Neutral citation: Piperhill Construction Ltd v Northern Ireland Housing Executive [2025] NIKB 47

NEC contract topics: Payment, Option W2

Form of contract: NEC4 Term Service Contract

Main areas of law: Adjudication under the Construction Contracts (Northern Ireland) Order 1997, including the statutory framework for payment and pay less notices.

 

Piperhill Construction and the Northern Ireland Housing Executive (NIHE) entered into a contract in August 2022 for the refurbishment of social housing, under the NEC4 Term Service Contract (June 2017 edition, with January 2019 amendments and bespoke amendments). The project was identified as “CT0106 – EDRF Retrofit Programme 2022 – Lot 3.” Clause 5 covered monthly payments, with service and notification requirements in clauses 13.7 and 13.11. Pay less notices were governed by clauses 50.6 and Y2.3, requiring clarity in both amount and basis of calculation.

On 17 February 2025, Piperhill submitted Application for Payment No. 19 for £718,699.11 plus VAT, relating to works at Rooney’s Meadow and Lurgantarry. On 6 March 2025, NIHE responded with documents that included purported payment certificates and pay less notices. Piperhill disputed both their content and the manner of service. On 21 March 2025, Piperhill commenced adjudication under clause W2.3, seeking full payment of the notified sum. The contract between the parties was a construction contract, and the rules on payment and adjudication were therefore governed by the Construction Contracts (Northern Ireland) Order 1997.

 

The court had to resolve three central issues. First, whether the pay less notices issued by NIHE complied with the contract and statutory requirements, particularly in terms of content under NEC clause 50.6 and Article 10(4) of the 1997 Order. Second, whether the adjudicator had jurisdiction to determine the validity of the content of those notices, or whether his remit was limited to issues of service. Third, whether enforcement of the adjudicator’s award should be stayed pending a prospective “true value” adjudication by NIHE.

 

Humphreys J concluded that the adjudicator had jurisdiction to determine the dispute in full, including both service and content of the pay less notices. The judge considered the notice of adjudication and found that the dispute was framed broadly, focusing on the defendant’s failure to pay the notified sum. The underlying factual background, including the 14 March 2025 email disputing both service and content, supported this construction.

The court rejected the argument that the adjudicator exceeded his jurisdiction. The scope of the adjudication included the content validity because NIHE itself had raised arguments about content in its defence. As Humphreys J stated: “As a matter of construction… the notice of adjudication encompassed the issue of the contents of the pay less notices and therefore their validity.” The adjudicator’s view that failure to provide the basis of calculation rendered the notices invalid was upheld. The judge confirmed that under Article 10 of the 1997 Order, a valid pay less notice must specify the basis of the sum claimed. The failure to do so meant that the amount applied for by Piperhill became the notified sum, enforceable in full.

The court also rejected the proposed stay for a “true value” adjudication, citing established case law. It restated that payment of the notified sum must be made before any reassessment is pursued.

The court entered judgment for Piperhill for £888,275.08, inclusive of VAT and interest, and ordered NIHE to pay costs.

 

This judgment affirms the necessity for precision in the content of pay less notices. It is not sufficient to simply state a revised figure. Notices must explain the basis of that amount. Failure to do so undermines their legal effect, triggering full payment of the contractor’s application. The judgment clarifies that the scope of adjudication may legitimately extend to issues raised in the defence, reinforcing the importance of clearly framing disputes at the outset. It also confirms that procedural rules concerning notice service, while important, are treated as directory unless expressly stated otherwise.

Practitioners and contracting authorities using NEC4 contracts must ensure robust procedures are in place for issuing timely and compliant pay less notices where required by statute. The case serves as a reminder that technical non-compliance, especially around notice content, can lead to significant payment liabilities, regardless of any underlying dispute over value. The legal certainty provided by this decision reinforces the commercial purpose of the NEC framework and the prompt payment regime embedded in the statutory scheme.