Adjudication Matters: August 2026

Welcome to the August 2026 edition of Adjudication Matters, where we discuss the latest key developments in adjudication.

In this month’s bulletin we look at:

1. Can an adjudicator come to a different conclusion than that proffered by the parties?
2. Was an adjudicator correct to determine that a final account had become conclusive?
3. Are payment terms compliant if the final date for payment is variable?

Can an adjudicator come to a different conclusion than that proffered by the parties?

 BDP Construction Limited v Cygnet Behavioural Health Limited [2026] EWHC 1796 (TCC)

This case considers the circumstances in which an adjudication decision will, or will not, be enforced for transgressing alleged issues of jurisdiction and natural justice.

Factual background

BDP Construction Limited (“BDP“) was contracted by Cygnet Behavioural Health Limited (“Cygnet“) to construct a hospital in Wolverhampton under a JCT Design & Build contract 2016 edition. The works did not complete on time and Cygnet setoff monies against BDP’s account for liquidated damages and for alleged defects.

BDP initiated an adjudication for the retained sums, and the adjudicator issued their decision on 09 March 2026. Therein, the adjudicator decided that Cygnet shall release the sums retained against BDP’s account, effectively dismissing Cygnet’s setoffs for liquidated damages and defects.

Cygnet did not comply with the adjudicator’s decision and BDP thereafter sought enforcement.

Cygnet resisted the enforcement on two grounds:

1. Jurisdiction – the adjudicator decided that there was no mechanism to apply liquidated damages contrary to his jurisdiction. This was said to be outwith the adjudicator’s jurisdiction because the existence of a mechanism was not a submission advanced by either party, and was not put to the parties before the adjudicator issued their determination. Rather, both parties agreed that a mechanism existed for applying liquidated damages, they just disagreed on what rate of damages applied (where there were competing versions of the contract in circulation).

2. Natural justice – there were two arguments advanced by Cygnet in this respect:

• There was an agreed factual basis between the parties upon which the adjudicator should have made his determination (i.e. that there was a mechanism to apply liquidated damages), and therefore if the adjudicator was to depart from this agreement, those points of departure (i.e. that no mechanism existed) ought to have been put to the parties before the determination was rendered.
• Notwithstanding whether an agreement existed or not between the parties (outlining a prescriptive factual matrix that the determination had to be issued within), it was incumbent on the adjudicator to notify the parties that he did not think a liquidated damages rate applied.

Judgment

In terms of jurisdiction, the court rejected Cygnet’s submissions.

The adjudicator’s jurisdiction, according to the court, was not sufficiently ringfenced so as to prevent the adjudicator from making a finding on the existence of a mechanism to apply liquidated damages. Instead, when the adjudicator determined that no mechanism existed, this amounted to the adjudicator making a determination on whether BDP/Cygnet had discharged their respective burdens of proof.

Such a finding, according to the court, is ordinarily available to an adjudicator unless the parties agree that certain contractual/factual circumstances apply to the dispute. Here, the court concluded that no such agreement existed between the parties.

In terms of natural justice, the court again rejected Cygnet’s submissions, concluding that:

• As the court had already concluded that no agreement between the parties limiting the parameters of a determination existed (further to the court’s conclusions on jurisdiction), it found that Cygnet’s first argument must necessarily fail
• Similarly, as the court already determined that the adjudicator was not putting forward a different positive answer to the question before him on liquidated damages (he was simply rejecting the fact that either party had discharged their burden of proving which rate of liquidated damages applied), the court concluded that it was not necessary for the adjudicator to canvass his conclusions with the parties prior to his determination.

Takeaway points

• This judgment reinforces the default position that the court adopts a robust approach to adjudication enforcement and will not permit technical jurisdictional or natural justice objections to defeat enforcement unless such objections are clearly made out.
• It therefore serves as yet another reminder of the risks of resisting enforcement of an adjudication decision, particularly in circumstances where any jurisdiction/natural justice objections are nebulous.

• It also emphasises the importance of parties expressly agreeing particular factual circumstances in which any determination is to be made, if indeed the common desire between the parties is to restrict such a determination to such factual circumstances.

Was an adjudicator correct to determine that a final account had become conclusive?

Oakland Wantage Care Home Limited v Stepnell Limited [2026] EWHC 1530 (TCC)

This case considers the law on final account notices and conclusivity provisions ventilated through a Part 8 claim following a successful adjudication by the contractor.

Factual background

Oakland Wantage Care Home Limited (“Oakland“) contracted Stepnell Limited (“Stepnell“) to construct a 65-bed care home in Wantage under an amended JCT Design & Build contract 2016 edition.

These works achieved practical completion on 26 April 2021, and final account discussions first commenced between the parties in January and February 2022. Shortly thereafter (on 17 February 2022) Stepnell submitted a statement of account (the “February 2022 Statement“). The Employer’s Agent responded to the February 2022 Statement on 07 March 2022 disputing the contents and issuing its payment certification.

Stepnell then submitted a further final account statement on 09 February 2024 (the “February 2024 Statement“). No payment certificate or response was received from Oakland or the Employer’s Agent. Stepnell commenced an adjudication against Oakland on 25 March 2024, seeking recovery of the sums set out in the February 2024 Statement.

The adjudicator determined that the “relevant statement” for the purposes of Clause 4.24.6 of the contract was the February 2024 Statement, and in the absence of a Payment Notice or Pay Less Notice, these sums became due and payable from Oakland.

Oakland paid the sums determined in the adjudication, and thereafter commenced a Part 8 claim seeking a declaration from the court that:

1. The “relevant statement” for the purposes of Clause 4.24.6 of the contract was the February 2022 Statement and that notice was given by Oakland properly disputing these sums on 07 March 2022.

2. Alternatively, if the “relevant statement” for the purposes of Clause 4.24.6 was the February 2024 Statement, then Oakland had disputed the sums in March 2022, or in the general Final Account process between March-September 2022, or as recorded in the February 2024 Statement itself, such that the February 2024 Statement did not become conclusive.

3. Assuming (1) or (2) applied, the “relevant statement” was not conclusive as to the sum due under Clause 4.24.2 (read with Clause 1.8 of the contract).

4. Assuming (1) or (2), and (3) applied, Oakland was entitled to adjudicate or issue proceedings in relation to the true value of Stepnell’s final account.

The court’s consideration of (1) and (2) dictated their conclusions on (3) and (4).

Judgment

(i) What is the “relevant statement”?

The test to determine the relevant statement, according to the court, is how the document would have been understood in the circumstances by a reasonable recipient aware of the surrounding facts i.e. would it have been understood as the relevant final account statement.

According to the court, the reasonable recipient would not have considered the February 2022 Statement to be the relevant statement where it was labelled “draft” and contained forecasted costing information. Therefore, the court concluded that the February 2024 Statement was the relevant statement for the purposes of Clause 4.24.6.

(ii) Was the “relevant statement” disputed such that it did not become conclusive?

The court concluded that Clause 4.24.6 required an Employer to give notice disputing anything “in” a Final Statement, and it was therefore a precondition to that notice that the Final Statement shall be issued first. Since the February 2024 Statement was not disputed by Oakland after it had been issued by Stepnell, the conclusivity provisions in Clause 4.24.2 read with Clause 1.8 did in fact bite.

Because of the court’s findings on (1) and (2), issues (3) and (4) by default fell away.

Takeaway points

• Although unsuccessful for Oakland, this demonstrates the utility of a Part 8 approach where there are unresolved issues following an adjudication.

• Further, it helpfully shows the circumstances where a Part 8 claim can be pursued (in this claim, finely balancing issues of contract/law with discrete factual considerations where the court had to consider emails and exchanges between the parties, to apply the test of the reasonable recipient with knowledge of the surrounding facts).

• It is also illustrative of the need to ensure all notice requirements are strictly complied with in a contract, and in terms of conclusivity provisions, it is informative of the lens through which these will be viewed (particularly relevant where Clause 4.24 and 1.8 are standard form JCT).

Are payment provisions compliant if the final date for payment is variable?

Deerns UK Ltd v VDC LHR11 Ltd [2026] EWHC 1509 (TCC)

This case reinforces the importance of ensuring payment provisions comply with the Housing Grants, Construction and Regeneration Act 1996 (as amended) (“HGCRA“). The court confirmed that, whilst parties are free to agree when payments become due, the period between the due date and final date for payment must remain fixed and certain. Where a payment mechanism allows that period to vary, the relevant provisions of the Scheme for Construction Contracts 1998 (as amended) (“the Scheme“) may be implied, with the result that the contractual payment schedules may be displaced and payment or pay less notices may become ineffective.

Factual background

VDC LHR11 Ltd (“VDC“) engaged Deerns UK Ltd (“Deerns“) pursuant to a consultancy agreement in relation to a development at Chandos Park Estate, London. Deerns sought payment of £910,501.71 plus VAT arising from two payment applications.

The dispute focused on the agreement’s payment mechanism. The agreement provided that:

• the final date for payment would be 30 days after the relevant due date;
• However, where Deerns’ payment application was submitted late, the final date for payment would be postponed by the same number of days as the delay.

Deerns contended that this mechanism did not comply with section 110(1)(b) of the HGCRA because it failed to provide a fixed period between the due date and final date for payment. Deerns therefore argued that paragraph 8 of the Scheme applied, meaning the final date for payment became 17 days after the due date. On that basis, VDC’s pay less notices had been served out of time and were ineffective.

VDC argued that the contract was HGCRA compliant when properly construed. Alternatively, VDC contended that the parties’ previous dealings had given rise to an estoppel by convention preventing Deerns from asserting that the contractual payment regime was non-compliant.

Judgment

The court found in favour of Deerns.

Mr Justice Eyre followed the approach adopted in Rochford Construction Ltd v Kilhan Construction Ltd and Lidl Great Britain Ltd v Closed Circuit Cooling Ltd, holding that section 110(1)(b) HGCRA requires the period between the due date and final date for payment to be fixed and identifiable.

The court held that the contractual payment provisions failed to comply with section 110(1)(b) HGCRA because, whilst the interim valuation date and due date for payment remained fixed, the final date for payment could vary where a payment application was submitted late. As a result, the interval between the due date and final date for payment was capable of variation and was therefore not fixed and certain. Applying the approach in Rochford and Lidl, the court held that the contract failed to provide a final date for payment as required by section 110(1)(b) HGCRA.

As a result, the contractual provisions relating to the final date for payment were replaced by paragraph 8 of the Scheme for Construction Contracts, which provided a final date for payment 17 days after the due date. Applying the Scheme, the court concluded that VDC’s pay less notices had been served outside the required timescales and were therefore ineffective.

The court also rejected VDC’s argument that part of the contractual payment timetable could be preserved. It held that, once the contract failed to provide a final date for payment as required by the HGCRA, paragraph 8 of the Scheme applied. The court had no power to impose a different solution or rewrite the parties’ agreement.

The court further rejected VDC’s estoppel arguments, declined to adjourn the proceedings for further evidence on that issue and refused VDC’s request for a stay of execution. Whilst there had been a degree of informality in the parties’ dealings, the contemporaneous documents did not demonstrate any shared understanding that the contractual payment timetable operated differently to its drafted terms. Nor was there any evidence that further pleadings or evidence would materially strengthen VDC’s position.

Takeaway points

This decision provides a number of important reminders:

• Whilst parties are free to agree when payments become due, the period between the due date and final date for payment must remain fixed and certain.

• A payment mechanism that allows the final date for payment to vary by reference to a payment application’s timing may fail to comply with section 110(1)(b) HGCRA.

• Where a contract fails to provide a final date for payment compliant with section 110(1)(b) HGCRA, the relevant provisions of the Scheme will apply.

• The court will not rewrite a non-compliant payment regime. Where the Scheme applies, its payment provisions will replace the non-compliant contractual mechanism.

• Parties should review payment mechanisms carefully to ensure that invoicing or payment application requirements do not inadvertently alter the period between the due date and final date for payment.

[1] BDP Construction Limited v Cygnet Behavioural Health Limited [2026] EWHC 1796 (TCC)

[2] Oakland Wantage Care Home Limited v Stepnell Limited [2026] EWHC 1530 (TCC)

[3] Deerns UK Ltd v VDC LHR11 Ltd [2026] EWHC 1509 (TCC)

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