1. Can a defective payment notice still be saved by a pay less notice?

Laing O’Rourke Delivery Ltd v Shepperton Studios Ltd [2026] EWHC 612 (TCC)

Factual background

Laing O’Rourke Delivery Ltd (“Laing O’Rourke”) was engaged by Shepperton Studios Ltd (“Shepperton”) under a building contract to carry out construction works at the Shepperton Studios site.

Laing O’Rourke submitted an interim payment application seeking £5,627,275.11 plus VAT. In response, Shepperton issued:

• a payment notice stating that a significantly lower sum of £2,420,516.84 was due; and
• a pay less notice which applied further deductions (including liquidated damages and other charges), bringing the net amount payable to nil.

Laing O’Rourke commenced an adjudication, arguing that both notices were invalid. The adjudicator agreed, finding that the payment notice failed to provide an adequate breakdown showing how the notified sum had been calculated. Because the pay less notice adopted that same sum as its starting point, the adjudicator concluded it was also defective. Laing O’Rourke was therefore awarded the full amount of its payment application.

Shepperton did not pay and Laing O’Rourke then sought summary judgment to enforce the adjudicator’s decision.

The issues before the Court

The Technology and Construction Court (“the Court“) was required to consider:

1. whether an invalid payment notice necessarily renders a subsequent pay less notice invalid;
2. whether Shepperton was entitled, as a matter of contractual construction, to rely on its pay less notice despite defects in the payment notice; and
3. whether enforcement should be stayed given that Laing O’Rourke had entered insolvency, and the resulting repayment risk.

Judgment

The Court held that:

• Shepperton’s payment notice was invalid, as it failed to explain how the stated valuation figure had been reached, contrary to the contractual requirements;
• However, a defective payment notice does not automatically invalidate a pay less notice;
• The pay less notice must instead be assessed on its own terms, asking whether it adequately explains the payer’s valuation and the basis of the deductions relied upon.

On the facts, the Court found that Shepperton’s pay less notice contained sufficient detail explaining the deductions it sought to apply. Although it had adopted an incorrect starting figure, this did not deprive it of effect. The judge described the approach as one of substance over form, reflecting the commercial purpose of payment and pay less notices.

As a result, the Court enforced the adjudicator’s decision only to the extent of £3,198,660.64 plus VAT, being the balance once the sums set out in the pay less notice had been deducted rather than the full sum claimed in the application.

Insolvency and stay of execution

Shepperton also sought a stay of execution on the basis that Laing O’Rourke was insolvent, arguing there was a real risk it would not be able to recover any overpayment following final determination of the dispute.

The Court declined to grant a stay. In doing so, it placed weight on:

• the availability of a parent company guarantee in favour of Shepperton; and
• the established principle that insolvency alone will not automatically justify a stay where suitable safeguards are in place.

Takeaway points

This case is a timely reminder that:

• a defective payment notice does not inevitably “contaminate” a pay less notice – the two must be considered separately;
• courts will look at the substance and purpose of a pay less notice, rather than adopting a rigid or overly technical approach;
• parties resisting adjudication enforcement on insolvency grounds face a high bar, particularly where protections such as guarantees exist; and
• careful drafting of payment and pay less notices remains critical if you want to avoid finding yourself on the wrong side of an adjudicator – or the court.

2. When enforcement fails: A breach of natural justice.

LMND Group Ltd -v- John Henry Group Limited (Case No. HT-2025-Man-000050, HT-2025-MAN-000063) (Unreported)

Factual background

LMND Group Ltd (“LMND“) and John Henry Group Limited (“JHGL“) entered into a Framework Agreement for the provision of sub-contract services in May 2023 (“the Agreement“). Two sub-contract works directions were issued pursuant to the Agreement, with the works completing in 2024.

This judgment relates to enforcement proceedings arising out of the fifth adjudication brought by LMND, in which LMND sought payment on a notified sum basis in relation to 15 separate applications. The Adjudicator awarded LMND £238,000.

JHGL resisted enforcement on the basis of two alleged breaches of natural justice, relating to the Adjudicator’s treatment of defences that JHGL had raised:

1. Defence 1: that the Adjudicator failed to give either party an opportunity to make submissions on the Adjudicator’s rejection of JHGL’s argument that LMND were estopped by convention (the “Estoppel Defence“), and
2. Defence 2: that the Adjudicator failed to take into account JHGL’s double payment defence, namely that credit should be given for £209,000 already paid to LMND (the “Double Payment Defence“).

Judgment

The Court dealt with each alleged breach in turn.

Estoppel defence

The Court held that the Adjudicator’s rejection of JHGL’s Estoppel Defence relied on reasoning and authority that neither party had advanced nor been invited to address.

In particular, the Adjudicator relied on the case of Spencer V MW High Tech Projects Ltd[1] (“Spencer”) to support the proposition that a shared misunderstanding of the applicability of the Housing Grants, Construction and Regeneration Act 1996 (the “Construction Act“) could not create an estoppel by convention. Spencer had not been referenced by either party, nor put to them for comment, before being relied upon in the Adjudicator’s decision.

LMND argued that the reference to Spencer was merely for completeness and had not impacted the Adjudicator’s rejection of the Estoppel Defence however, the Court rejected this, finding that the Spencer case played a determinative role in the Adjudication’s decision.

The Court held that this constituted a serious breach of natural justice and that the breach had a material impact on the outcome of the adjudication. Enforcement of the Adjudicator’s Decision was, therefore, refused.

Double payment defence

The Court dealt with the second challenge briefly and ultimately rejected it, holding that the Adjudicator had reached a conclusion which was open to the Adjudicator to make.

Further, the Adjudicator was correct to determine that, in the context of a notified sum adjudication, arguments relating to double payment could not be considered where the notified sum had not first been paid.

Takeaway points

This judgment provides a rare example of a successful natural justice challenge to enforcement.

It provides a reminder that, whilst the Courts remain firmly pro-enforcement, adjudication enforcement disputes are highly fact sensitive and procedural missteps can be fatal.

Adjudicators are entitled to apply the law but, where a point of law is potentially determinative and has not been raised by the parties, submissions should always be invited from the parties before the Decision is made.

[1] [2019] EWHC 2547

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