1. Does payment application marked “on account” and with some minor errors still constitute a valid interim payment application?

 Formations v LAPP [2025] EWHC 1526 (TCC) [1st Formations Ltd v Lapp Industries Ltd [2025] EWHC 1526 (TCC) (19 June 2025)]

Factual Background

LAPP was engaged by Formations under a construction contract to carry out refurbishment works at Shelton Street, London. On 14 April 2023, LAPP submitted an application for an interim payment of £100,000 plus VAT. The application included a valuation of the works, an invoice, and a breakdown of costs. Formations did not issue a valid Payment Notice or Pay Less Notice in response.

LAPP commenced adjudication, and the adjudicator found in its favour, awarding the full amount claimed. Formations did not pay and instead challenged the adjudicator’s decision through Part 8 proceedings, arguing that the application was not valid under the Housing Grants, Construction and Regeneration Act 1996 and the Scheme for Construction Contracts 1998 (“the Scheme“).

Judgment

The court held that LAPP’s application was a valid interim payment application under the Scheme. It was clearly identifiable as an interim payment application, included a valuation, and stated the amount claimed and the basis for the claim. The court rejected Formations’ arguments that the application was ambiguous or provisional, noting that LAPP had clearly requested payment of £100,000 plus VAT.

The judge emphasised that minor inaccuracies or the use of terms like “on account” did not invalidate the application. The court took a commercial and commonsense approach, consistent with established case law.

Takeaway points

Interim payment applications must be clear and unambiguous, but need not be perfect in form. The court will adopt a practical approach to interpreting payment applications, avoiding overly technical objections.

2.When the validity of a pay less notice is in dispute, is it within the Adjudicators jurisdiction to consider both the service and the contents of the payless notice?

[In the Hight Court of Justice in Northern Ireland]

Factual Background

Piperhill Construction Ltd (“Piperhill”) was engaged by the Northern Ireland Housing Executive (“NIHE”) under an NEC4 Term Service Contract for refurbishment works at two housing sites. On 17 February 2025, Piperhill submitted interim Application for Payment No. 19, seeking £718,699.11 plus VAT. NIHE responded on 6 March 2025 with two payment certificates and two pay less notices, certifying nil payment for one site and £118,148.23 for the other.

Piperhill disputed both the content and the service of these notices, arguing they failed to comply with the contract’s requirements. Piperhill commenced adjudication. The adjudicator found the pay less notices were invalid, finding that there was insufficient explanation of how the sums certified had been calculated. The adjudicator awarded Piperhill the full amount claimed. NIHE did not pay, prompting Piperhill to issue Part 7 enforcement proceedings. NIHE responded with Part 8 proceedings, challenging the adjudicator’s jurisdiction and the validity of the decision. In particular NIHE claimed that the adjudicator had strayed beyond their jurisdiction in considering the content of the pay less notice instead of limiting themselves to the service of the pay less notice.

Judgment

The court heard both the Part 7 and Part 8 proceedings together and held that the adjudicator did have jurisdiction  and the dispute referred included both service and content issues. The judge found that the notices failed to comply with the contract and statutory requirements because they did not explain the basis upon which  the sums certified had been calculated.

The court rejected NIHE’s argument that the adjudicator had exceeded his jurisdiction and confirmed that the adjudicator was entitled to determine whether the notices were legally effective. As such, the adjudicator’s award was enforceable.

Takeaway points

In order to be valid, pay less notices must clearly state the basis on which the sum certified has been calculated.

Adjudicators have jurisdiction to consider matters relating to both the service of and content of payment notices if these issues form part of the dispute referred.

The judgment reinforces the importance of strict compliance with contractual and statutory payment notice regimes in construction contracts.

3. Is a settlement agreement a standalone contract or a variation? and does the statutory right to adjudicate apply to disputes arising under a settlement agreement?

London Eco Homes Ltd v Raise Now Ealing Ltd [2025] EWHC 1505 (TCC) London Eco Homes Ltd v Raise Now Ealing Ltd [2025] EWHC 1505 (TCC) (25 March 2025)

Factual Background

Raise Now Ealing Ltd (“Raise Now”) appointed London Eco Homes Ltd (“Eco Homes”) to carry out construction works under a JCT Intermediate Building Contract with contractor’s design (“the Original Contract”). The Original Contract included an express right to refer disputes to adjudication. During the course of the works, disputes arose but were subsequently resolved through a settlement agreement (“the Settlement Agreement“). The Original Contract was later terminated. Under the terms of the Settlement Agreement, Raise Now was to make payments to Eco Homes according to a specified schedule. When Raise Now failed to comply with this schedule, Eco Homes referred the dispute as to non-payment to adjudication proceedings.

Raise Now contested the adjudicator’s jurisdiction, arguing that the Settlement Agreement was a standalone contract that did not contain any adjudication provisions. The adjudicator rejected this argument and ruled in favour of Eco Homes. When Raise Now failed to comply with the adjudicator’s decision, Eco Homes applied to the court for summary judgment.

The central issue before the court was whether the adjudicator had jurisdiction. This turned on whether the Settlement Agreement incorporated an adjudication clause, either by statutory implication (on the basis that it constituted a construction contract under section 108 of the Housing Grants, Construction and Regeneration Act 1996) (“HGCRA“), or because the adjudication provisions in the Original Contract continued to apply to disputes arising under the Settlement Agreement.

Judgment

The court held that the adjudicator had jurisdiction to decide the dispute because the Settlement Agreement was a variation of the Original Contract, not a standalone agreement. As a result, the adjudication provisions in the Original Contract applied, and the court granted summary judgment in favour of Eco Homes.

In reaching this decision, the court first considered whether the Settlement Agreement could itself be classified as a construction contract under section 108 of the HGCRA. Although the Settlement Agreement referenced potential construction operations (e.g. remedial works), the dispute referred to adjudication did not arise from those operations. Therefore, the statutory adjudication provisions were not implied, and the Settlement Agreement was not a construction contract for the purposes of the Act.

The court then turned to whether the adjudication clause in the Original Contract applied. This clause covered disputes “arising under the contract.” District Judge Baldwin found that the Settlement Agreement was not a new contract, but rather a variation of the Original Contract. Several factors supported this conclusion:

• The Settlement Agreement explicitly referenced the Original Contract’s termination provisions.
• It confirmed that the default and termination notices were served correctly “in accordance with the JCT Contract.”
• The Settlement Agreement preserved the right to enforce the terms of the Original Contract, indicating continuity with the Original Contract.

The judge also interpreted the “entire agreement” clause in the Settlement Agreement as referring to the termination of the Original Contract, not as a replacement of it. This interpretation aligned with commercial logic and preserved the commercial link between the two documents.

Arguments that the governing law and jurisdiction clauses in the Settlement Agreement excluded adjudication were also dismissed. These were standard clauses and did not override the broader context.

The court also reaffirmed the judiciary’s support for alternative dispute resolution, referencing recent case law, which reflects a growing judicial emphasis on encouraging alternative dispute resolution mechanisms.

Takeaway points

• Adjudication provisions in original construction contracts may survive into settlement agreements if those settlement agreements are construed as variations rather than standalone contracts. This is a question of fact and depends upon the terms agreed in the settlement.
• Parties should not rely solely on “entire agreement” clauses to exclude a right to refer a dispute to adjudication unless a settlement agreement is clearly standalone and expressly excludes adjudication rights.
• If parties wish to exclude adjudication, they should:
  • Draft the settlement agreement as a fully standalone contract;
  • Expressly exclude adjudication rights; and
  • Avoid referencing or relying upon the original contract’s mechanisms.
• The courts will interpret agreements in line with commercial common sense and the broader judicial trend of encouraging alternative dispute resolution.

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