This article discusses VMA Services Limited v Project One London Limited [2025] EWHC 1815 (TCC), a case concerning the enforcement of an adjudicator’s decision in favour of the responding party, VMA, who successfully deployed a ‘notified sum’ defence in a ‘true value’ adjudication. Significantly, the court found that where a sum was determined to be immediately due to the responding party as a notified sum, the adjudicator did have jurisdiction to order payment.
Factual Background
VMA and POL entered into a contract in 2023, for the design and installation of mechanical works at Cheyne Walk, incorporating the JCT Design and Build Sub-Contract Agreement Conditions 2016. VMA submitted its application for payment for £274,259.81 gross, and a net payment of £106,434.88. POL failed to serve a payment notice and/or payless notice timeously.
Going against the grain, POL initiated an adjudication seeking determination of the ‘true value’ of that interim valuation. VMA argued the notified sum as a defence and counterclaim. The adjudicator’s decision found VMA’s application for payment valid and absent any notices, £106,434.88 was due as the notified sum. He stated that where a party has failed to comply with its immediate payment obligation in respect of a notified sum, it is not entitled to adjudicate on the true value and he was therefore not required to embark on the true value of the works.
Legal Background
In respect of the immediate payment obligations and the principle of subjugation, the judgment cited O’Farrell, J in Bexheat Ltd v Essex Services Group Ltd [2022] EWHC 936 (TCC), namely that:
“(i) where a valid application for payment has been made, an employer who fails to issue a valid Payment Notice or Pay Less Notice must pay the ‘notified sum’ in accordance with s 111 of the 1996 Act;
(ii) s 111 of the 1996 Act creates an immediate obligation to pay the ‘notified sum’;
(iii) an employer is entitled to exercise its right to adjudicate pursuant to s 108 of the 1996 Act to establish the ‘true valuation’ of the work, potentially requiring repayment of the ‘notified sum’ by the contractor;
(iv) the entitlement to commence a ‘true value’ adjudication under s 108 is subjugated to the immediate payment obligation in s 111;
(v) unless and until an employer has complied with its immediate payment obligation under s 111, it is not entitled to commence, or rely on, a ‘true value’ adjudication under s 108.”
Further, the judge added:
(vi) the immediate payment obligation principle applies whether or not the contractor has first obtained an adjudication award in its favour (AM Construction v The Darul Amaan Trust [2022] EWHC 1478 (TCC));
(vii) a Responding Party is entitled to raise a very wide range of matters by way of defence and counterclaim without infringing the general rule that only one dispute can be referred within a single adjudication (Global Switch Estates 1 Limited v Sudlows Limited [2020] EWHC 3314 (TCC)); and
(viii) “The set-off may be advanced by way of defence to the exclusion of the claim referred to adjudication, but not as an independent claim for a monetary award in favour of the respondent to the reference” (Bresco Electrical Services Ltd (in liq) v Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25).
The Jurisdiction Issue
From that eight-step application of the authorities, the judge communicated his train of thought to navigate this type of dispute. However, he was required to take one step further and determine if there is an exception to the rule in Bresco and the adjudicator could make the monetary award to the responding party pursuant to the notified sum defence.
Firstly, the court considered Paragraph 20(b) of the Scheme which states that an adjudicator may decide any of the parties to the dispute is liable to make a payment under the contract. However, the judge found that this provision does not “confer upon [the adjudicator] the power to order payment to a Responding Party.”
The court then considered WRW Construction Limited v Datblygau Davies Developments Limited [2020] EWHC 1965 (TCC). Here, even though the court found that the adjudicator did not have jurisdiction to order a sum to be paid to the responding party, on the basis of a valid, binding valuation, a court’s enforcement of that award can include an order for payment of the sum due.
The judge found the WRW reasoning persuasive and decided that this case was an exception to the approach in Bresco. He said that “where there is a determination that a particular sum is immediately due to a Respondent, different considerations apply.” The judge agreed it would be an “arid exercise” to require VMA to commence another adjudication to recover a sum which has already been determined to be due to them. Further, he stated it would be quite contrary to the policy of the Act and the Scheme to improve cash flow and encourage the rapid, but temporary, resolution of disputes. He concluded that “this adjudicator did have the jurisdiction to order payment of the sums awarded.”
Conclusion
Although this judgment might seem to be authority that the adjudicator has a wide jurisdiction to go one step further in respect of a debt and award payment to the responding party, the court made it clear that a notified sum defence is an exception to the rule in Bresco that, generally, a cross-claim or set-off advanced by way of defence, does not stand as an “independent claim for a monetary award in favour of the respondent.” As such, it would seem that, generally, the responding party might need to undertake “arid exercises” in pursuit of payment.
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