UK Construction and Law

A final date for payment that slides when the application is late is no final date at all, and 910,501 pounds falls due

By Staff Writer  |  23 August 2026

A consultancy agreement on a north London development set the final date for payment at 30 days after the due date, then postponed it by however many days the payment application was late. The court held that this made the final date depend on an event rather than on the due date, so the statutory scheme applied, the pay less notices were served out of time and the full sum claimed became payable.

The judgment in Deerns UK Limited v VDC LHR11 Limited [2026] EWHC 1509 (TCC) was handed down at noon on 23 June by Mr Justice Eyre. The consultant sought 910,501.71 pounds plus VAT on applications 7 and 8 under a consultancy agreement of 23 April 2025 for engineering services at a development at Chandos Park Estate in NW10. It got the whole of it.

The drafting looks orthodox on a first reading. Clause 7.2 provided that the application date and the due date for each instalment were the specified dates in a schedule, that the final date for payment was 30 days after the due date, and that if the consultant's invoice was issued late the final date would be postponed by the same number of days by which it was late. Clause 7.3 required any pay less notice not later than five days before the final date.

Why the postponement clause was fatal

Section 110(1)(b) of the Housing Grants, Construction and Regeneration Act 1996 requires every construction contract to provide a final date for payment in relation to any sum which becomes due. The parties are free to agree the length of the gap between the two dates. What they are not free to do, on the reasoning the court applied, is peg the later date to something other than the earlier one.

The payer argued for a reading in which the whole timetable was recalculated from whenever the application was in fact made. The court rejected it, holding that the schedule laid down a series of fixed dates and that clause 7.2 moved one of them only.

Adoption of the Defendant's interpretation would amount to a wholesale re-writing of the parties' agreement.

Mr Justice Eyre, sitting in the Technology and Construction Court

On the correct reading the interval between the due date and the final date could vary, and could exceed 30 days, according to when the consultant applied. That put the contract on the wrong side of the line drawn in Rochford Construction Ltd v Kilhan Construction Ltd [2020] EWHC 941 (TCC), where Cockerill J accepted that a due date may be fixed by reference to an invoice or a notice, while the final date has to be pegged to the due date and be a set period of time rather than an event or a mechanism. Section 110(3) then imported the Scheme for Construction Contracts, whose paragraph 8 fixes the final date at 17 days from the due date.

On that timetable the pay less notices, served on 27 February and 25 March, were nine days and seven days late respectively. The notified sums fell due in full.

Estoppel, and why it did not save the notices

The payer's fallback was an estoppel by convention: the parties had, it said, operated the agreement on a shared understanding that a late application reset the whole timetable, and that understanding produced a compliant arrangement. It asked for the point to be pleaded out with disclosure and cross-examination rather than decided in a Part 8 claim.

The court dealt with it there and then. The evidence of the common understanding was described as vague and unparticularised, with no oral dealings identified, no correspondence relied on and no explanation of how any reliance was communicated. A payee's decision not to take a late notice point on a particular application is not, without more, evidence of an agreed method.

The court also refused a stay of execution. It held that the principles governing stays in adjudication enforcement apply equally here, and that the consultant's financial position was not materially worse than when the contract was made, with the payer's own non-payment having played a part in the difficulties relied on. The cross-claims, put at 25 to 30 million pounds, had not progressed beyond initial correspondence.

The HGCRA provides for the imposition of the Scheme in these circumstances it does not empower the court to redraft the parties' agreement and still less does it empower the court to vary the periods laid down in the Scheme where it applies.

Mr Justice Eyre, sitting in the Technology and Construction Court

The practical lesson sits in one sentence of the contract. A clause that moves the final date to protect the payer against late applications is the clause that hands the payee the Scheme, and with it a 17 day final date that almost no payer's internal process is built to meet.