The Technology and Construction Court’s recent decision in Vision Construction Ltd v Gypcraft Drylining Contractors Ltd [2025] EWHC 2707 (TCC) provides valuable guidance on payment notices, bespoke payment mechanisms, and the limits of estoppel in construction contracts.
Background
Vision Construction Ltd (“Vision”) was the main contractor. Gypcraft Drylining Contractors Ltd (“Gypcraft”) was engaged as a subcontractor under a written subcontract dated November 2020. The subcontract contained a bespoke payment schedule derived from, but not identical to, the JCT payment provisions.
During the works, Gypcraft submitted a payment application (Application 23) which Vision failed to respond to with a valid payment notice. An adjudicator determined that Vision’s notice was out of time and that Gypcraft was entitled to the full amount claimed as a “notified sum”.
Vision subsequently issued Part 8 proceedings in the TCC, seeking declarations on three points:
- Whether the subcontract contained an “adequate payment mechanism” within the meaning of section 110 of the Housing Grants, Construction and Regeneration Act 1996 (as amended) (“the 1996 Act”);
- Whether Vision could rely on estoppel by convention to validate a course of dealing in which late notices had been accepted; and
- Whether Vision’s late notice could alternatively be treated as a valid “pay less” notice.
The Court’s Findings
Deputy Judge Williamson KC dismissed Vision’s claim and upheld the adjudicator’s decision.
Adequacy of the Payment Mechanism
The Court confirmed that the bespoke payment schedule provided an adequate mechanism for determining when interim payments became due, even though it did not use the JCT term “Interim Valuation Date”. The mechanism worked in practice and had been operated by both parties. The Court emphasised that minor drafting departures from standard form do not invalidate an otherwise clear and workable payment regime.
Estoppel by Convention
Vision argued that Gypcraft was estopped from insisting on strict compliance because both parties had routinely accepted late payment notices. The Court rejected this, finding no evidence of a shared understanding or reliance sufficient to found an estoppel. A consistent pattern of late notices, without more, was insufficient. The decision reinforces the principle that estoppel requires clear and unequivocal conduct showing a shared assumption and reliance.
Characterisation of the Notice
Finally, the Court declined to treat Vision’s late payment notice as a “pay less” notice. The document had been expressly framed and issued as a payment notice; it could not be recharacterised after the fact. The decision aligns with earlier authority distinguishing the two types of notice and underscores the need for parties to serve the correct notice, on time, and in the correct form.
Practical Implications
The case offers several practical lessons for those involved in payment administration and adjudication:
- Contract wording matters. A payment mechanism will usually be upheld if it is commercially intelligible and has been used in practice, even if it departs from the standard JCT language.
- Deadlines are strict. Late payment or pay-less notices cannot easily be salvaged through arguments about course of conduct or implied waiver.
- Estoppel remains narrow. Parties must show a shared and relied-upon understanding, not just a pattern of convenience or informality.
- Form and timing of notices. Each notice should clearly state its purpose and be issued in strict accordance with the contractual timetable.
Commentary
This is the latest in a string of cases to provide clarity on matters which legal practitioners have grappled with for some time. Consistent with those cases, it also demonstrates the Court’s ‘common sense’ approach of cutting through legally weak (but otherwise compelling) arguments which parties have come to employ as a matter of course in adjudication proceedings.