Vision Construct Limited v Gypcraft Drylining Contractors Limited

In construction payment disputes, a payment schedule may identify the relevant valuation date even if it uses different terminology from the standard-form contract. The court should read the contractual documents together and in a commercially coherent way.

A course of dealing does not by itself establish an estoppel by convention. The party asserting the estoppel must show a communicated shared assumption, reliance or material influence, and unconscionability in going behind it. A document labelled and framed as a Payment Notice cannot retrospectively be treated as a Pay Less Notice merely because it contains information relevant to the latter.

Vision Construct Limited sought declarations concerning the construction of the interim payment mechanism in its subcontract with Gypcraft Drylining Contractors Limited. The declarations were intended to undermine an adjudicator’s decision requiring payment of £216,947.75 plus interest as a notified sum under section 110B(4) of the Housing Grants, Construction and Regeneration Act 1996.

VCL argued that the payment schedules failed to identify an Interim Valuation Date, that the parties’ prior dealings created an estoppel by convention permitting late Payment Notices, and that a late document headed “Payment Notice” operated as a Pay Less Notice. The court determined each issue in Part 8 proceedings.

1. Declarations refused. The claimant’s three arguments failed, and the adjudicator’s analysis was not displaced.

2. The payment schedules, read with clause 4 of the subcontract, clearly identified the relevant dates for the payment cycle: the submission valuation date, due date, Payment Notice deadline, Pay Less Notice deadline and final date for payment. It was commercially unrealistic to treat the regime as ineffective merely because the schedule used “Sub-Contractor Submission Valuation Date” rather than “Interim Valuation Date”. The schedule and clause 4 could operate together, so a compliant application made four days before the Interim Valuation Date also complied with the schedule. Alternatively, an application made pursuant to an instruction or direction under the subcontract was made “in accordance with the contract” for section 110B(4) purposes. The Interim Valuation Date argument was rejected.

3. The estoppel by convention case was unsuitable for determination in the evidence-free setting of Part 8 and failed on its merits. The previous late notices did not establish a shared convention; they were equally consistent with confusion or inefficiency. The alleged representation was no more than a statement of fact, there was no evidence of reliance, and unconscionability could not be established without a fuller factual investigation.

4. The 7 February 2023 document was a Payment Notice. Its covering email and heading repeatedly identified it as such. Applying the approach to contractual notices in Advance JV v Enisca Ltd [2022] EWHC 1152 (TCC), its character was clear. Retrospectively converting it into a Pay Less Notice would undermine the statutory and contractual payment regime. The guidance in Grove Developments Limited v S&T (UK) Limited [2018] BLR 173 supported treating the character and validity of the notice as matters of fact and degree.

5. VCL was not entitled to the declarations sought. Consequential matters were left to agreement, failing which a short remote hearing would be convened.