Deerns UK Limited v VDC LHR11 Limited [2026] EWHC 1509 (TCC)

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Deerns UK Limited v VDC LHR11 Limited

[2026] EWHC 1509 (TCC) | High Court of Justice, King's Bench Division, Technology and Construction Court

Before Mr Justice Eyre | Heard 5 June 2026 | Handed down 23 June 2026

Interactive Process Flow | Final payment date compliance

Case Analysis Process Flow

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1. Case Overview

Case: Deerns UK Limited v VDC LHR11 Limited [2026] EWHC 1509 (TCC)
Court: High Court of Justice, King's Bench Division, Technology and Construction Court
Judge: Mr Justice Eyre
Hearing Date: 5 June 2026
Judgment Date: 23 June 2026
Case No: HT-2026-000123

VDC LHR11 Limited engaged Deerns UK Limited under a consultancy agreement dated 23 April 2025 to provide engineering consultancy services for a development at Chandos Park Estate in London. Deerns claimed £910,501.71 plus VAT under applications for payment 7 and 8. It said the contract did not provide a compliant final date for payment, so paragraph 8 of the Scheme for Construction Contracts applied and VDC's pay less notices were late. VDC relied on its interpretation of the contract, an alleged estoppel by convention, a different method of applying the Scheme and an application for a stay of execution. The judgment determined those issues in Deerns' favour (paragraphs 1-5 and 101).

Central Legal Test: Section 110(1)(b) of the Housing Grants, Construction and Regeneration Act 1996 requires a compliant final date for payment. The court had to decide whether clause 7.2 fixed that date solely by reference to the due date, or made it dependent on the separate event of a payment application being issued (paragraphs 16-30 and 55-57).

Parties, contract and project

Claimant: Deerns UK Limited, the engineering consultant.

Defendant: VDC LHR11 Limited, the party that engaged the consultant.

Contract: A consultancy agreement dated 23 April 2025.

Project: Engineering consultancy services for a development at Chandos Park Estate, London NW10 (paragraph 1).

Payment dispute

Deerns sought £910,501.71 plus VAT under applications for payment 7 and 8. Clause 7.2 stated that the final date for payment was 30 days after the due date, but allowed that date to be postponed by the number of days by which the consultant's payment application was late. Deerns said this variable interval failed section 110(1)(b), causing the Scheme's 17-day final date to apply (paragraphs 2, 6 and 11-12).

2. Procedural History

Applications and notices

Application 7: The due date was 4 February 2026. VDC issued its pay less notice on 27 February 2026.

Application 8: The due date was 6 March 2026. VDC issued its pay less notice on 25 March 2026.

Deerns contended that the Scheme made the final dates 21 February and 23 March, with the pay less notices due by 16 February and 18 March respectively (paragraphs 11-12).

Part 8 determination

The court dealt with the proper interpretation of the contract, statutory compliance, estoppel by convention, application of the Scheme and VDC's requested stay of execution. The hearing took place on 5 June 2026 and judgment was handed down on 23 June 2026 (paragraph 5 and the judgment heading).

3. Defendant's Position

VDC argued that the contract provided a compliant payment timetable and that its pay less notices were in time. It advanced four alternative routes if its primary interpretation failed (paragraphs 3-5).

Contract interpretation

VDC relied on the Schedule of Valuation Dates and said the dates should be recalculated from the actual date of a late payment application. On that reading, the due date moved and the final date remained 30 days after the revised due date, making the notices timely (paragraphs 31 and 45-52).

Estoppel and Part 8 procedure

VDC alleged a shared understanding that late applications reset the payment timetable. It said the estoppel required pleadings, disclosure, further evidence and cross-examination, so the issue should not be decided in the Part 8 proceedings (paragraphs 58-63 and 66-67).

Scheme and stay arguments

VDC argued that the Scheme should make the minimum change to the agreed regime by imposing an unextendible 30-day period, rather than the Scheme's 17-day period. It also sought a stay under CPR 83.7(4)(a), relying on Deerns' financial position and VDC's asserted valuation and damages claims (paragraphs 88-89 and 93-99).

4. Claimant's Position

Deerns said clause 7.2 made the final date depend on the timing of its payment application rather than solely on the due date. It maintained that the Scheme applied, the pay less notices were late and there was no evidential basis for an estoppel or stay (paragraphs 2, 32-33, 67 and 99).

Statutory payment timetable

Deerns relied on Rochford Construction Ltd v Kilhan Construction Ltd [2020] EWHC 941 (TCC) and Lidl Great Britain Ltd v Closed Circuit Cooling Ltd [2023] EWHC 2243 (TCC). It submitted that section 110(1)(b) permits agreement on the length of the period after the due date, but not a final date controlled by another event (paragraphs 17-30 and 32).

Estoppel and financial evidence

Deerns denied any common understanding that the whole payment timetable was recalculated. It relied on the documentary payment history and said VDC's cross-claims remained disputed and had not progressed beyond initial correspondence. Deerns accepted cashflow pressure but maintained that it remained a going concern (paragraphs 63, 67, 83-86 and 96-100).

5. Court's Analysis

Interpretation of clause 7.2

The court read clause 7.2, Schedule 1 and the Schedule of Valuation Dates together. The interim valuation dates and due dates were fixed, but the final date could move if Deerns submitted its payment application late. VDC's reading would have rewritten the agreement by moving the due date as well (paragraphs 34-54).

Failure to comply with section 110

Because the final date was not determined solely by reference to the due date and depended on the date of the payment application, the contract failed section 110(1). Section 110(3) therefore brought the relevant provisions of the Scheme into operation (paragraphs 55-57).

Estoppel by convention

VDC's alleged common understanding was vague, unparticularised and inconsistent with the contemporaneous documents. The payment history did not show that VDC acted on the asserted understanding or that Deerns shared it. The court decided the issue under Part 8 and rejected the estoppel (paragraphs 74-87).

Mandatory effect of the Scheme

Paragraph 8 of the Scheme imposed a final date 17 days after the due date. The court could not substitute the 30-day fixed period proposed by VDC because that would create a regime found in neither the contract nor the Scheme. VDC's pay less notices were therefore out of time (paragraphs 88-92).

Refusal of a stay

Deerns was solvent and remained a going concern, while VDC's cross-claims were far from established. Deerns' financial position was not materially worse than when the contract was made, and VDC's non-payment had contributed to its difficulties. The grounds for a stay were not established (paragraphs 93-100).

6. Decision and Outcome

Winner: The Claimant (Deerns UK Limited) succeeded.

Result: The court held that the contract failed to provide a final date for payment compliant with section 110(1), paragraph 8 of the Scheme applied and VDC's pay less notices were out of time. Subject to submissions on the form of the order, judgment was entered for Deerns in the amounts claimed (paragraphs 56-57, 92 and 101). The Defendant (VDC LHR11 Limited) did not succeed on this application.

Practical Effect: VDC could not rely on its pay less notices, its estoppel defence failed and its request for a stay was refused. Deerns obtained judgment for £910,501.71 plus VAT, subject to the final form of the order (paragraphs 2, 87, 92 and 100-101).

Specific rulings

1. Clause 7.2 did not provide a compliant final date for payment (paragraphs 54-57).

2. VDC's estoppel argument failed and did not require later Part 7 determination (paragraphs 77-87).

3. Paragraph 8 of the Scheme imposed a 17-day final date and the pay less notices were late (paragraphs 90-92).

4. The application for a stay was refused (paragraph 100).

Judgment sum and continuing claims

The court gave judgment for Deerns in the amounts claimed, subject to submissions on the order (paragraph 101). VDC's asserted valuation and design claims were not determined in this judgment and were described as a long way from being established (paragraphs 95 and 100).

7. Key Legal Principles and Practice Points

Final dates must follow the due date

A construction contract may allow the parties to choose the length of the interval between the due date and final date. The final date cannot depend on a separate event such as submission of an invoice or payment application. If it does, the contract does not satisfy section 110(1)(b) (paragraphs 17-30 and 55-57).

The Scheme supplies Parliament's timetable

Where a contract fails to provide a final date, paragraph 8 of the Scheme supplies a date 17 days after the due date. The court cannot devise a different period merely because it would preserve more of the parties' intended arrangement (paragraphs 88-92).

Estoppel requires evidence of a shared assumption

An estoppel by convention requires a shared or communicated assumption, reliance and circumstances making departure from the assumption unfair. Informal administration and failure to raise earlier notice points did not prove the structured common understanding alleged by VDC (paragraphs 64-65 and 77-86).

Practice Implications

For Claimants:
Check whether the final date is fixed by a stated period after the due date. Record the due date, Scheme final date and last date for a pay less notice for every application. Preserve the payment applications, notices and covering communications because the court may decide an asserted estoppel from those records.

For Defendants:
Do not calculate a final date from an invoice or payment application unless the due date itself moves under a compliant mechanism. Serve pay less notices by the earliest defensible deadline while any interpretation issue remains unresolved. An estoppel case should identify the precise shared assumption, how it was communicated and the conduct said to amount to reliance.

General Practice Points:
Payment schedules and operative clauses must be read together before the contract is executed. If the final date can move independently of the due date, paragraph 8 of the Scheme may replace the intended period. A stay application requires evidence establishing the repayment risk and must address whether the payer's own non-payment caused the claimant's financial position.

Legal Disclaimer

This interactive process flow is provided for educational and professional development purposes only and does not constitute legal advice. The content reflects interpretations and analyses that may not apply to specific circumstances. Contract interpretation depends on specific wording, jurisdiction, and factual context. Always consult qualified legal professionals before making decisions based on this content. SCCSI and its contributors accept no liability for reliance on this material.