Adjudication Case Law Update 2026: Part 3

In Part 3 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 covers the limits of the use of Part 8 on enforcement; the power of an adjudicator (or the court) to fix an earlier completion date than the contract administrator has certified; the first court of appeal case on the residential occupier exception; a look at natural justice; guidance on the validity of payment and pay less notices; and two first instance decisions on payment and pay less notices.   

In Part 3  

Adjudication enforcement and Part 8 limits 

United Utilities Water Ltd v Northstone (NI) Ltd (t/a Farrans Construction) [2026] EWHC 1057 (TCC) (06 May 2026) 
 
Adjudicator – power to fix earlier completion date 

Mace Construct Ltd v Baltic Investment Holdings Ltd [2026] EWHC 976 (TCC) (28 April 2026) 
 
Jurisdiction – residential occupier exception – validity of pay less notice 

RBH Building Contractors Ltd v James & Anor [2026] EWCA Civ 511 (29 April 2026) 

Natural justice 

Premier Modular Ltd v Maidstone and Tunbridge Wells NHS Trust [2026] EWHA 1404 (TCC) (June 2026)

Natural justice – failure to consider material defence 

Clerkenwell Lifestyle (UK) Ltd v HG Construction Ltd [2026] EWHC 1406 (TCC) (12 June 2026) 

Payment Notice – validity  

United Utilities Water Ltd v Northstone (NI) Ltd (t/a Farrans Construction) [2026] EWHC 1057 (TCC)

Payless notice – requirements 

See RBH Building Contractors Ltd v James & Anor (above)

Payment Notice – schedule of payment dates – lateness - validity  

Liberty Roofing (East Midlands) Ltd v Midelton Developments (Church Street) Ltd [2026] TCC Manchester

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    

Adjudication enforcement and Part 8 limits 

United Utilities Water Ltd v Northstone (NI) Ltd (t/a Farrans Construction) [2026] EWHC 1057 (TCC) (06 May 2026) 

The court held that there was insufficient evidence to determine in Part 8 proceedings (heard at the same time as an application for summary judgment to enforce an adjudicator’s award), how the recipient of a payment notice with knowledge of the relevant background facts – including the reasons for, and effect of, amendments and variations to the original contract – would have understood what the final date for payment was, whether or not there was a requirement for a payless notice, and if so, by what date the payless notice was required to be served.  

Further, Part 8 proceedings were not suitable to determine the question of the validity of a payment notice – and thus the requirement for a payless notice – where the issues required extensive factual enquiry.

Adjudicator – power to fix earlier completion date 

Mace Construct Ltd v Baltic Investment Holdings Ltd [2026] EWHC 976 (TCC) (28 April 2026) 

An adjudicator has power under the scheme to review and revise extensions of time, and this includes power to fix a completion date earlier than that established through the contractual process.  

Jurisdiction – residential occupier exception – validity of pay less notice

RBH Building Contractors Ltd v James & Anor [2026] EWCA Civ 511 (29 April 2026) 

Where the evidence satisfied the ‘low threshold’ for the potential application of the residential occupier exception, the judge below had been right to dismiss the application for summary judgment. Although academic, the court went on to find, as the judge had done, that a letter relied on by employers as a payless notice satisfied the statutory requirements.

Natural justice 

Premier Modular Ltd v Maidstone and Tunbridge Wells NHS Trust [2026] EWHA 1404 (TCC) (June 2026) 

The adjudicator went off on 'a frolic of his own', deciding a material issue on a basis which neither party had contended for and which they had no opportunity to address.

Natural justice – failure to consider material defence 

Clerkenwell Lifestyle (UK) Ltd v HG Construction Ltd [2026] EWHC 1406 (TCC) (12 June 2026) 

The adjudicator had not inadvertently failed to recognise a defence. The adjudicator had done what he had been asked to do, namely to decide upon entitlement to extensions of time and liquidated damages, and there was no breach of the rules of natural justice.

Payment notice – validity  

See United Utilities Water Ltd v Northstone (NI) Ltd (t/a Farrans Construction) (above) 

Payless notice – requirements  

See RBH Building Contractors Ltd v James & Anor (above)

Payment notice – schedule of payment dates – lateness - validity  

Liberty Roofing (East Midlands) Ltd v Midelton Developments (Church Street) Ltd [2026] TCC Manchester [unreported] 

The contract provided a schedule of dates for payment applications. Liberty claimed payment upon two applications. The adjudicator determined that as they were made later than the schedule dates, they were invalid as ‘default payment notices’ but held that they created a notified sum for the purposes of the act. The court disagreed on enforcement. The payment notices were invalid as they did not comply with the requirements of the contract as required by s111(2). The adjudicator was wrong in law. An alternative claim based on estoppel was not supported by the evidence and was unsuitable for determination in summary proceedings. 

Court decision summaries in full  

Adjudication enforcement and Part 8 limits 
United Utilities Water Ltd v Northstone (NI) Ltd (t/a Farrans Construction) [2026] EWHC 1057 (TCC) (06 May 2026) 

There were two applications before the court: one by the claimant, ‘UU’, to enforce an adjudicator’s award in its favour for £3.269 million, the other by the defendant, ‘Farrans’, for a declaration under Part 8 CPR on a point of law relied on to defeat enforcement.  

Farrans entered into a joint venture (JV) with Roadbridge Ltd (the JV parties) to secure a contract with UU, for one (and the largest) of a series of contracts for the construction of water supply infrastructure in West Cumbria, known as the West Cumbria Supply Project (the project).  

The original contract was in the form of an NEC3 Engineering and Construction Contract [April 2013] Option C with bespoke amendments, and the total was £85 million. By a later settlement agreement in 2018, prices increased to £95 million. This was later followed by a Deed of Variation settlement and release in September 2021 whereby the prices increased further to £131.6 million, and other terms regarding payment varied. These variations were to settle disputes and change the basis of the contract from Option C to Option A. They also introduce a schedule which regrouped the remaining activities in the activity schedule into milestones. In addition, it enabled the JV parties to apply for payments as soon as each milestone was completed and to benefit from an accelerated payment cycle. 

The new payment process was summarised by UU in evidence: 

1. An assessment date when a milestone was completed 
2. A certification date seven days after the later of (i) the assessment date and (ii) receipt by the Project Manager of an application for payment 
3. A due date one day after the certification date
4. A final date for payment seven days after the due date 

As a result of those changes, the JV parties were entitled to apply for payment when a milestone had been completed, which could result in more than one application per calendar month. 

A dispute arose in relation to payment notice PA-70, which was issued by the project manager in response to two applications for payment AFP77 for Milestone 9 and AFP78 for Milestone 11 made by the JV parties using a cloud-based system known as CEMAR which was in use throughout the project. The Project Manager agreed that Milestone 9 had been achieved but not Milestone 11, so notified the JV parties by a ‘general communication’ (as defined in the contract) on 11 October 2024 via CEMAR.  

On the same date, and by the same means, the Project Manager issued a payment notice in which he considered the 'amount due' to be a negative payment in the sum of just over £3 million, calculated in accordance with the definition set out in Core Clause 50.2. 

Although they did not consider it contractually necessary, the JV parties responded to PA-70 with general communication GC-4538 in which they purported to issue a ‘payment reduction notice’ – the contractual Clause Y2.3 equivalent of a payless notice – on 17 October 2024 (received on 18 October 2024). The payment reduction notice stated the sum due was '£0.00/£Nil/£Zero'.

UU said that reliance by Farrans on Clause Y2.3 was misplaced and that the JV parties had misdirected themselves as to the effect of the amendments to the contract. They contended that the last date for valid service of the payment reduction notice under the contract as amended was 12 October 2024, one day after the sum was notified on 11 October 2024. The notified sum (of minus approximately £3 million) was payable on 19 October 2024. The purported payment reduction notice, which was served on 18 October 2024 (dated 17 October 2024), was therefore six days late and invalid.  

UU asserted that the effect of PA-70 was that the JV parties were obliged to pay UU the notified sum. Farrans disagreed and the dispute was referred to adjudication. The adjudicator found that the sum of approximately £3 million was due under PA-70, and the payment reduction notice was out of time.  

The enforcement proceedings were only brought against Farrans.  

Farrans had originally raised a natural justice issue, but that was not pursued. They now asserted that the adjudicator made an error of law, that PA-70 was not valid, (issue 1) and if it was valid, they were not required to serve a payless notice if it wished to pay less than the £3 million (issue 2). They said the Part 8 claim concerned a straightforward matter of law as to the payment provisions of the contract and their interpretation and the provisions of the Act.  

UU did not agree that the two issues set out in the Part 8 claim were straightforward. For them, issue 1 comprised sub-issues, including whether the information contained on CEMAR, used throughout the project by UU and Farrans, was incorrect and misleading. This raised a sub-issue as to the final date for payment.  

PA-70 was dated and sent to CEMAR on 11 October, with the due date the following day. The final date for payment was the 19 October. The payment reduction notice had to be given no later than 12 October (5 days before the final date for payment). However, CEMAR gave the due date for payment as being 8 November, which would have allowed a much longer period for the giving of a payment reduction notice. This was because the calculations for the original contract payment provisions were not changed to accommodate the milestone provisions of the variations. 

There was no dispute as to the law and the principles to be applied. 

Decision 

Having considered the evidence, the court accepted UU’s submissions that the issues were unsuitable for determination under Part 8 CPR. The issues were not straightforward such that all the court had to do was consider the words of the contract itself and the requirements of the Act. The available evidence did not permit resolution of the plain evidential inconsistencies and did not permit the court to determine how a reasonable person, with the knowledge of the parties, would have understood the notices. While there was some evidence from UU of the background to the amendments to the contract, Farrans’ evidence was insufficient to determine how the notices were received against the background of the knowledge of the actual parties.  

It was relevant that the parties to the contract were ‘sophisticated and experienced and were required to act in the spirit of mutual trust and cooperation’ and at all times had access to legal advice in making changes to the contract. The lack of evidence dealing with the original contract, the amendments, and how CEMAR was used in practice both before and after the amendments, prevented the court from assessing how a reasonable recipient would understand a notice. Farrans had failed to deal with UU evidence that CEMAR was not to be reprogrammed, with the result that the payment dates generated were wrong. In the court’s judgment, the reasons for and effect of the amendments were central to determining how a reasonable recipient would have understood the relevant notices under the new regime agreed between the parties. 

In the circumstances, it was not necessary to consider the substantive submissions concerning the adequacy and or validity of PA-70, nor was it necessary to consider the need for, and/or validity of, the payment reduction notice.  

The adjudicator’s award would be enforced. 

Adjudicator – power to fix earlier completion date

Mace Construct Ltd v Baltic Investment Holdings Ltd [2026] EWHC 976 (TCC) (28 April 2026) 

The claimant (Mace) sought 7 declarations as to the proper construction of an amended JCT Design and Build Contract 2016 which they entered into as contractor with the defendants (Baltic) as employer, for the refurbishment of The Baltic Exchange in London. 

The parties were in dispute over a range of matters, including, for the purposes of the seventh declaration being sought, the disputed grant by the Employer's Agent (EA) of an extension of time (eot) of seven weeks and five days under various clauses of the contract. The eot related to three events, two of which were the subject of claims by Mace, resulting from changes to the design in the Employer's Requirements and/or the need to obtain further planning approvals and listed building consents, none of which were held to be within the scope of Mace's contractual responsibility. 

Baltic challenged the grant of extensions of time in an adjudication in which the adjudicator concluded that the extension granted by the EA on 24 December 2024 did not bind him as adjudicator. He reviewed and revised it in light of the findings to reduce it to zero. 

The seventh declaration was sought in these terms: 'An adjudicator and/or the court does not have the power to fix a completion date earlier than that which has previously been fixed by the employer's agent by virtue of clause 2.25.4 and/or clause 2.25.5.2 of the contract'.  

The relevant provisions of the contract (with court emphasis added) were: 

'2.25.1 If on receiving a notice and particulars under clause 2.24: 

2.25.1.1 any of the events which are stated to be a cause of delay is a Relevant Event; and 

2.25.1.2 completion of the Works or of any Section is likely to be delayed thereby beyond the relevant Completion Date, then save where these conditions expressly provide otherwise, the Employer shall give an extension of time by fixing such later date as the Completion Date for the Works or Section as he then estimates to be fair and reasonable. 

2.25.4 After the first fixing of a later completion date in respect of the Works or a Section…the Employer may by notice to the Contractor, giving the details referred to in clause 2.25.3, fix a Completion Date for the Works or that Section earlier than that previously so fixed if the fixing of such earlier Completion Date is fair and reasonable, having regard to any Relevant Omissions for which instructions have been issued after the last occasion on which a new Completion Date was fixed for the Works or for that Section. 

2.25.5 After the Completion Date for the Works or for a Section, if this occurs before the date of practical completion, the Employer may, and not later than the expiry of 12 weeks after the date of practical completion shall, by notice to the Contractor, giving the details referred to in clause 2.25.3: 

2.25.5.1 fix a Completion Date for the Works or for the Section later than that previously fixed if it is fair and reasonable having regard to any Relevant Events, whether on reviewing a previous decision or otherwise and whether or not the Relevant Event has been specifically notified by the Contractor under clause 2.24.1; or 

2.25.5.2 subject to clauses 2.25.6.3 and 2.25.6.4, fix a Completion Date earlier than that previously fixed if that is fair and reasonable having regard to any instructions for Relevant Omissions issued after the last occasion on which a new Completion Date was fixed for the Works or Section; or 

2.25.5.3 confirm the Completion Date previously fixed.' 

The court accepted that the exercise to be performed under clause 2.25.1 was prospective and the passage in Keating on Building Contracts 12th Edition at 8-039 was cited with approval. So far, so orthodox. Mace then contended in what was described as a ‘bold submission’, that an extension of time granted under clause 2.25.1, however incorrect, could not be reviewed by the adjudicator or the court. The core of the submission was that the adjudicator or the court would never be in a position to carry out the prospective exercise required by clause 2.25.1 but would be looking at the matter retrospectively, knowing how matters had turned out. Baltic retorted that this conclusion that the employer was eternally saddled with an erroneous extension of time ignored the power of review given to the adjudicator by the scheme: 

'20. The adjudicator shall decide the matters in dispute...in particular, he may (a) open up, revise and review any decision taken or any certificate given by any person referred to in the contract unless the contract states that the decision or certificate is final and conclusive'. 

The court agreed with Baltic that 'the adjudicator could open up, revise and review (sic) the extension of time granted under clause 2.25.1, but he is to carry out the task which that clause requires, i.e. a prospective assessment in response to the notice and particulars submitted under clause 2.24.' 

The question whether the review and revision could fix a completion date earlier than that already decided under the contract was not expressly addressed, but the court’s approval of the extract from Keating suggests and supports the view that an adjudicator or the court can do so if the contract provides for the fixing of an earlier date. In the case of an unamended JCT contract, the fixing of an earlier completion date would be possible upon there having been omissions within clause 2.25.5.2 (or its equivalent in other similarly worded contracts). 
  

Jurisdiction – residential occupier exception – validity of pay less notice

RBH Building Contractors Ltd v James & Anor [2026] EWCA Civ 511 (29 April 2026) 

This was an appeal by RBH from the refusal of Neil Moody KC, as he then was, sitting as a deputy High Court judge (the judge) to grant summary judgment to enforce an adjudicator’s award in their favour for £633,0001.

The appeal raised two questions:  

1. Whether Mr and Mrs James had a reasonable prospect at trial of showing that they intended to occupy a dwelling to bring themselves within the ‘residential occupier’ exception’ under s106 of the Act. 
   
   
2. Whether a letter headed ‘withholding notice’ sent by Mr and Mrs James in response to a payment application by RBH amounted to a valid payless notice within s111(4) of the Act.   
   
   

Background 

Mr and Mrs James made an oral contract with RBH to procure the construction of a dwelling house on land they had purchased. At first the agreement was that Mr and Mrs James would pay RBH certain sums, later increased to a sum of £10,000 per month to manage the works. This agreement was later varied to provide that RBH would recover the costs of the works (and RBH claimed, overhead and profit, though this was in dispute). The agreement was in the nature of a management contract whereby RBH would engage and pay various subcontractors to carry out the works. 

Work started in 2022 and ran to 2024, with the dwelling incomplete as a result of disputes between the parties. On 18 November 2024, without warning, RBH submitted a payment application for a sum of £633,000, with a final date for payment just 17 days later on 5 December.

The application consisted of a spreadsheet comprising:  

• 10 pages listing individual invoices 

• A grouping of invoices with no further information 
  
  
• A collection of what were described as paid invoices – various lines throughout were colour-coded but the code was not explained 

On 27 November 2024, Mr and Mrs James responded with a letter headed ‘Notice of Intention to Withold Payment’. It read:  

‘We write in connection with the Application for Payment dated 18 November 2024 sent by email by Edward Ranns at 11:58 (the ‘application’) and hereby notify of you of our intention to withhold payment of the sum claimed. We intend to withhold payment of £663,016.16 and accordingly intend to make payment of £0.’ 

It went on to identify 11 separate items which were disputed with reasons for the disputes. 

RBH commenced adjudication proceedings on 6 December to which the scheme applied. Mr and Mrs James challenged jurisdiction relying on the ‘residential occupier exception’ in s106 of the Act. The adjudicator decided he had jurisdiction, found that the letter of 27 November was not a valid payless notice, and awarded RBH the sum claimed in its payment application of £633,000. That sum was not paid and RBH started enforcement proceedings. In response, Mr and Mrs James contended that the ‘residential occupier exception’ in s106 of the Act applied, meaning the adjudicator had no jurisdiction. They sought a declaration under Part 8 CPR that their letter of 27 November was a valid payless notice. 

The judgment below 

Both applications came before the judge who decided on the evidence that Mr and Mrs James had a ‘real prospect’ of establishing that the residential occupier exception in section 106 was engaged and refused enforcement. At the request of the parties, the judge considered the payless notice and determined that it was valid in that it would have been understood by a reasonable recipient and provided ‘an agenda for trial’. 

RBH appealed on both grounds set out below. 

The judgment of the court of appeal was given by Lord Justice Coulson.


Ground 1: the residential occupier exception - the law 

Section 106 and the authorities 

There were few previous cases concerned with the residential occupier exception under s.106. A genuine residential occupier was not difficult to discern. The reported cases (all at High Court level) were at the extreme margin where the court had been unimpressed with attempts by property developers, or those going to rent out the properties on completion, to rely on this exception to avoid paying sums found due to the contractor. Many concerned the fact of residential occupation at the outset (rather than the alternative limb of s.106, namely ‘intends to occupy’, which was an issue). See  Samuel Thomas Construction Ltd (2000) (unreported);  Edenbooth Ltd v Cr8 Developments Ltd [2008] EWHC 570; and Shaw v Massey Foundations Piling Ltd [2009] EWHC 493 (TCC). 

Only one s.106 case dealt with the intention to occupy, namely Westfields Construction Ltd v Lewis [2013] EWHC 376; [2013] 1 WLR 3377. Although that started life as a summary judgment application to enforce an adjudicator's decision, it was unusual because the parties sought a final determination of the issue as to whether or not the residential occupier exception applied. There was not only documentary material, but oral evidence, including cross-examination. It was found as a fact in Westfields that the defendant never intended to occupy the property once the works were complete and the attempt to rely on the s.106 exception failed.  

What mattered was ‘the employer's intention at the time of formation of the contract’ - a conclusion relied on by the judge in this case. In addition, s106 was intended to protect ordinary householders, not otherwise concerned with property or construction work, and without the resources of even relatively small contractors, to deal with what was, in 1996, a new and untried system of dispute resolution. 

While the date of the formation of the contract is important in any consideration of any alleged 'intention to occupy', he also considered that 'occupation' was an ongoing process and could not be tested by reference to a single snapshot in time. ‘Occupies’ carried with it some reflection of the future, indicating that the employer occupies and will remain at (or intends to return to) the property. Evidence about the position at the date that the contract was made, had to be considered in the context of all the evidence of occupation and intention, both before and after the agreement of the contract. Above all, s.106 needed to be approached with common sense: it was a brief consideration of the facts, whether the employer is or is not a residential occupier within the terms of the exception. 

The only other first instance case of direct relevance to this appeal was Howsons, where  HHJ Bird found that, to fall within the exception, the occupation of the property had to be lawful. In that case the defendant employer obtained planning permission to develop a barn by converting it into a live/work unit. The local council's plan did not permit converting barns into residential use, save where the living accommodation was ancillary to a general business use that would increase employment in the region. In those circumstances, the attempt to rely on the residential occupier exception failed.  

Next, the court considered the wording at s.30(1)(g) of the Landlord and Tenant Act 1954, where a landlord could oppose an application for a new tenancy on the basis that they ‘intend to occupy the holding for the purposes, or partly for the purposes, of a business to be carried on’. In Gregson & Anor v Cyril Lord Ltd [1963] 1WLR 41, Diplock LJ (reading the judgment of Upjohn LJ, with which he agreed), to satisfy this test, two things were required. The first was ‘a genuine bona fide intention on the part of the landlord that they intend to occupy the premises for their own purposes’. the second was the landlord must prove they had a reasonable prospect of being able to bring about that occupation by their own volition.  

In Gatwick Park Services Ltd v Sargeant [2000] 3 P.R. 25, Laws LJ commented at [61] that the hurdle of establishing an intention to occupy ‘is by no means a high one’. Section 118 of the Housing Act 1985 states that a secure tenant of a house in England had the right to buy the freehold or leasehold (depending on which the landlord owns) if statutory preconditions were satisfied. If an individual ceased to be a secure tenant before the completion of a purchase, for instance if they moved out after initiating purchase, the right to buy was no longer available. And whether an individual had occupied or intended to occupy a property as a primary residence for the purposes of a secured tenancy, was a critical ingredient in determining their right to buy. In The Mayor and Burgesses of the London Borough of Islington v Boyle & Anr [2011] EWCA Civ 1450 (Islington), Etherton LJ articulated the principles to be applied when deciding whether a tenant continued to occupy a dwelling as their home, despite living elsewhere. Finally, the assessment of occupancy was be carried out objectively.  

The principles 

In determining whether a person intends to occupy the property as their residence for the purposes of s.106 of the 1996 Act: 

1. The burden of proof is always on the party seeking to trigger the statutory exception (Westfields at [3]).
   
   
2. The determination of the necessary intention to occupy is a matter of fact (Gregson, Islington). The threshold is not high, and it may be capable of being determined on a summary basis (Gatwick Park). If there is credible evidence both ways, it may not be. The fact that the issue arises in the context of adjudication enforcement makes no difference: there is no overriding presumption in favour of enforcement if it is realistically arguable that the adjudicator did not have the necessary jurisdiction (Estor v Multifit). 
   
   
3. The determination must be made as to the existence of the intention to occupy at the time that the contract was made. Evidence of intention both before and after the contract was made may also be relevant, if only to test the accuracy of the court's determination of the position at the time of the contract (Westfields). 
   
   
4. There are two elements to the test (Gregson). The first is whether there is a bona fide intention to occupy in the future, this being largely a matter of subjective intent. The weight to be given to such evidence will depend on the individual case. Evidence of subjective intention could be accompanied by evidence which, viewed objectively, supports the existence of that subjective intention. For example, contemporaneous material expressing or acknowledging the intention to occupy when the works are complete may be of value.
    
5. The second element of the test is whether the person who wishes to occupy has a realistic prospect of bringing that occupation about (Gregson). That echoes Etherton LJ's use of the expression ‘practical possibility’. He preferred to see the decision in Howsons as a case where there was no realistic prospect of lawful occupation because the conversion works would never have been permitted if the would-be occupier had said that they intended to live there full-time. 
   
   
6. To trigger s.106, the intention to occupy must have a temporal aspect (Islington). It would not be sufficient for the employer to intend to occupy the property after letting it out for 20 years. In the absence of any obvious alternative, he suggested there must be an intention to occupy within a reasonable time after the completion of the works. 

Argument on the evidence 

There was evidence that the original intention may have been to sell the house on completion. The development was being funded by a loan containing an undertaking that the James’ would not occupy the house. But that was countered by evidence that the house was being built to the James’ personal requirements. They had sold their previous home, lived in a caravan on site during the build, registered with a local GP, believed they could pay off the development loan and substitute a conventional mortgage once completed, and would then be free to live in it as the undertaking not to occupy would no longer be binding. There was also evidence the James intended to let the house for periods of time.  

Conclusion on ground 1 

The starting point was the limited scope of the s.106 issue before the judge. The issue as to the intention to occupy on the part of Mr and Mrs James arose in the context of RBH's claim for summary judgment. The first line of defence was that the adjudicator had no jurisdiction to decide the dispute, because, at the time of the contract, Mr and Mrs James intended to occupy the property. As the judge rightly noted, the question for him was whether there was a realistic prospect that, on the evidence, Mr and Mrs James could show that they intended to occupy the property on completion.  

He was not making a final determination; he concluded there was sufficient evidence that the argument had a realistic prospect of success. In accordance with the principles, he considered the judge could conclude that Mr and Mrs James had crossed that relatively low threshold. There was direct evidence from Mr James as to the intention to occupy the house on completion. This was supported by the architect. There was other evidence to support this – selling the previous home, living on site, etc. The development loan and undertaking (not to occupy) went the other way but did not trump the evidence of intention to occupy. Such occupation would not have been unlawful (as would occupation in breach of planning law) but would only have been a breach of contract sounding in damages. Once the development loan was paid off there was nothing to prevent occupation. The fact that the James’ might rent out the property for part of the year did not mean they were not occupiers under the Act. 

The appeal on ground 1 failed. While that made the appeal on ground 2 academic, the court dealt with the issues raised with respect to the payless notice, acknowledging that they might be of wider importance.  

Ground 2: the validity of the payless notice 

The courts had considered the content of payment and payless notices under the Act a number of times, including Thomas Vale Construction PLC v Brookside Syston Ltd [2006] EWHC 3637 (TCC); Henia Investments Ltd v Beck Interiors Ltd [2015] BLR 704; Surrey and Sussex Healthcare NHS Trust v Logan construction (Southeast) [2017] BLKR 189; Muir Construction Ltd v Capital Residential Ltd [2017] CSOH 132; Grove Developments Ltd v S&T (UK) Ltd (Grove) [2018] BLR 173; and Advance JV. The only Court of Appeal judgment touching on payment and payless notices is S&T (UK) Ltd v Grove Developments Ltd (S&T) [2019] BLR 1, in which the Court of Appeal upheld the first instance judge on this issue at [57] and [58].  

The court noted both the timing and content of the payment application to which the payless notice had to respond. The application ‘required the recipient to do all the work in trying to identify what was due and why, particularly in circumstances where the net sum of £660,000 had not been the subject of previous invoices and was not separately explained. It was a poor presentation of what was a final account claim. If it was a payment notice under s.106 of the 1996 Act, it barely limped over the threshold. The payless notice has to be considered against that background.’ 

The letter of 27 November said that Mr and Mrs James intended to withhold payment of the entirety of the sum claimed. It could not therefore have been clearer that they were not paying any part of that sum. The fact that it referred to 'withholding' rather than not paying the sum claimed was nothing to the point: when considering the validity of a notice under the Act, titles and references to particular clauses or functions did not matter. The only other thing that the notice needed to do, was to make it clear why Mr and Mrs James said that nothing was due to RBH.  

He considered, as the judge did, that the letter went on to do just that. Mr & Mrs James identified 11 separate items with which they disagreed, the total of which exceeded the sum claimed, and why they did not agree those sums. The court said the amount of work needed to be done by them to respond to the application should not be under-estimated. The application had been in the course of preparation over some time yet came without prior notice and warning. The payless notice did not lie with RBH to complain about lack of clarity. The payless notice complied with the requirements of the Act. 

Natural justice

Premier Modular Ltd v Maidstone and Tunbridge Wells NHS Trust [2026] EWHA 1404 (TCC) (June 2026) 

The claimant ‘PML’ applied to enforce an adjudicator’s decision awarding them over £1 million and other relief (the Decision). The defendant (the Turst) resisted the application alleging the decision was reached in breach of natural justice on three grounds:  

1. The central finding that there had been a compensation event (CE) was made on a contractual basis which neither party had raised or made submissions on. 
   
   
2. The adjudicator failed to address one of the Trust’s defences, namely PML’s failure to comply with a condition precedent to the claiming of a CE. 
   
   
3. The finding that the accepted programme had been updated, contrary to the parties' stated position that the original programme was the only accepted programme.  

After summarising the law, the court turned to the facts. The contract was NEC Option A for the design and construction of a new ‘barn theatre’ the total of the prices being in excess of £17.9 million. The problem which arose and which was central to the adjudication was the requirement for the trust to provide a permanent mains water supply for the testing and commissioning of the works. PML said the trust was obliged by reason of an accepted programme to do this by 30 October 2023 but failed to do so until 20 February 2024, causing them delay and amounting to a CE. The original accepted programme was never updated, and this was the common position agreed by the parties. The accepted programme contained no obligation to provide the water supply by any particular date albeit subsequent programmes submitted by PML but not accepted by the trust contained such dates. 

In summary, the adjudicator determined that there was a CE because the trust failed to provide the permanent water main supply by the date in revised programme no. 3 which neither party said was an accepted programme. By contrast, what the parties had agreed was the accepted programme contained no such date. The judge said: 

'This startling conclusion was clearly material to the Decision, and it should have been put to the parties for comment. It was a breach of the rules of natural justice not to do so: the Adjudicator went off on a “frolic” by, in effect, inventing a case for PML which he considered to be superior to that which they actually advanced.' 

As to the question whether PML had considered the defence by the trust that PML having failed to give the necessary notices (being a condition precedent for the claiming of a CE), the issue had been ventilated at length and was considered by the adjudicator. It was not for the court to pick over the decision and consider which parts were correct and which doubtful. 

This being an application for summary judgment under CPR Part 24.3 the court reminded itself of the guidance from the Court of Appeal in Carillion Construction Ltd v Devonport Dockyard Ltd [2006] BLR 15 and concluded that the trust had a real prospect of succeeding on its contention that there had been a breach of natural justice. Application dismissed.

Natural justice – failure to consider material defence

Clerkenwell Lifestyle (UK) Ltd v HG Construction Ltd [2026] EWHC 1406 (TCC) (12 June 2026) 
 
The claimant employer (Clerkenwell) referred a claim for liquidated damages to adjudication. They employed the contractor (HG) to build an hotel. Disputes arose over delays and entitlement to liquidated damages (lds) and Clerkenwell referred the dispute to adjudication. They required the adjudicator to determine the correct completion dates(s) for the two sections of the works and the amount of lds to which they were entitled. There had been an agreement to a 12-week extension time (eot) and Clerkenwell said they did not seek to upset that. HG’s planning expert took the completion dates arising from the 12-week eot as its starting point and then sought further extensions of time for subsequent events.  

The adjudicator made his determination as to the completion dates, taking into account critical path analyses from both parties’ experts. Though HG’s case in the adjudication started with and built on the 12-week eot, it did not actually plead that it resulted from or in a binding agreement that could not be reduced. The adjudicator based his determination on events occurring both before and after the ‘agreed’ eot as set out in critical path analyses tabled by the experts and awarded the claimant over £1.1 million in liquidated damages.  

At enforcement, HG at first argued there was an excess of jurisdiction, though this was not pursued. By way of Part 8 proceedings, HG argued that the agreed eot was a binding agreement, not subject to reduction, and the adjudicator could only grant more time for subsequent events. Clerkenwell pointed out that all the delay analysis was performed against an agreed baseline and not the allegedly agreed revised completion dates and the adjudicator's findings were consistent with that methodology. On the facts, the court found that the 12-week eot was ‘agreed’ only in that it was not disputed, but it did not amount to a settlement or binding agreement such that it could not be revisited.  

HG had not put that defence forward in the adjudication, and argued that the adjudicator (albeit inadvertently) should recognise this was a possible defence on the facts but had failed to do so. The court held that the adjudicator had not failed to see something that might be a possible defence. The adjudicator had done what he had been asked to do, and there was no breach of the rules of natural justice. The court declined to grant relied on the part claim and enforced the decision.

Comment   

The background facts were extensive and peculiar to the case. What may be of interest is the court’s response to the argument that an adjudicator may have a duty to appreciate and deal with a possible (un-pleaded) defence. The judge said:  

'In my view, it is clear that a pre-requisite to any argument that there has been a breach of natural justice as a result of a failure to consider a material defence is that that defence, or the matters constituting that defence, has been raised. In most circumstances, it is likely that the defence will be expressly identified as a defence. It is possible, particularly if a party is not legally represented, that an argument or facts that should reasonably be recognised as a defence may be regarded as raised by the respondent, and should be regarded by the adjudicator as raised, even if not labelled as a defence. The issue is fact sensitive. But nothing of that nature arises here.'

Payment notice – validity  

See United Utilities Water Ltd v Northstone (NI) Ltd (t/a Farrans Construction) (above)

Payless notice – requirements  

See RBH Building Contractors Ltd v James & Anor (above)

Payment notice – schedule of payment dates – lateness - validity  

Liberty Roofing (East Midlands) Ltd v Midelton Developments (Church Street) Ltd [2026] HHJ Beevor TCC Manchester [unreported] 

Liberty brought Part 7 proceedings to enforce an adjudicator's decision. Midleton opposed the claim and brought Part 8 proceedings for declaratory relief.  

Liberty was a roofing and cladding sub-contractor who claimed payment of their invoices 4 and 5 from Midelton, a property developer. The claim arose under a sub-contract incorporating the JCT Short Form Sub-contract terms, amended to include a payment schedule specifying dates for payment applications and payment notices.  

The adjudicator had decided that although Liberty's payment applications were served later that the payment schedule dates, and were therefore invalid as default payment notices, they created notified sums payable under the Act.  

The court held that the adjudicator had erred in law. The key issue was whether a late payment application could create a valid notified sum under section 111 of the Act. The court held that the timing of the payment applications was fundamental to the contractual payment provisions, as evidenced by the parties' agreement of specific dates in the payment schedule. A notice served late could not be considered to have been 'pursuant to and in accordance with a requirement of the contract' as required by section 111(2) of the Act. The court rejected Liberty’s contention that the issue was one of interpretation. Equally, it rejected an argument that Midelton was estopped by convention from denying the validity of the late payment notices. The estoppel claim was unsupported by the evidence and was not suitable to be decided in Part 8 proceedings. The adjudicator was wrong in law to conclude any notified sum existed and the court granted a declaration accordingly.  

Note: the judgment of this case is not yet available. The author gratefully acknowledges that this note was prepared with the aid of Lexis Citation Note 1551.

References: 

[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 2026: Part 2

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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