therefore amount to a notice disputing matters contained within it, regardless of whether the same valuation issues had already been discussed.
As no compliant notice disputing the February 2024 Final Statement had been served, the employer’s claim failed.
Practical Implications
This decision reinforces several important principles concerning the administration of final accounts under the JCT Design and Build Contract.
First, the courts will look beyond the title of a document and consider its substance. Whilst there is no requirement for a Final Statement to be expressly labelled as such, a document that is objectively incomplete, provisional or expressed to be a draft is unlikely to satisfy the contractual requirements.
Secondly, parties should not assume that ongoing negotiations or earlier correspondence disputing elements of the final account will preserve their position. Where the contract requires notice disputing matters contained within a Final Statement, a compliant notice must be served after the Final Statement has been issued and within the contractual timescales.
Finally, the judgment demonstrates the importance the courts place on the commercial purpose of conclusivity provisions. These clauses are intended to bring certainty and finality to the final account process, and the courts are unlikely to dilute those contractual mechanisms by treating earlier negotiations as satisfying the formal notice requirements.
How CCC Can Help
The final account provisions contained within the JCT suite of contracts can have significant financial consequences if they are not administered correctly. Identifying when a document constitutes a Final Statement, ensuring that compliant payment or pay less notices are served, and protecting a party’s ability to challenge the true value of the final account all require careful consideration of both the contractual provisions and the evolving case law.
At Contract & Construction Consultants (CCC), we regularly advise employers, contractors and subcontractors on the preparation and review of payment notices, final account procedures, adjudication strategy and contractual notice requirements. Our team has extensive experience assisting clients in navigating complex payment disputes and ensuring that contractual rights are protected throughout the lifecycle of a project.
If you require advice regarding final account procedures, payment disputes or adjudication under the JCT forms of contract, please contact a member of the CCC team.
