Lessons from Netomnia v MJ Quinn – contractual payment notice requirements must be complied with strictly
The Technology and Construction Court has recently considered whether an application for payment (AFP) constituted a valid payment notice under the Housing Grants, Construction and Regeneration Act 1996 (“HGCRA”), where the contractor failed to include information expressly required by the parties’ contract.
The decision in Netomnia Ltd v MJ Quinn Integrated Services Ltd [2026] EWHC 1824 (TCC) serves as a timely reminder that, whilst the HGCRA prescribes the minimum statutory requirements for payment notices, parties remain free to agree additional contractual requirements. Where those requirements are clear and commercially justified, failure to comply with them may render an application for payment invalid.
Background
Netomnia Limited engaged MJ Quinn Integrated Services Limited under a Master Services Agreement (“MSA”) for the design and installation of fibre-optic infrastructure across the United Kingdom.
The MSA required an Application for Payment to:
- state the sum considered due;
- explain the basis upon which that sum was calculated;
- provide a breakdown of the activities performed;
- include such documentation and information as was reasonably required to verify the accuracy of the application; and
- reference the corresponding Purchase Order.
On 5 February 2026, MJ Quinn submitted one of 168 applications for payment issued on the same day. The application sought payment of £3,770.84 but referred only to the relevant Work Order. It did not identify the corresponding Purchase Order, Polygon ID or Feature ID.
Netomnia rejected the application as invalid. Although the adjudicator concluded that the application was valid and awarded the contractor the claimed sum, Netomnia subsequently commenced Part 8 proceedings seeking declarations that the application did not comply with the contractual payment provisions and therefore could not operate as a valid payment notice under section 110B(4) of the HGCRA.
The Issues
The Court considered four principal issues:
- Whether the Polygon ID and Feature ID constituted information “reasonably required” to verify the application under clause 6.5.4 of the MSA.
- Whether the contractor had failed to comply with clause 6.5.5 by omitting the corresponding Purchase Order reference.
- Whether any alleged deficiencies in the contractual payment mechanism meant that the Scheme for Construction Contracts applied.
- Whether Netomnia was prevented by estoppel from relying upon the contractual requirements.
The Decision
Information reasonably required to verify the application
The Court held that the omission of the Polygon ID and Feature ID rendered the application non-compliant with clause 6.5.4.
In reaching that conclusion, Mr Justice Eyre emphasised the commercial context in which the parties operated. The contract related to a nationwide fibre network involving hundreds of work orders, thousands of polygons and millions of individual network features. Netomnia was also required to issue payment notices within the short statutory timescales imposed by the HGCRA.
Against that background, the Court concluded that merely identifying the Work Order did not provide sufficient information to enable Netomnia to verify the sums claimed efficiently. The Polygon ID and Feature ID formed part of the information that was objectively and reasonably required to validate the application.
Failure to reference the Purchase Order
The contractor argued that it had never been properly provided with the relevant Purchase Order and, alternatively, that the Purchase Order did not correspond with the sums claimed because the application related to indexation and permit costs. The Court rejected both arguments.
The Purchase Order had been sent to the contractor’s accounts department more than two years before the application was submitted. The fact that the document was not circulated internally within the contractor’s organisation did not mean it had not been provided.
The Court also held that the Purchase Order remained the corresponding Purchase Order notwithstanding that the application sought additional sums arising from contractual indexation and permit costs. Those sums still related to the same underlying works and therefore remained connected to the original Purchase Order.
The Scheme for Construction Contracts
MJ Quinn argued that if compliance with clause 6.5.5 was impossible, the contractual payment mechanism was inadequate and should be replaced by the Scheme for Construction Contracts. The Court disagreed. Clause 6.5 provided a perfectly workable mechanism for determining payments due under the contract. The contractor’s inability to comply resulted from its own failure to include information available to it, rather than from any deficiency in the contractual machinery. Accordingly, the Scheme did not apply.
Estoppel by convention
Finally, the contractor argued that previous payment practices prevented Netomnia from insisting upon strict contractual compliance. The Court reaffirmed the well-established principles governing estoppel by convention, namely that there must be a shared assumption, communicated between the parties, upon which both parties relied and from which it would be unconscionable to depart.
Those requirements were not satisfied. Whilst there may have been previous applications that omitted a Purchase Order reference, there was no evidence of a consistent practice of accepting applications that omitted all of the information absent from the present application. The estoppel argument therefore failed.
Practical Implications
This judgment provides several important reminders for employers and contractors alike.
First, compliance with the statutory requirements of the HGCRA alone will not necessarily be sufficient. Where parties have agreed additional contractual requirements governing payment applications, those provisions must also be satisfied.
Secondly, whether information is “reasonably required” will be assessed objectively and in its commercial context. On complex projects involving significant volumes of work and tight payment timescales, employers are entitled to require sufficient information to enable prompt verification of payment applications.
Thirdly, the Court adopted a commercially sensible interpretation of the contractual provisions. Technical arguments regarding internal administration or document handling were insufficient to avoid clear contractual obligations.
Finally, the decision confirms that the Scheme for Construction Contracts will not displace an agreed contractual payment mechanism merely because one party has failed to comply with it. The Scheme applies only where the contract itself fails to provide an adequate mechanism for determining payments due.
Key lessons
The decision reinforces the importance of strict compliance with contractual payment provisions. Contractors should ensure that every application for payment contains all information required by the contract, particularly on large framework agreements where employers rely upon detailed project identifiers to verify applications within the statutory payment timetable. Meanwhile, for employers, the judgment provides reassurance that clearly drafted contractual requirements intended to facilitate efficient verification of payment applications will be upheld, provided they are commercially justified and do not conflict with the HGCRA.
How CCC can help
At Contract & Construction Consultants (CCC), we advise employers, contractors and subcontractors on payment disputes, including the validity of payment applications, payment notices and pay less notices. Whether you are preparing payment documentation, responding to a disputed application, or pursuing or defending an adjudication, our team can provide practical, commercially focused advice to protect your contractual position.
