Lessons from VMA Services Ltd v Project One London Ltd [2025] EWHC 1815 (TCC)

Can a party avoid paying a Notified Sum awarded in a ‘smash and grab’ adjudication by commencing its own ‘true value’ adjudication?  Unsurprisingly, ‘no’, was the answer from Adrian Williamson KC in the case of VMA Services Ltd (“VMA”) v Project One London Ltd (“Project One”). If one required a reminder of the Court’s stalwart position on honouring the payment provisions of the Housing, Grants and Regeneration Act 1996, then look no further than VMA.

Brief Background

In October 2023, VMA and Project One entered into a JCT Design and Build Sub-Contract Agreement 2016 Edition for mechanical works, which gave rise to the dispute.

During the works, VMA Services made an interim application for payment in the sum of £106,434.88. Project One failed to issue either a payment notice or a pay less notice in response to VMA’s application for payment and as such, VMA’s application for payment became the ‘notified sum’ [1]. Instead, Project One commenced an adjudication to establish the 'true valuation' of the work.

The adjudicator in the adjudication found that Project One could not sidestep its obligations under the Housing Grants and Construction Regeneration Act 1996 (“The Act”) to pay the notified sum simply by commencing an adjudication.

With Project One refusing to pay the amount awarded by the adjudicator to VMA, VMA were left to enforce the decision. Project One challenged the enforcement of that decision on the grounds that the adjudicator lacked jurisdiction to order payment to a non-referring party and that the process had breached the principles of natural justice.

A losing battle?

Unless there is an issue with jurisdiction (the scope of what the adjudicator can determine), natural justice (bias or unfairness), or procedure (obvious errors), parties to an adjudication are bound by the adjudicator’s decision [2]. Where money is due, the losing party must pay the successful party the amount determined as due by the adjudicator.

In VMA, Adrian Williamson KC provided a deft summary of the common law position to address the challenges made by Project One to enforcement:

• the entitlement to commence a 'true value' adjudication under s 108 of The Act is subject to the immediate payment obligation in s 111 of The Act [3] and therefore, payment of the notified sum must be made prior to commencing a ‘true value’ adjudication [4];
• If one party asks for payment for certain parts of the work, the other party can use any defence to show that the payment isn’t owed [5]; and
• A responding party in an adjudication “will not generally be able to make a monetary recovery arising from its defence and counterclaim….[unless it is] advanced by way of defence to the exclusion of the claim referred to adjudication” [6].

With these principles in mind, Adrian Williamson KC dismissed Project One’s jurisdictional and procedural objections, on the basis that:

• It would be contrary to the Act and established common law for a party with an adjudication award in its favour to have to commence another adjudication to recover a sum which has already been determined to be due to them [7];
• The Scheme for Construction Contracts is unequivocal in stating that “the decision of the adjudicator shall be binding on the parties, and they shall comply with it until the dispute is finally determined” [8];
• Project One’s argument that the adjudicator had breached the principles of natural justice lacked any teeth.

Concluding Thoughts

Thirty-four paragraphs were all Adrian Williamson KC required to slice through Project One’s attempts to evade paying the notified sum. The Court remains resolute in ensuring that the payment process enshrined in the Act is preserved and honoured, irrespective of the underlying merits of the amount applied for. In an attempt to compete with Adrian Williamson KC’s brevity, one may conclude as follows:

• Does the payment process under the Act remain draconian? Yes.
• Are the consequences of non-compliance with the Act draconian? Yes.
• Will there remain injustices by virtue of parties exploiting the draconian payment mechanism under the Act? Yes.
• Are there any ‘ground-breaking’ means to challenge enforcement proceedings? No.

Perhaps we should be grateful that whilst there are rarely any guarantees in law, one would not want to bet against the Court changing tack on its approach to payment in construction contracts nor challenges to the enforcement of adjudicators’ decisions, any time soon.

If you have any queries relating to the decision, contact James Mapley or Lucy Ferebee.