Payment Notice ≠ Payless Notice

• 19 November 2025
• Views

In Vision Construction Ltd v Gypcraft Drylining Contractors Ltd [2025] EWHC 2707 (TCC), the TCC taught the contractor a £217k lesson, from which we will all benefit, about it not being possible to recharacterise a payment notice as a pay less notice. 

By way of background, the contractor, Vision, was late in issuing its payment notice 23 (“PN 23”).  Vision’s subcontractor, Gypcraft, obtained an adjudicator’s decision that Vision should therefore pay the amount stated in its interim application 23, further to which Vision sought declarations to invalidate the decision.  One argument run by Vision was that the document issued in response to interim application 23 was in fact a pay less notice issued within the required timeframe.  As the judge noted, this was “an ambitious submission” in light of the following:

• The document’s covering email referred twice in the subject line to “PN 23”.
• The body of the email twice referenced the provision of a “Payment Notice”.
• The attached document was headed “Payment Notice”.
• The document stated that “the basis on which the sum stated in this Payment Notice has been calculated is set out in the attached breakdown”. 

The TCC took the approach to contractual notices helpfully summarised at paragraph 47 of Advance JV v Enisca Ltd and concluded that it had no doubt that the document was a payment notice. While the TCC’s reasoning is not set out in detail, I think it’s safe to assume that, given how plainly the payment notice was identified as such, the court was not persuaded that, per Advance JV, the contractor’s intention, viewed objectively, was to issue a pay less notice, or that a reasonable recipient would consider it a pay less notice.  The contractor was not assisted by Sir Peter Coulson’s pronouncement in Construction Adjudication (4^th ed. 2018), which was cited in Advance JV, that “the courts will take a commonsense, practical view of the contents of a payless notice and will not adopt an unnecessarily restrictive interpretation of such a notice…”.

The TCC’s view was that it would undermine the Housing Grants Construction and Regeneration Act 1996 and the sub-contract, if what was clearly intended to be a payment notice could retrospectively be converted into a pay less notice.  In support of that view, it cited the observation in the first instance decision of Groves v S&T that a payment notice and pay less notice “has to make plain that it is, respectively, a payment notice or a pay less notice.” 

As noted above, this is a pointed reminder for everyone who issues payment notices and payless notices that they must be separate notices, and that a payment notice cannot become a payless notice.  The contractor might have had a better outcome here if the payment notice had not been labelled as such, and the decision could be seen as a harsh one given that the sub-contractor was still notified, before the date for the payless notice, that the contractor intended to pay less.  Nevertheless, the decision follows established authorities and there would still be the issue of whether PN 23 complied with the HGCRA 1996 requirements for a payless notice: PN 23 would have stated the sum due at the due date whereas a payless notice must state the sum due at the date on which it is issued.