TCC Rejects Technical Arguments on Late Payment Notices

February 2026

Ben Couldrey and Charlie Bayliss

October 2025 saw the decision of the Technology and Construction Court (“TCC”) in Vision Construct Ltd v Gypcraft Drylining Contractors Ltd [2025] EWHC 2707 (TCC) confirm that:

payment notices issued by paying parties must be accurate, unambiguous and served on time to comply with the requirements of the Housing Grants, Construction and Regeneration Act 1996 (the “Construction Act”); and
advancing excessively technical arguments and/or seeking to retrospectively recharacterise events to avoid payment and enforcement of an award following a ‘smash and grab’ adjudication will likely be given short shrift by the courts.

We have summarised the key takeaways of the case below. A more in-depth analysis is provided in the sections that follow.

Key takeaways

The decision reinforces the importance of understanding and complying with the payment regime and timetable in any contract and/or under the Scheme / Construction Act. Clear labelling of notices is critical by any party submitting a notice and a document clearly expressed as one thing (in this case a payment notice) cannot later be reinvented as a different thing (in this case the payless notice) and any attempt to do so (to escape the consequences of non-compliance) will be viewed as cynical by the courts.

The outcome is also a reminder that excessively technical or legalistic arguments that seek to complicate a common sense approach to interpreting payment provisions will likely be given short shrift by the courts (as will advancing arguments that are not suited to the evidential rules and procedures of certain proceedings).

If a party seeks to bring an estoppel claim, then a Part 8 claim will typically not be the correct forum. This is because proving estoppel ordinarily requires a significant investigation of factual evidence, an enterprise not suited to Part 8 proceedings. The judgment reinforces that there must be clear evidence to demonstrate all the elements required for estoppel by convention.

We have observed a number of cases in which respondents in “smash‑and‑grab” adjudications have advanced arguments similar to those raised by VCL, particularly allegations of estoppel by convention arising from departures from the contractual payment regime, coupled with attempts to retrospectively re‑characterise previously issued notices. The TCC’s judgment conveys clear disapproval of such approaches, and it is hoped that this will discourage parties from pursuing weak, technical arguments of this nature in future adjudications.

The facts of the case

Contractor, Vision Construct Ltd (“VCL”), employed Gypcraft under a JCT Design & Build Subcontract 2016, supplemented by an 11-month payment schedule (which was replaced by subsequent schedules over the course of the works). Each payment schedule was in near-identical form. Each contained a table providing dates for the following items:

Sub-Contractor Submission Valuation Date;
DUE date (sic);
Accounts to issue Payment Notice by;
Payless Notice to be issued by; and
Final date for Payment.

Furthermore, footnote 4 of each schedule stated that “all Applications for Payments and Invoices are to be issued to by end of business on the Valuation date above“.

A dispute arose in relation to payment cycle #23 of the 2022-23 payment schedule (which was not the latest 2023/24 schedule):

Gypcraft submitted an interim payment application for £342,385.52 on 16 January 2023.
On 7 February 2023, VCL purported to issue a payment notice stating that the sum due to Gypcraft was only £125,437.77 (which VCL later paid).
The 7 February document, called in the covering email a “Payment Notice” and stated on its face to be a “Payment Notice“, was not issued on time, but rather 5 days later than the Subcontract required.
VCL did not issue a separate payless notice.
Gypcraft adjudicated, claiming the sum notified on 16 January 2023 was payable as the payment notice was late and therefore ineffective.

The adjudicator agreed with Gypcraft’s argument and awarded the unpaid £216,947.75 plus interest.

Whilst VCL paid the award, it commenced Part 8 proceedings seeking declarations that would invalidate the adjudicator’s decision and require the award to be forthwith repaid. VCL advanced three arguments:

The Subcontract’s payment schedule did not properly identify an Interim Valuation Date for payment cycle #23, so the Construction Act required the terms of the Scheme¹ to be implied, meaning Gypcraft had no right to make interim payment application #23 when it did (i.e., prior to the new due date under the Scheme).
There was a course of conduct between the parties in other payment cycles whereby Gypcraft had, prior to and after payment cycle #23 (including in previous years), accepted VCL’s late payment notices against previous applications. VCL argued that as a result Gypcraft was estopped by convention from arguing that the 7 February document was not a valid payment notice.
In any event, the 7 February document (even if not a valid payment notice) could and should be treated as a valid and timely payless notice, so the applied for amount was not the notified sum payable.

The ‘payment schedule identifies no interim valuation date (so the Scheme applies)’ argument

VCL argued that the 2022-23 payment schedule did not set out any (or any clear and unambiguous) Interim Valuation Dates for the purposes of continuing the interim payment regime beyond the dates set out in the initial payment schedule of the Subcontract.

VCL contended that, as a result, the Scheme applied instead to fix the relevant (valuation) periods. That in turn meant that (so long as the 2022-23 payment schedule applied) there was no relevant right under the Subcontract to submit a contractually compliant application pursuant to clause 4.6.3.1 of the JCT terms (as had otherwise been the case).

Adrian Williamson KC (sitting as Deputy High Court Judge in the TCC) rejected this argument:

The argument was identified as a “very technical” one and, whilst not assumed to be ‘wrong’, the TCC was “entitled” to treat the argument with “some scepticism” (in line with the clear message from case law that adopting an excessively technical or legalistic approach to matters that are supposed to be commercially straightforward will not be appreciated²).
The TCC found that the argument amounted to the contention that it was no possible to make sense of the payment schedule in the context of clause 4 of the JCT Subcontract; i.e., it was not possible reading together clause 4 and the 2022/23 payment schedule, for Gypcraft to give “such notification in accordance with the contract” as contemplated by section 110B(4)(b) of the Construction Act.
The TCC disagreed. The judge found that it would be “perverse and uncommercial to hold that the (payment) regime” could not work because the phrase “Sub-Contractor Submission Valuation Date” was used in place of the “Interim Valuation Date”.
The judge found that payment schedules (including the 2022/23 payment schedule) did identify valuation and payment dates clearly and operated in harmony with the JCT mechanism in the Subcontract.

The ‘estoppel by convention’ argument

VCL sought to establish a course of dealing in which Gypcraft had historically accepted late payment notices without objection.

VCL introduced evidence that for almost the entirety of 2021, 2022 and 2023 (that is, both before and after payment cycle #23 in January 2023) Gypcraft accepted payment notices issued out of time; issued invoices seeking payment of VCL’s notified sum; and took those net sums without complaint or any meaningful, clear reservation.
For example, VCL referred to application #20 made by Gypcraft on 14 September 2022:
- Gypcraft issued payment application 20 seeking payment of circa £90,000.
- This sum was arrived at by putting forward a “net valuation” of circa £2m and deducting “previous net payments” of £1.912m.
- On 6 October 2022, VCL issued a payment notice showing a sum due of only about £32,000. This document described the sum of £1.912m as “amount previously due“.
VCL argued that this conduct amounted to Gypcraft effectively representing to VCL that the net summary position as at the start of a payment cycle was to be found only in the gross value of the work done less the amounts invoiced by Gypcraft in accordance with the previous payment cycles.
In particular, by those representations, VCL argued that Gypcraft impliedly represented there were no other notified but uninvoiced sums which had to be taken into account when assessing movement in the month (i.e. since the time of the last valuation).
VCL claimed reliance on that convention when it took up, assessed and valued Gypcraft’s applications, such that it would be unconscionable for Gypcraft to retrospectively withdraw from it and assert that interim payment application 23 became due for payment in the amount claimed.
On this basis, VCL argued Gypcraft should be estopped by convention from insisting that VCL’s 7 February payment notice was invalid for lateness.

The judge rejected VCL’s argument, finding that there was no evidence of any estoppel by convention³:

In its payment applications, all Gypcraft did was state a fact about the “previous net payments” being as set out in the application.
Gypcraft did not “impliedly represent[ed] there were no other notified but uninvoiced sums which had to be taken into account when assessing movement in the month“.
The judge remarked that “an implied representation would be a most unusual basis for this type of , and this aspect of the case seems, with respect, to be an ingenious lawyer’s gloss upon the facts, rather than a shared assumption”.
The judge found that there was no evidence or document which shows a convention of accepting out of time payment notices had developed. The judge remarked that such was “equally consistent with confusion, inefficiency or a number of other possible explanations”.
The TCC also found that there was no evidence of any reliance. To establish this VCL would have to show that they fell into the habit of issuing their Payment Notices late because they were subject to some sort of convention. This was not made out.
Finally, the judge found that there was no evidence of any unconscionability or injustice caused to VCL by Gypcraft’s abandonment of the convention. In particular, the judge said that this element of the argument would “require a full investigation of the facts and is an undertaking inherently unsuitable for Part 8 (proceedings)”.

The TCC confirmed that Part 8 is only appropriate where a Claimant seeks the court’s decision on a question unlikely to involve a substantial dispute of fact. As estoppel relies heavily on factual evidence, estoppel claims are not generally suitable for Part 8 proceedings.

The ‘it’s a valid payless notice anyway’ argument

VCL’s final argument was that, even if the 7 February payment notice was late, it could still operate as a valid payless notice (and was therefore in time). VCL contended that its 7 February payment notice clearly communicated to Gypcraft an intention to pay less than the amount applied, with a breakdown of reasons. VCL therefore argued that this is all that is required by the Subcontract and the Construction Act for a payless notice and, therefore, could be read as such.

The judge rejected this “ambitious submission” given the clear labelling of the 7 February email and documentation as a “payment notice”. The court refused to allow any such retrospective re-characterisation of the document on the basis that it would be “entirely artificial” and, as doing so would undermine the statutory scheme of the Construction Act.

Overall, the court dismissed all of VCL’s arguments and refused to grant the declarations requested.

If you have any questions regarding the information discussed in this article, or require assistance with understanding the payment regime under a contract, or advice on strategy in respect of a contested payment application, please contact Ben Couldrey and Charlie Bayliss.

¹Scheme for Construction Contracts (England & Wales) Regulations 1998 (SI 649/1998)

²Adrian Williamson KC cited Coulson LJ’s observation in Bennett Construction Ltd. v CIMC MBS Ltd. [2019] BLR 587: “the courts expect the parties to adopt business common sense as to the arrangements for invoicing and payment.”

³As required for such an estoppel: see Mears Limited v Shoreline Housing Partnership Limited [2015] EWHC 1396 (TCC) at para [49].

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