Laing O'Rourke Delivery Limited v Shepperton Studios Limited

Summary

A contractor won a smash and grab adjudication: the adjudicator held the employer's payment notice and pay less notice for one application invalid, because they did not show how the gross valuation was built up, and ordered the notified sum of over 5.6 million pounds to be paid. The contractor applied to enforce.

The employer resisted, saying the decision was obviously wrong, that its pay less notice was valid in any event, that later true value adjudications undercut the sum, and that any payment should be stayed because the contractor was insolvent.

Simon Lofthouse KC decided the point of construction at the enforcement hearing to save a separate Part 8 trial. He held that a defective payment notice did not contaminate an otherwise properly detailed pay less notice. The pay less notice stood, so the contractor was entitled to the sum applied for less the deductions detailed in that notice, about 3.2 million pounds plus VAT, and he refused a stay because a parent company guarantee secured repayment.

Background and facts

Laing O'Rourke Delivery, the contractor, carried out works for Shepperton Studios, the employer, under a building contract dated 16 November 2021.

The contractor referred a payment dispute to adjudication. The adjudicator held that the employer's payment notice for application 45, and its related pay less notice, were invalid because they did not set out how the gross valuation had been calculated. He ordered payment of 5,627,275.11 pounds plus VAT and interest.

The employer resisted enforcement on four grounds: that the decision was obviously wrong and the subject of its own Part 8 claim; that even if the payment notice was invalid the pay less notice was valid; that five later adjudications had assessed the true value and undercut the contractor's entitlement; and that any sum should be stayed because the contractor was insolvent.

The issue

The court had to decide whether to resolve the construction point at the enforcement hearing, and if so whether a defective payment notice also defeated the pay less notice that used the same undetailed figure. It also had to decide whether to stay execution against an insolvent contractor.

The decision

The judge first decided to resolve the construction point rather than leave it to the listed Part 8 hearing. Where a short point of construction is central to the decision and the facts are not in dispute, the court can determine it at the enforcement hearing, as in Elements (Europe) Ltd v FK Building Ltd [2023] EWHC 726 (TCC) and A&V Building Solutions Ltd v J&B Hopkins Ltd [2023] EWCA Civ 54. Deciding it now saved the parties the cost of the April trial.

On the notices, the judge accepted that the failure to show the build-up of the gross valuation meant the contractor was entitled under clause 4.9.3 to the sum applied for, but that entitlement was expressly subject to a valid pay less notice. The employer had set out in the pay less notice the sums it sought to deduct, and the contractor accepted those were sufficiently detailed.

The judge held that the defect in the payment notice did not carry across to the pay less notice:

"I do not consider that the failure to detail the make-up of the gross valuation contaminates both the payment notice and the pay less notice in the manner submitted by LOR."Simon Lofthouse KC, paragraph 37

The pay less notice was therefore valid. The adjudicator had been wrong to treat the undetailed gross figure as fatal to it. The judge upheld the decision to the extent of 3,198,660.64 pounds plus VAT, being the difference between the sum applied for of 5,627,275.11 pounds and the deductions of 2,428,614.47 pounds set out in the pay less notice.

On the stay, the employer contended the contractor was insolvent, and the judge held that the evidence of the contractor's financial strength did not displace the prima facie entitlement to a stay under the established principles. The employer pointed to the risk that parent support might be withdrawn, and to observations elsewhere describing a late decision to pull the plug on a defendant as commercially amoral. The judge held that a continuing parent company guarantee, governed by English law, answered the concern:

"I consider that the existence of the parent company guarantee does displace the starting point of a prima facie entitlement to a stay of execution."Simon Lofthouse KC, paragraph 67

He refused the stay of the sum found due.

Practical implications

The most useful point for payment practice is that a defective payment notice does not automatically poison a pay less notice. If the pay less notice sets out the deductions in sufficient detail, it can stand even though it starts from the same undetailed gross figure. The contractor's remedy for the missing build-up is the entitlement to the applied-for sum, but that remains subject to the pay less notice.

For employers, the discipline is clear. Detail the deductions in the pay less notice itself. That is the information the contractor needs, and it is what keeps the notice alive even if the payment notice is later found wanting.

The case also shows how a smash and grab can be met at the enforcement hearing. Where the point is one of construction, the facts are agreed and a Part 8 claim is on foot, the court may decide it there and then, cutting off the windfall before it is paid. A responding employer should get its Part 8 claim issued and its construction argument ready for the enforcement date.

On stays, insolvency is a starting point, not the end. A continuing parent company guarantee can displace the prima facie entitlement to a stay by giving the paying party a secure route to recover an overpayment if the true value later proves lower; an undertaking to repay given by the claimant itself was held insufficient here.

Laing O'Rourke Delivery Limited v Shepperton Studios Limited [2026] EWHC 612 (TCC), Technology and Construction Court, Simon Lofthouse KC sitting as a Deputy Judge of the High Court. Heard 3 March 2026, judgment handed down 16 March 2026.