The court’s decision in Deerns UK Limited v VDC LHR11 Limited [2026] EWHC, highlights a narrow but recurring drafting trap: does a movable final date for payment satisfy Section 110(1)(b) of the Housing Grants, Construction and Regeneration Act 1996, and if not, what consequences follow?
What happened?
VDC engaged Deerns to provide engineering consultancy services on a development in London. Deerns submitted two payment applications totalling over £900k, which VDC sought to reduce by serving pay less notices. The contract’s payment clause set a final date for payment 30 days after the due date, but allowed that date to be postponed if Deerns submitted its application late.
VDC maintained its pay less notices had been served in time against that 30-day timetable.
Deerns disputed this, arguing that the contract failed to fix a final date for payment at all and was therefore invalid under the Construction Act. If the statutory Scheme for Construction Contracts applied instead, the final date would be just 17 days after the due date, rendering VDC’s pay less notices out of time.
What did the Court decide?
- The contract’s payment clause did not fix a valid final date for payment as required by section 110(1)(b) HGCRA, because the final date could move depending on when Deerns submitted its application.
- As a result, the statutory Scheme for Construction Contracts applied in place of the contract’s own timetable, fixing the final date at 17 days after the due date rather than 30.
- On that shorter timetable, VDC’s pay less notices were served late, and Deerns was automatically entitled to the full amount applied for.
- The Court also rejected VDC’s arguments on estoppel by convention and on staying execution of the judgment, so Deerns was entitled to immediate payment.
What can we learn from this?
The final date for payment needs to be fixed, not conditional on when an application is submitted or any other event. Get this wrong, and the Scheme’s shorter 17-day timetable takes over, which can make pay less notices that looked to be in time ineffective. That’s a costly mistake to make at the drafting stage.
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This article contains information of general interest about current legal issues, but does not provide legal advice. It is prepared for the general information of our clients and other interested parties. This article should not be relied upon in any specific situation without appropriate legal advice. If you require legal advice on any of the issues raised in this article, please contact one of our specialist construction lawyers.
© Hawkswell Kilvington Limited 2026
