United Utilities Water Limited v Northstone (NI) Limited (trading as Farrans Construction) [2026] EWHC 1057 (TCC)

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United Utilities Water Limited v Northstone (NI) Limited (trading as Farrans Construction)

[2026] EWHC 1057 (TCC) | High Court of Justice, Business and Property Courts in Leeds, Technology and Construction Court (KBD)

Before Her Honour Judge Kelly sitting as a Judge of the High Court | Heard 24 June 2025 | Handed down 6 May 2026

Interactive Process Flow | Part 8 and enforcement

Case Analysis Process Flow

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1. Case Overview

Case: United Utilities Water Limited v Northstone (NI) Limited (trading as Farrans Construction) [2026] EWHC 1057 (TCC)
Court: High Court of Justice, Business and Property Courts in Leeds, Technology and Construction Court (KBD)
Judge: Her Honour Judge Kelly sitting as a Judge of the High Court
Hearing Date: 24 June 2025
Judgment Date: 6 May 2026
Case No: HT-2025-LDS-000013 and HT-2025-LDS-000014

United Utilities Water Limited (UU) engaged a joint venture comprising Northstone (NI) Limited, trading as Farrans Construction, and Roadbridge Limited for the West Cumbria Supply Project. The works included 32 kilometres of raw water aqueduct and 24 kilometres of water mains under an amended NEC3 Engineering and Construction Contract. A payment assessment issued through CEMAR recorded a negative amount due of £3,269,328.05, and an adjudicator later ordered Farrans to pay that sum plus VAT. UU sought summary judgment to enforce the award, while Farrans brought a connected Part 8 claim challenging the payment notice and the asserted need for a pay less notice (paragraphs 1-2 and 14-23). The court had to decide whether Farrans' two issues could properly be determined on the evidence available in Part 8 proceedings (paragraphs 48-65).

Central Legal Test: The construction of a contractual payment notice is objective: the court asks how a reasonable recipient, circumstanced as the actual parties were, would have understood it in its factual and contractual context. The immediate question was whether the evidence permitted that assessment within Part 8 proceedings (paragraphs 27 and 48-63).

Parties, Project and Representation

Enforcing claimant: United Utilities Water Limited, represented by Ms Jennie Gillies, instructed by Addleshaw Goddard LLP.

Defendant and Part 8 claimant: Northstone (NI) Limited, trading as Farrans Construction, represented by Mr William Webb KC, instructed by Brodies LLP.

Project: Contract 6 of the West Cumbria Supply Project, covering 32 kilometres of raw water aqueduct and 24 kilometres of network water mains (paragraphs 1, 3-5 and 43-44).

Contract and Payment Regime

Original form: NEC3 Engineering and Construction Contract, April 2013, Option C with bespoke amendments, dated 30 March 2017, with Prices of £85m (paragraphs 4-5).

Later agreements: A settlement agreement dated 25 July 2018 increased the Prices to £95m. A Deed of Variation dated 30 September 2021 changed the pricing basis from Option C to Option A, introduced milestone payments and increased the Prices to £131.6m (paragraphs 9-12).

System: The parties used CEMAR to administer payment documents, although its automatically generated dates did not reflect the amended payment timetable (paragraphs 14 and 52).

Core Dispute

The Project Manager issued PA-70 on 11 October 2024 in response to AFP77 and AFP78. It assessed minus £3,269,328.05 as due, based on Milestone 9 and a nil assessment for Milestone 11 (paragraphs 14-16 and 38). Farrans contended that PA-70 was invalid because CEMAR displayed 8 November 2024 as the due date, the document was unclear and a negative figure did not demand repayment. It also disputed any obligation to issue a pay less notice (paragraphs 21-23 and 31-40).

2. Procedural History

Payment and Adjudication Chronology

4 October 2024: The joint venture submitted AFP77 and AFP78 through CEMAR (paragraph 14).

11 October 2024: The Project Manager issued PA-70, assessing minus £3,269,328.05 (paragraphs 14-15).

18 October 2024: UU received Farrans' payment reduction notice. UU maintained it was served six days late (paragraphs 16-17).

Adjudication: The adjudicator decided in UU's favour and ordered Farrans to pay £3,269,328.05 plus VAT within seven days (paragraphs 18-19).

Connected Court Proceedings

UU issued claim HT-2025-LDS-000013 to enforce the adjudicator's decision by summary judgment. Farrans issued claim HT-2025-LDS-000014 under Part 8, seeking declarations that would defeat enforcement (paragraphs 2 and 20-23). Farrans abandoned its natural justice defence before the hearing and relied on its two contract-interpretation issues instead (paragraph 20).

Issues Framed for Part 8

Issue 1: Whether PA-70 was a valid payment notice requiring Farrans to pay £3,269,328.05, with the stated due and final payment dates.

Issue 2: If PA-70 was valid, whether Farrans had to issue a pay less notice if it wished to pay less than £3,269,328.05 (paragraphs 22-23).

3. Defendant's Position

Farrans argued that its Part 8 questions were short points of contractual and statutory interpretation suitable for immediate determination. It said PA-70 failed the required standard of clarity and did not create a valid demand for payment (paragraphs 31-40 and 49).

Incorrect CEMAR Date

Farrans relied on CEMAR's display of 8 November 2024 as the due date. It argued that the contract required accurate and unambiguous dates, particularly where only one day was available for a responsive notice, and that a technical problem in UU's chosen system could not excuse the discrepancy (paragraphs 32-37).

Negative Assessment and Demand

PA-70 recorded minus £3,269,328.05 under 'this payment'. Farrans accepted that the contract could require repayment to UU, but argued that stating a negative amount was not the same as demanding payment of a positive sum and required an additional calculation (paragraphs 38-39).

Part 8 Suitability

Farrans characterised Issue 1 as a pure question about the validity of PA-70. It submitted that the court could decide the issues from the contract, the legislation and the documents, without a wider factual inquiry into the amendments or the parties' dealings (paragraphs 31 and 49-50).

4. Claimant's Position

UU maintained that the Part 8 issues could not be decided without evidence about the amended contract, the use of CEMAR and the knowledge of the actual recipients. It sought enforcement because Farrans had not established a defence to the adjudicator's award (paragraphs 41-58 and 66).

Reasonable Recipient and Context

UU relied on the objective approach stated in Advance JV v Enisca Limited [2022] EWHC 1152 (TCC). The notice had to be read by reference to a reasonable recipient circumstanced as the actual parties were, including the relevant contract, purpose and factual setting (paragraph 27).

Amendments and CEMAR Knowledge

UU said the 2021 amendments accelerated payment, introduced bespoke milestone dates and could not be reflected in CEMAR without risking historic data. Its evidence was that both sides knew CEMAR's generated dates were wrong after the amendments. Farrans' evidence did not address that asserted shared knowledge or the reasons for the revised regime (paragraphs 49-56).

Contractual Roles

UU argued that the Project Manager acted independently when assessing amounts and that the contract allowed UU and Farrans to be payer or payee depending on the assessment. Farrans' analysis wrongly treated the Project Manager and UU as one party and did not address that change of payment direction (paragraphs 42-47).

5. Court's Analysis

Part 8 Required a Sufficient Factual Record

The court accepted UU's submission that the two issues were not suitable for determination under Part 8. The interpretation exercise could not be reduced to the words of the contract, legislation and documents because the available evidence did not establish how a reasonable recipient would have understood the notices (paragraphs 59-60).

Missing Evidence About the Parties' Knowledge

Farrans' evidence did not permit the court to place the language and notices in the relevant factual setting. In particular, it did not address the original contract, the circumstances and effect of the amendments, the operation of CEMAR before and after those amendments, or the asserted shared knowledge that its generated dates would be wrong (paragraphs 61-62).

Earlier Dealings Remained Relevant

The court rejected Farrans' submission that the amendments had drawn a line under the earlier history. The reasons for the amendments and their effect were central to deciding what the reasonable recipient would have understood under the revised regime (paragraph 63).

No Decision on PA-70's Substantive Validity

Because Issue 1 was unsuitable for decision under Part 8, the court did not determine whether PA-70 was legally adequate or valid. It also declined to determine Issue 2 because findings on Issue 1 might affect whether a pay less notice was required (paragraphs 64-65).

6. Decision and Outcome

Winner: The Claimant (United Utilities Water Limited) succeeded.

Result: The court granted UU summary judgment enforcing the adjudicator's award. Farrans' two Part 8 issues were not determined because the evidence was insufficient for the contextual interpretation required (paragraphs 59-66). The Defendant (Northstone (NI) Limited (trading as Farrans Construction)) did not succeed on this application.

Practical Effect: Farrans must satisfy the adjudication award, fees and interest. The judgment does not establish that PA-70 was valid on its substantive merits; it establishes that Farrans could not obtain the requested Part 8 declarations on the evidence presented.

Enforcement Order

Summary judgment was entered for UU for £3,269,328.05 plus VAT, together with the interest awarded by the adjudicator from 19 October 2024 to 2 April 2025 (paragraph 66).

Fees and Continuing Interest

The order included £62,254.69 plus VAT for the adjudicator's fees. Interest at 8.1% was payable from 3 April 2025 (paragraph 66).

Part 8 Outcome

The court declined to determine either of Farrans' two Part 8 issues. It expressly left the substantive adequacy and validity of PA-70 undetermined (paragraphs 64-65).

7. Key Legal Principles and Practice Points

Objective Construction of Payment Notices

A contractual payment notice is construed objectively by asking how a reasonable recipient circumstanced as the actual parties were would understand it. The relevant contract, purpose, factual setting and the adverse consequences of an unanswered payment notice form part of that assessment (paragraph 27).

Part 8 Is Unsuitable Where Facts Must Be Tried

A court cannot decide a supposedly short construction point under Part 8 when the legal test depends on a factual setting that the evidence does not establish. Missing evidence about the parties' knowledge and working practices may prevent a declaration even where the documents reveal an apparent inconsistency (paragraphs 48 and 59-63).

Project Manager and Payment Direction

Under this contract, the Project Manager exercised independent assessment functions. The contract also contemplated either UU or Farrans being payer or payee, depending on whether the assessment produced a positive or negative amount (paragraphs 47 and 54).

Practice Implications

For Claimants:
An enforcing party should identify whether the resisting party's Part 8 case depends on disputed facts or an incomplete factual record. Evidence should explain contract amendments, electronic administration systems and the knowledge shared by the participants. The enforcement claim should remain separate from any invitation to decide the underlying payment dispute on its merits.

For Defendants:
A party seeking declarations under Part 8 must provide the evidence needed for the legal test it asks the court to apply. Where notice validity depends on the reasonable recipient, witness evidence should address the recipient, the parties' shared knowledge, prior working practices and system limitations. A visible date error may not be enough if the court cannot determine how the notice would be understood in context.

General Practice Points:
When amended payment terms cannot be reflected accurately in an electronic contract platform, the parties should record the agreed procedure and correct dates outside the automated fields. Payment documents should state the amount, payment direction, due date and response deadline in plain terms. Parties should preserve evidence showing how the system was used and understood after each contract amendment.

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.