By Jennifer Treverton & Andrew Clough
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Published 28 September 2026
The payment notice regime under the Housing Grants, Construction and Regeneration Act 1996 is heavily dependent on strict compliance with contractual and statutory deadlines. The importance of timing was starkly illustrated earlier this year in Liberty Roofing (East Midlands) Ltd v Midleton Developments (Church Street) Ltd (unreported), in which the Technology and Construction Court (TCC) refused to enforce an adjudicator's decision.
The TCC declared that the payment notices served outside the contractual schedule were invalid and incapable of creating a notified sum under the payment provisions of the Construction Act. Accordingly, the adjudicator was wrong to conclude there was a notified sum (in respect of the relevant invoices) which entitled Liberty to payment.
The decision
The claim related to roofing and cladding works at Midleton House, Birmingham. The parties agreed a payment schedule varying the sub-contract payment provisions, specifying specific dates by which applications for payment and payment notices/pay less notices were to be served.
In payment cycles 4 and 5 there were issues with Liberty's application and Midleton's corresponding payment notice being served late. Midleton made no payment in cycle 5, with Liberty ceasing works in early July 2025 for non-payment. Liberty referred the dispute to adjudication on 3 October 2025.
At adjudication, the adjudicator found that both Liberty's payment applications and Midleton's payment notices had been served late and therefore breached the contract. Nevertheless, the adjudicator concluded that Midleton's payment notices "recognised Liberty's entitlement to payment" and awarded Liberty the sum claimed.
The court refused to enforce the adjudicator's decision, and held that timing was fundamental to the operation of the notified sum regime under the Construction Act 1996. The payment provisions stipulated specific dates for service of the payment application and payment notice - as both were served late there was no valid payment notice/default payment notice and therefore no notified sum entitling Liberty to payment. The adjudicator was wrong to conclude that payment was due to Liberty on that basis.
The court rejected Liberty's argument that service of a payment notice was not a condition precedent to creating a notified sum and a reasonable recipient would have understood the application/payment notice to be valid. The court found that the validity of the application/payment notice was not a matter of interpretation - "they are either valid or they are not".
The court also rejected Liberty's estoppel arguments, finding issues of estoppel do not generally fall within parameters for Part 8 proceedings and involve substantial disputes of fact requiring proper pleading. The correspondence indicated Liberty would receive payment but did not confirm Midleton accepted late payment notices were valid.
Takeaways
It is not uncommon for parties to a construction contract to operate payment provisions differently to that in the contract or to submit applications/notices not strictly in compliance the contract. This decision is a reminder of the importance of being clear on the applicable payment provisions and dates and of ensuring notices are served on time accordingly. If a dispute was to arise, the lack of strict contractual compliance with dates for applications/notices could create issues with a party's ability to adjudicate and/or enforce a decision.
