Adjudication Case Law Update 2026: Part 2

In Part 2 of our 2026 Court Decision Summaries, Kenneth Salmon MCIArb, consultant solicitor to Slater Heelis Limited and Kuits LLP, summarises recent court decisions concerning the enforcement of adjudicators' awards under the Housing Grants, Construction and Regeneration Act 1996.   

This issue discusses several cases that deal with jurisdiction, a case involving adjudication between two of four parties to a joint venture, and the seemingly perennial question of what makes a valid payment and pay less notice? There’s the added twist of whether a pay less notice can succeed if the payment notice is invalid, and a gloss: what about the effect of earlier decisions on value? We also cover a case under the Building Safety Act 2022 which considers the question of the adjudicator’s jurisdiction and the effect of an award on an application for a building liability order.   

In Part 2  

Jurisdiction – Building Safety Act and effect of adjudicator’s award   

Crest Nicholson & Others v Ardmore Construction Ltd (in Administration) & Others [2026] EWHC  789 (TCC) Constable J. (judgment 1 April 2026)  

Jurisdiction – whether one party to Joint venture can bring proceedings  

Darchem Engineering Ltd v Bouygues Travaux Publics & Anor [2026] EWHC 220 (TCC) (judgment 6 February 2026)   

Jurisdiction – title to sue and power to award interest  

Eden Homes (Scotland) 2 Ltd v Southside Veterinary Clinic Ltd (Sheriff Civil Court) [2025] SCPAI 23 

Payment and pay less notices 

Laing O'Rourke Delivery Ltd v Shepperton Studios Ltd [2026] EWHC 612 (TCC) (judgment 16 March 2026)


Legislation

The ‘Act’ means the Housing Grants, Construction and Regeneration Act 1996, as amended by the Local Democracy, Economic Development and Construction Act 2009 Pt 8. The ‘new’ provisions apply to contracts entered into on or after 1 October 2011. The Act applies to England and Wales, Scotland and Northern Ireland. 

The main regulations are contained in the Scheme for Construction Contracts (England and Wales) Regulations 1998 (the ‘Principal Regulations’).[1] They have been amended by the Scheme for Construction Contracts (England and Wales) (Amendment) (England) Regulations 2011 [2] (the ‘new Regulations’). The new Regulations apply only to contracts for construction operations in England entered into on or after 1 October 2011. 

For earlier contracts, the Principal Regulations apply. Northern Ireland has its own scheme: the Scheme for Construction Contracts in Northern Ireland 1999, as amended by the Scheme for Construction Contracts in Northern Ireland (Amendment) Regulations (Northern Ireland) 2012. The Northern Ireland Scheme is broadly similar to that in force in England and Wales. 

There are separate regulations for contracts for work in Scotland, applicable to contracts made on or after 1 November 2011. [3] The new Regulations apply only to contracts for work in Scotland entered into on or after this date. For earlier contracts, the Scheme for Construction Contracts (Scotland) Regulations 1998 [4] applies. There are new separate regulations for Wales, applicable to contracts for construction operations in Wales entered into on or after 1 October 2011. [5] 

A reference to ‘the Scheme’ is to the Principal Regulations for England and Wales, or the Scheme for Scotland, Wales or Northern Ireland, as the context requires.

Summary    

Jurisdiction – Building Safety Act and effect of adjudicator’s award     

Crest Nicholson & Others v Ardmore Construction Ltd (in Administration) & Others [2026] EWHC  789 (TCC) (judgment 1 April 2026)  

The adjudicator had jurisdiction under the contract between the claimant developer and the defendant contractor and under the Act to decide that the contractor was liable under the Defective Premises Act 1972 (DPA) for defects in the cladding of several residential blocks. The amended adjudication provision in the contract allowing disputes ‘arising under the contract’ to be referred to adjudication was wide enough to encompass disputes relating to work ‘taken on’ under the DPA.

Consequently, the adjudicator’s substantive findings and/or the decision itself (ordering the payment of money) was a ‘relevant liability’ under the Building Safety Act (BSA) to be taken into account in deciding whether to make a building liability order (BLO). On the evidence, including the adjudication finding and decision, it was just and equitable to make the BLO against the defendants ahead of the trial to determine the extent of the liability of the contractor. 

Jurisdiction – whether one party to Joint venture can bring proceedings  

Darchem Engineering Ltd v Bouygues Travaux Publics & Anor [2026] EWHC 220 (TCC) (judgment 6 February 2026) 

Darchem was not a ‘party’ as defined in the subcontract and could not bring adjudication proceedings. It follows that the summary judgment application failed. 
 

Jurisdiction – title to sue and power to award interest 

Eden Homes (Scotland) 2 Ltd v Southside Veterinary Clinic Ltd (Sheriff Civil Court) [2025] SCPAI 23  

While there was no free-standing power to award interest under the Act, the adjudicator had power to make such an award where interest was a disputed matter in the adjudication, and the defender had failed to plead lack of jurisdiction and make sufficient reservation of rights.  

Payment and pay less notices 

Laing O'Rourke Delivery Ltd v Shepperton Studios Ltd [2026] EWHC 612 (TCC) (judgment 16 March 2026)  

In part 7 proceedings to enforce an adjudicator’s award in LOR’s favour, and even though the criteria for hearing a part 8 application was not met, the court had to decide on two substantive issues said to have been wrongly decided by the adjudicator. First, on a proper construction of the building contract, the court held that SSL’s payment notice was invalid as it was required by the contract to, but did not give, a buildup of the gross sum said to be due before deducting previous payments. Second, the court found that SSL’s pay less notice was not ‘contaminated’ by the payment notice despite it starting with the ‘unexplained’ gross value figure from that notice, since the deductions to be made were all properly detailed in the pay less notice.  

In the result, LOR was entitled to the sum claimed in its interim payment application, less the deductions in the pay less notice. The court then had to consider a third defence: whether SSL could rely on a series of earlier adjudicator decisions declaring or awarding it various sums in reduction of the sum otherwise due in this latest adjudication. The court decided it was not so entitled. Finally, SSL sought a stay on the grounds of LOR’s insolvency which ultimately refused on a solvent LOR group company providing a guarantee of repayment.  

Court decision summaries in full  

Jurisdiction – Building Safety Act and effect of adjudicator’s award    

Crest Nicholson & Others v Ardmore Construction Ltd (in Administration) & Others [2026] EWHC  789 (TCC) (judgment 1 April 2026)  

This is an important decision about the scope and the exercise of the court’s power to make a BLO under the BSA. In response to detailed and skillful argument, Constable J. gave a comprehensive judgment, considering the scope of the relevant statutory provisions, what was ‘just and equitable’ and how and when the power to make a BLO might be exercised. Significantly for our purposes, there was an adjudicator’s decision, but no application to enforce or challenge it, the validity and impact of which had also to be considered. The judgment repays close reading. The summary concentrates on the validity and role of the adjudicator’s decision in respect of liabilities under the BSA.  

The claimant Crest, acting as a developer, engaged Ardmore Construction Ltd (ACL) to design and build a residential complex consisting of various blocks and a tower. The contract was the JCT WCD form 1998 with amendments. The standard adjudication clause was deleted and replaced with a clause that all disputes arising under the contract could be referred to adjudication under the Act and Scheme. 

Years later, it was found there were fire safety and other defects in 18 apartment blocks and a multi-storey tower block. Crest began adjudication proceedings against ACL. The day before the adjudicator’s decision was due and admittedly in anticipation of potential future liabilities it could not meet, ACL went into administration as part of an extensive re-structuring within Ardmore Group. 

The adjudicator decided he had jurisdiction to deal with a claim for defects and breach of contract and duty under s1. of the DPA and made findings of breach of contract and breach of duty, awarding Crest £14.9 million.  

Crest, the claimant, asked for two things: 

1. A decision on whether any liability the first defendant ACL (in administration) might have to Crest under s1. of the DPA, or whether a building safety risk was also the joint liability of each of the associated parties (the ‘BLO defendants’).  
   
   
2. An order (‘the adjudication BLO’) making the BLO defendants jointly and severally liable for £14.9 million, awarded against ACL in an adjudicator’s decision dated 29 August 2025 (‘the decision’). 

Constable J. said there were two questions for the court. 

1. Where a principal contractor had entered administration against the backdrop of allegedly extensive fire safety defects, and where both factual and legal responsibility for any such defects is in dispute, is it nevertheless just and equitable for the court to determine in advance of trial that associated companies should stand behind any relevant liability ultimately established. 
   
   
2. How, if at all, are the provisions for BLOs applicable to liabilities arising out of the decision of an adjudicator, pursuant to statutory or contractual regimes required by the Act? 

This review is primarily concerned with the second question. The BLO defendants argued that it was premature, unnecessary, and neither just nor equitable to decide the first question on what was a ‘pre-emptive’ or ‘anticipatory’ application. The court held that there was power to make such an order in advance of trial. There was mutual benefit in everyone knowing who must stand behind ACL if it was found liable at trial. Based on the evidence, both expert and witness statement, the lengthy submissions and known facts, the court was satisfied that it was just and equitable to make a BLO. 

The court turned to the second question – the significance in these proceedings of the decision of the adjudicator. 

To start with, the BLO defendants argued that the enforcement of the decision was not procedurally before the court. There was no application; no pleaded case. Fundamentally, claimed entitlement to sums under the decision was a disputed matter for trial. In response, Crest contended no such application was needed. They relied on the decision itself as a binding determination of ACL’s liability under the DPA unless and until challenged by the joint administrators. Crest’s application was made under s.130 of the BSA and it had to show, on the evidence, the constituent elements of the BLO, as against the BLO defendants.  

The court considered that, assuming that the decision was capable of being a ‘relevant liability’ (which was the BLO defendants’ next substantive objection), the court was capable, on application pursuant to s.130, of determining the existence of such liability when ordering (should it be just and equitable) its transmission to an associate.  

If the court was wrong about that, the substance of the enforceability of the adjudicator’s decision was, in any event, in issue between the parties. Had it been necessary, the court would have granted permission for Crest to amend its application to bring a summary judgment application against ACL, granting such relief as necessary pursuant to CPR3.10(a) and following that, the court would have summarily determined that the adjudicator’s decision should be enforced against ACL for reasons set out below. 

Next, was the obligation to comply with an adjudicator’s decision a ‘relevant liability’? The court found that it was. The short answer to the various submissions was that an adjudicator’s decision was binding until the dispute was finally determined, in this case by the court. Its interim status did not mean that, pending any trial, it somehow did not create a liability. Plainly it did.  

If a decision was not challenged in court, it constituted a binding determination of a party’s liability for all time. The determination of the existence of a liability was additional to the contractual obligation to comply with that determination. The fact that the standard method of summarily enforcing an adjudicator’s decision was through a cause of action arising out of the obligation to pay, did not mean that an adjudicator had not also determined the existence of a substantive liability which might constitute a ‘relevant liability’ under the BSA.  

The fact that an adjudicator’s decision might determine the existence of a ‘relevant liability’ for the purposes of s.130 was no injustice. The BLO defendants could still counter claim in restitution for return of the payment due subject to the BLO. The extent to which there might be injustice in attaching a BLO to the (potentially temporary) liability, could be considered explicitly as part of the just and equitable test. Any potential injustice could be met by the requirement of the court to consider whether it is just and equitable to impose a BLO in respect of any established liability. Given that safety valve, there was no imperative to construe the word ‘liability’ other than naturally.  

The adjudicator had made a finding of liability under the DPA which was binding on Crest and ACL. The court also agreed with the alternative way in which Crest put the case: the failure to comply with the decision was itself a liability capable of being a ‘relevant liability’ for the purposes of the BSA. It was a liability that was ‘incurred as a result of a building safety risk’, by reason of a sufficient causal nexus between the substantive liability (determined by the adjudication) and the consequent liability (created by non-payment).  

The BLO defendants case amounted to a submission that adjudication was incompatible with the ‘extraordinary’ remedy of a BLO. At paragraphs 192 and 193 of the judgment, the court found that, if correct, that submission would deprive the construction industry of the use of one of the most important dispute resolution tools from which it had benefited significantly over the last 30 years. In light of the judgment of Lord Briggs in Bresco it would be wrong to restrict the utility of adjudication to simply supporting short term cashflow. Constable J. said:  

'If a BLO cannot, as a matter of principle, attach to the liability created by an adjudicator’s decision and/or non-compliance with that decision, there is considerably less purpose to a party wasting costs in obtaining an unenforceable determination of liability against the original body. Mr Hughes KC’s submission leads to the outcome in which the only way to obtain a BLO from the original body’s associates is following the establishment of a relevant liability after a full high court trial. There is nothing in the BSA, nor inherent in the concept of justice and equity, that necessitates this conclusion.'

Jurisdiction  

Did the BLO defendants have a better than arguable case that the adjudicator lacked jurisdiction? The BLO defendants argued they did on three grounds: 

1. The adjudicator decided that ACL was liable under the DPA. However, the adjudicator did not have jurisdiction to determine such a claim. A claim under the DPA was not a dispute ‘arising under the ‘D&B’ contract’.
    
2. The adjudicator awarded sums to CNO (a successor party) who was not a party to the contract. 
   
   
3. Even if it was a party to the D&B contract, CNO was not owed a duty under section 1(1)(a) of the DPA.  

The court rejected all three arguments, the latter two on case-specific factual grounds. 

The first arises from the wording of the adjudication clause and comments up and down the judicial hierarchy about the difference, if any, between disputes ‘arising under the contract’ or ‘arising under or out of the contract’ or ‘in connection with the contract’.  

In this contract, the standard clause (Article 5) says: ‘If any dispute or difference arises under this contract either party may refer it to adjudication in accordance with clause 39A.’ This was deleted and replaced with: ‘Any dispute which by virtue of Part II of the Housing Grants, Construction and Regeneration Act 1996 is to be referred to adjudication shall be referred to adjudication in accordance with the Technology and Construction Solicitors Association Adjudication Rules (TeCSA Adjudication Rules) current at the time of reference.’ 

The BLO defendants contrasted this with Article 6A: ‘any dispute or different as to any matter or thing of whatsoever nature arising under this contract or in connection with...’ and lead onto the case law referrals. 

In BDW Trading v Ardmore Construction Limited [2024] EWHC 3235 (TCC) a similarly worded clause - which could be contrasted with different language in an arbitration clause - provided jurisdiction over a claim under the DPA that while leave to appeal was given, no appeal was made.  

In Fillite (Runcorn) Limited v Acqu-Lift (Runcorn) Ltd (1989) 26 ConLR 66, the phrase ‘under a contract’ in an arbitration clause was held insufficiently broad to include claims for negligent misrepresentation, for misrepresentation under the Misrepresentation Act 1967, or a claim based on an express oral guarantee or a collateral contract. 

The court was also referred to the House of Lords case of Fiona Trust & Holding Corporation and Ors v Privalov & Ors [2007] UKHL 40. The court noted what Lord Briggs said in Bresco Electrical Services Ltd (in liquidation) v Michael J Lonsdale (Electrical) Limited [2020] UKSC 25; [2021] 1 All Eng LR 697 at [40] and in the first instance decisions (prior to the decision of Joanna Smith J) of (a) Hillcrest Homes Ltd v Beresford and Curbishley Ltd [2014] EWHC 280 (TCC), (2014) 153 ConLR 179 in which HHJ Raynor QC saw ‘considerable force’ in the submission that the reasoning in Fiona Trust was inapplicable to construction adjudication because the provision for adjudication was the consequence of statutory intervention (at [50]); and (b) J Murphy & Sons Ltd v W Maher and Sons Ltd [2016] EWHC 1148 (TCC), (2016) 166 ConLR 228, [2017] Bus LR 916 in which Akenhead J reached the opposite conclusion, treating the learning about arbitration in Fiona Trust as a useful analogy.  

Lord Briggs noted that differing views were expressed in the leading practitioner texts: the editors of Hudson’s Building and Engineering Contracts (14th edn, 2019) preferring Judge Raynor’s view, at paragraphs 11–022, while the editors of Keating on Construction Contracts (10th edition, 2019), paragraphs 18–077 appeared to recognise the force of Fiona Trust by analogy. 

Crest’s starting point was s1 of the DPA from which it argued that the contract identified the work ‘taken on’ on by ACL being work to which the duties under the DPA applied meaning that the dispute relating to that work arose ‘under’ the contract. The court was attracted by this argument. It also preferred the views of Joanna Smith J. and Akenhead J. as being consistent with the broader obiter views of Lord Briggs. That this approach had been supported at the highest level, albeit obiter, could also be derived from Aspect Contracts (Asbestos) Ltd v Higgins Construction plc [2015] Bus LR 830, in which Lord Mance concluded that he was ‘very content’ and, later, ‘prepared’ to proceed on the basis that a conterminous tort claim could fall within the language of section 108(1) of the Act. 

The court could not improve on the views expressed by Joanna Smith J. with which it agreed. There was nothing in Hansard when the Bill for the Act was being debated to identify or resolve any ambiguity, even if it was permissible to have regard to such material. The court came back to s1 of the DPA to comply with which was in the contract. There was nothing to alter the conclusion that the phrase ‘under the contract’ within the Act (and therefore within the contract) included the jurisdiction to consider a claim brought under the DPA for works carried out pursuant to a construction contract.  

The court concluded the decision was enforceable and determined a ‘relevant liability’ for the purposes of s130 of the BSA. On the merits it was just and equitable that the so called pre-emptive BLO should and would be made.  
 

Jurisdiction – whether one party to Joint venture can bring proceedings  

Darchem Engineering Ltd v Bouygues Travaux Publics & Anor [2026] EWHC 220 (TCC) (judgment 6 February 2026) 

These enforcement proceedings arose out of a third adjudication between the parties in which the adjudicator awarded Darchem over £23.9 million. The underlying dispute related to a subcontract between a joint venture (JV) of Bouygues and Laing O’Rourke (known as BYLOR) as the contractor, and a JV of Darchem and Efinor Ltd (known as EDEL) as the subcontractor, for the fabrication, supply, delivery to site, installation and testing of various stainless steel pools, pits and tanks, together with associated works, for a nuclear power station.  

In each of the adjudications brought by Darchem, BYLOR challenged the jurisdiction of the adjudicator on the basis that Darchem alone was not ‘a Party’ to the subcontract and therefore had no right to adjudicate. They also raised other objections, such as ‘no dispute’ capable of reference, but these were not pursued before the court.  

The question of jurisdiction turned on whether Darchem, as one of two entities within the subcontracting JV was entitled to bring adjudication proceedings in its own name, rather than together with the other company in the subcontractor JV. The answer lay in the proper construction of the subcontract which comprised of an agreement and conditions. There was no dispute as to the approach the court should take to enforcement, nor the principles to be applied in construing the subcontract which were the same whatever the dispute resolution forum.  

The court set out the terms of the subcontract on which the parties relied. The competing constructions were lengthy and relied on a detailed consideration of numerous terms. The court found the definitional terms to be important. The first fundamental term was at the beginning of the agreement: 

‘This agreement is made [date] between:  

1. Bouygues [address];
2. Laing O’Rourke [address] (acting jointly and severally with Bouygues ‘the contractor’);
3. Darchem [address]; and
4. Efinor [address] (acting jointly and severally with Darchem ‘the subcontractor’)

All of the above are together known as the ‘parties’. Clause (6) contained option W, which dealt with dispute resolution: 

• ‘2.2 Notwithstanding any other provision of the dispute resolution rules, any party may at any time 
  
  
• 2.2.1 seek adjudication of any dispute, in which case the adjudication procedure set out in Rule 4 applies
  
  
• 4.17 The adjudicator's decision is binding upon the parties unless and until the dispute to which it relates is finally determined by the tribunal appointed in accordance with Rule 6, or by written agreement of the parties in accordance with Rule 3 or otherwise.’ 

At the heart of the contractual analysis was this question: was Darchem a 'party' for the purposes of the adjudication clause 2.2 of option W?  

The rival contentions  

The centrepiece of Darchem’s argument was that within the 'agreement': 

1. Darchem was identified, separately, in the list of parties on part 2.
   
   
2. After listing Efinor, the agreement stated (acting jointly and severally with Darchem Engineering the 'subcontractor'). This was definitional. The 'Subcontractor' was 'Darchem and Efinor acting jointly and severally. 
   
   
3. This was followed by the wording under the list of the parties which stated: ‘All of the above are together known as the ‘parties’. 
   
   
4. Then each of the parties (including Darchem, separately from Efinor) had executed the subcontract in their own names as a deed. 
   
   
5. The order of precedent placed the agreement first. 

For BYLOR, it was contended that: 

1. Article 1 of the agreement stipulated that words and expressions shall have the meanings as assigned to them in the conditions of subcontract. 
   
   
2. These conditions, at clause 11.2(11), defined 'parties' as 'the contractor and the subcontractor'. 
   
   
3. Clause 11.1 provided that (a) defined terms were capitalised and (b) terms identified in the subcontract data were in italics. 
   
   
4. The subcontract data identified the entities constituting the JVs, (and did not include any reference to the parties acting jointly and severally). 
   
   
5. The conditions all pointed to the fact that the parties intended a bilateral, rather than a multilateral, agreement. 
   
   

The court’s analysis  

The court agreed with BYLOR that the whole of the subcontract conditions were drafted objectively as being a bilateral subcontract, with two parties, not four (or potentially six if one included the ‘contractor’ and the ‘subcontractor’ as each constituting a ’party’), with the ‘chaos’ that could potentially result if any and all of those parties had a unilateral right of adjudication. 

Two clauses in the conditions (9.1.1 and 9.1.2, dealing with termination) specifically addressed the situation where a party comprised two or more companies acting in joint venture. In clause 9.1.1, a reference to that party was deemed to be a reference to each such company individually, with a similar ‘deeming’ provision in clause 9.1.2. There was no equivalent wording in option W deeming the word ‘party’ in clause 2.2 of the conditions to be a reference to each company individually. These clauses demonstrated a clear objective intention that a ‘party’ was not generally to be understood as a reference to the constituent companies making up a Joint Venture, but to the indivisible Joint Venture. Where a ‘party’ was to be deemed to mean otherwise, the subcontract said so. It followed that the word 'party' was not a reference to one of the constituent parts of the JV, but to the JV itself. 

The court did not consider that the word ‘all’ in 'all of the above are together known as the ‘parties’, was intended to convey that each of the constituent companies was a separate 'party'. When the subcontract was read as a whole and in light of the numerous express indications to the contrary, it was both linguistically and conceptually coherent to construe the wording as meaning simply that all of the entities named, together, were the constituent parts of the (two) parties. That part of the agreement grouped the four signatories into two defined 'parties' (contractor and subcontractor), consistent with the bilateral drafting that followed throughout the conditions. This reading was wholly consistent with the definition of 'parties' in clause 11.2(11) of the conditions and avoided an inconsistency or conflict and scope for confusion. 

Even if one viewed the definition of 'parties' by reference to 'all of the above' in the agreement as being inconsistent with the clause 11(2) of the conditions, the order of precedence nevertheless still meant that it did not prevail. First because, as a matter of construction, there was an available alternative that did not give rise to an inconsistency and that was to be preferred. Second, if the court was wrong about that, the agreement itself stated, in clause 1, that words and expressions shall have the meanings as are respectively assigned to them in the conditions. In other words, the agreement stipulated where to look for the meaning of defined words, i.e. to the conditions. Relying on the primacy of the agreement in the scheme of precedence did not assist where it was the agreement which stated that the meaning of words was assigned to them by the conditions. 

The reference to 'acting joint and severally' in the context of the subcontract as a whole was better construed as no more than a reference to the facts that (a) Efinor was acting with Darchem as 'the subcontractor', and that (b) their liability for the JV was joint and several. 

Finally the general principle that Darchem and Efinor had each become individual parties to the subcontract, and were to be presumed entitled to pursue the normal rights and remedies available to each of them in contract and at common law, could not assist where, as held to be the case here, they were not separate parties to the subcontract. 

Darchem also relied on clause 4.17 of option W to contend that the decision obtained by it was 'binding upon the parties'. It was clear that option W was also drafted in anticipation that there were just two parties (see the definition of dispute notice), and implicitly that the 'parties' upon whom the decision was binding were parties to the adjudication.  

Had it been intended that each constituent entity possessed such rights, one would reasonably have expected the contractual machinery to contain clearer and more comprehensive procedural safeguards (a) to prevent the potential chaos of the situation envisaged in having multiple parties and (b) to remove the inherent ambiguity in the existing clause 4.17 in which it is not clear whether 'parties' means 'parties' to the subcontract or those 'parties' who had taken part in the adjudication. 

In the circumstances Darchem was not a party, as defined, of the subcontract. It could not operate clause 2.2 of option W. Clause 12.6 did not make it a party and/or was not operated to give Darchem authority unilaterally to start an adjudication on behalf of the JV. The decision was reached without jurisdiction and could not be enforced. 
 

Jurisdiction – title to sue and power to award interest 

Eden Homes (Scotland) 2 Ltd v Southside Veterinary Clinic Ltd (Sheriff Civil Court) [2025] SCPAI 23  

The pursuer was the cedent (the successor) to an assignee of the original claimant after which a provisional liquidator was appointed to the cedent. The three issues at the heart of the case were: 

1. Whether the adjudicator exceeded his jurisdiction in making an award of interest in addition to the principal sum (the adjudicator's award altogether being ‘the claim’). 
   
   
2. The claim having been assigned, whether such assignation was defeated by the appointment of a provisional liquidator to the cedent prior to intimation of the assignation to the debtor (the defender). 
   
   
3. The impact of a purported waiver of any entitlement to the claim by the provisional liquidator.
    

Background

Principal Building Ltd entered into a construction contract with the defender veterinary practice. There was a payment dispute after the defender issues a pay less notice which was referred to adjudication. The adjudicator found the pay less notice was late and awarded the contractor some £45,000 plus interest as claimed for late payment. 

Title to sue  

This concerned the pursuer’s right to bring the adjudication as the second assignee from the original contractor and following the appointment of a provisional liquidator which the defender said meant that the claim did not vest in the pursuer. The court was referred to various authorities and to s 144 of the Insolvency Act 1986. The defender sought but failed to make out a case of ‘judicial assignment’. The court held that the claim did not vest in the liquidator but remained an asset of the company capable of assignment and enforcement. As the pursuer averred, the claim transferred from principal (the original contractor) to the first assignee Edison Group Ltd, where the principal was divested of any right to enforce the claim.  

On intimation of the Edison Group assignation there were no competing rights to the claim; the only right to the claim (be it a real right or personal right) was vested in Edison Group Ltd - as assignor to the pursuer Edison gave the necessary intimation (notice) of the assignation, effective to perfect a real right to the claim in the hands of Edison and thereafter the pursuer who derived title to sue from Edison. 

Waiver  

As stated above, the court was not persuaded that the appointment of a provisional liquidator operated as a judicial assignment. In consequence:  

1. There was nothing for the provisional liquidator to waive. Any purported waiver of the provisional liquidator's right to the claim would be of no practical effect. 
   
   
2. The real right to enforce the claim remained with the principal pending intimation of the Edison Group assignation. On intimation of the Edison Group assignation, principal was divested of the real right to the claim and any purported waiver by the provisional liquidator would have no practical effect. 
   
   
3. If the court was wrong in the above opinion, the real right to the claim remained with the principal and the provisional liquidator, as agent of the company, had locus to waive it, and did so. 
    

Interest   

The Court of Appeal in Carillion Constructions Ltd v Devonport Royal Dockyard 

[2005] ECWA Civ 1358 considered the import of the English equivalent to paragraph 20(2) of the scheme for Scotland and concluded that the paragraph did not confer a freestanding power to award interest. The pursuer claimed interest in the adjudication notice and its referral. The defender denied the claim on the grounds that the contract made no provision for interest and therefore there was no power to award it. The defender engaged with the issue without averring that the adjudicator had no jurisdiction to award interest. There was a reservation of the right to raise any jurisdictional issue, but no specific reservation as to the power to award interest. The issue was a matter of dispute before the adjudicator.  

Payment and pay less notices 

Laing O'Rourke Delivery Ltd v Shepperton Studios Ltd [2026] EWHC 612 (TCC) (judgment 16 March 2026) 

LOR sought to enforce an adjudicator’s decision, awarding it £5.627 million. The decision concerned the validity of payment and pay less notices issued under a building contract in the dated 16 November 2021 between LOR as contractor and Shepperton Studios Ltd (SSL) as employer. 

The adjudicator found that SSL’s payment and pay less notices were invalid as they did not set out the basis on which the sum due to LOR had been calculated and SSL must pay LOR the sum claimed in its application for payment (AFP45). SSL had issued a pre-emptive part 8 application in advance of the publication of the decision and therefore any enforcement proceedings, to challenge those findings as being ‘clearly’ wrong and so as to avoid having to pay the notified sum in AFP45. Directions were given for the disposal of the Part 8 claim with an estimated length of hearing of 1 day. That hearing was due in April 2026. 

A question arose as to whether the court could or should deal with the issues raised by the part 8 proceedings upon the application for enforcement by LOR. The court referenced the court guide at paragraph 9.4.5 and restated the principles to be observed, noting that recent practice had departed from the guide. Despite the fact that the procedures had not been followed, the court decided it should deal with the issues raised, given that they had been simplified and that extra time was needed. It would have been ‘unconscionable’ to determine the enforcement without considering the objections to the adjudicator’s findings, but the court dealt with the matter on a more pragmatic basis. 

The court considered the payment provisions of the contract. There was significant argument as to whether those provisions required the SSL payment notice to give a detailed build up to the starting gross figure (and even if it did, whether this could be obtained by reference to previous interim payments).  

The court then turned to the notices. SSL’s payment notice 045 started with a gross valuation, and after deducting previous payments, left a net sum payable. Importantly, the gross valuation was neither broken down nor was there reference to any other document in which it could be seen how that sum was calculated.  

The pay less notice 045, made deductions for (i) liquidated damages; (ii) the provision of utilities and (iii) catering arrangements, in each with a breakdown provided in the Appendix to the notice. SSL contended that its payment notice was valid, as the contract did not require a breakdown and the adjudicator was clearly wrong to find the contrary. LOR said the notice was invalid as the adjudicator had found.  

SSL further submitted that if there was a requirement to provide a breakdown of the gross sum, that breakdown had been separately provided on numerous occasions and that it was in a constant figure throughout AFP 41-44. It was true that LOR had detail of the breakdown to an earlier gross figure but the court was unable to accept that this made good any deficiency in the payment notice. Had the earlier spreadsheets been incorporated by express reference on the face of the payment notice, then as in S&T (UK) Ltd v Grove Developments Ltd [2018] EWCA Civ 2448, any objection as to lack of detail on the notice itself may have failed. That was not this case. One purpose of the payment notice was to identify how the sum said to be due was built up. The parties had agreed what was to be provided. The commercial sense in providing that information, was obvious.  

It followed that the court agreed with the adjudicator’s conclusion that payment notice 45 was not a valid payment notice. While able in the time available to and having determined the issue of construction, the judge noted that for the purposes of paragraph 9.4.5 of the TCC Guide, the issue of the construction of the payment notice would not have satisfied the criteria of paragraph 9.4.5(c). The issue was not straightforward and occupied the large part of oral submissions before the court.  

SSL contended that even if the payment notice was invalid this did not affect the pay less notice which had full breakdown of the deductions. LOR then had an intriguing counter argument: that if the starting figure (the gross value taken from the payment notice) was deficient, then after making the deductions in the pay less notice, the balance due would be wrong and that contaminated the pay less notice. The court did not agree with that submission. The starting point absent a valid payment notice, was the sum claimed due in AFP45. From that SSL was entitled to deduct the sums properly detailed in the pay less notice. The letter was not contaminated by the former. 

SSL’s third defence was that in five previous adjudications between the parties, there were binding findings as a consequence:  

1. LOR was obliged to pay liquidated and ascertained damages of £1,791,983. 
   
   
2. LOR had no substantive entitlement to a claimed £2 million in bonus payments for Sections 1 and 2 of the works. 
   
   
3. LOR had no substantive entitlement to a £1m bonus for timely completion of Section 3 of the works. 

The court held that the requirement to comply with an adjudicator's decision applied equally whether that decision was declaratory or for a specified sum (see the judgment of Akenhead J in HS Works Ltd v Enterprise Managed Services Ltd [2009] EWHC 729 (TCC). The court was considering the circumstances in which it was permissible to set off one adjudication decision against another. Having reviewed the authorities, Akenhead J concluded at paragraph 40: 

1. ‘It is necessary to determine at the time when the Court is considering the issue whether both decisions are valid; if not or it cannot be determined whether each is valid, it is unnecessary to consider the next steps.
    
2. If both are valid, it is then necessary to consider if, both are capable of being enforced or given effect to; if not or other is not so capable, the question of set off does not arise. 
   
   
3. If it is clear that both are so capable, the Court should enforce or give effect to them both, provided that separate proceedings have been brought by each party to enforce each decision. The court has no reason to favour one side or the other if each has a valid and enforceable decision in its favour. 
   
   
4. How each decision is enforced is a matter for the court. It may be wholly inappropriate to permit a set off of a second financial decision as such in circumstances where the first decision was predicated upon a basis that there could be no set off.’ 

That test was not satisfied on the facts of this case, given that there were no separate proceedings brought by SSL to enforce those decisions. Further as SSL recognised there were difficulties posed to this defence, at least in respect of the £3 million worth of bonus payments payable under AFP 45 by S&T (UK) Ltd v Grove Developments Ltd which held that party A could only reclaim from party B the difference between the notified sum and the true value once the notified sum had been paid to party B.   

Nor would it be unconscionable for the court to ignore the previous decisions such decisions and there was nothing in paragraph 9.4.5 of the guide having any application to such a situation not was it intended to depart from the principles established in the authorities as to the circumstances in which set off of decisions should be permitted. Giving permission to defend to the value of those five further decisions would be the same allowing a set off and equally objectionable. 

Finally, SSL sought a stay of execution of any judgment, both pending the Part 8 proceedings and generally. On grounds that LOR was insolvency and in accordance with the well-known principles stated by Coulson J (as he then was) in Wimbledon v Vago [2005] EWHC 1086 (TCC).  

Ultimately, this issue was resolved when the parent company of LOR Group gave a guarantee of repayment if such entitlement later arose.  

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

[2] Scheme for Construction Contracts (England & Wales) (Amendment) (England) Regulations 2011 (SI 2011/2333). 

[3] Scheme for Construction Contracts (Scotland) Amendment Regulations 2011 (SI 2011/371). 

[4] Scheme for Construction Contracts (Scotland) Regulations 1998 (SI 1998/687) (S.34). 

[5] Scheme for Construction Contracts (England and Wales) Regulations 1998 (Amendment) (Wales) Regulations 2011 (SI 2011/1715) (W.194).

 

Kenneth Salmon MCIArb is a qualified solicitor in England, Wales and Eire. He is a Ciarb qualified and practising Mediator and a member of the Education Committee at Ciarb North West Branch. Kenneth is a construction specialist currently working as a consultant to Slater Heelis Limited and Kuits LLP. He has extensive experience of all forms of dispute resolution including arbitration, adjudication, expert determination and mediation.   

He is the author of Cases on the Enforcement of Construction Adjudication Awards (2012) and the series Cases (on adjudication enforcement) published in Ciarb’s academic journal Arbitration: The International Journal of Arbitration, Mediation and Dispute Management 1999-2017 and as now published in Ciarb’s newsletter from 2018 to present.    

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Other articles by Ken: 
Adjudication Case Law Update 2026: Part 1

Adjudication Case Law Update 2025: Part 1  
Adjudication Case Law Update 2025: Part 2 
Adjudication Case Law Update 2025: Part 3  
Adjudication Case Law Update 2025: Part 4 

Adjudication Case Law Update 2024: Part 1 
Adjudication Case Law Update 2024: Part 2 
Adjudication Case Law Update 2024: Part 3 
Adjudication Case Law Update 2024: Part 4  

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