Own goals in adjudication: beware outstanding notified sums

Construction law aficionados will be well-versed on the interaction between notified sums and true value adjudications: a paying party must pay an outstanding notified sum before starting a true value adjudication.

The principle above was extended further in VMA Services Limited v. Project One London Limited [2025], where the court decided that the referring party in a true value adjudication should pay the responding party an outstanding notified sum.

Our summary of the case and practical takeaways for parties is below.

Background

In October 2023 Project One London Limited engaged VMA Services Limited to design and install mechanical works at a project in London.

On 24 June 2024 VMA submitted its payment application number 8 to Project One for a net sum of around £106k. Project One didn’t issue any notices in response, and neither did it pay the sum claimed by VMA.

In December 2024 Project One started a true value adjudication. The parties made submissions in the adjudication regarding Application 8, including in relation to the adjudicator’s jurisdiction. The adjudicator decided that Project One should pay the outstanding notified sum in Application 8, and declined to decide the true value of VMA’s works as Project One had wanted.

VMA subsequently issued enforcement proceedings. Project One resisted enforcement on the basis that the adjudicator did not have jurisdiction to award a “reverse” payment to VMA, which had been the responding party in the ‘true value’ adjudication that Project One had attempted.

Court’s decision

The court began its decision by reiterating the default legal position:

• A paying party cannot start a true value adjudication without having paid any outstanding notified sum first (Bexheat Ltd v. Essex Services Group Ltd [2022]).
• The above principle even applies where there is no adjudication decision regarding the notified sum (see AM Construction v. The Darul Amaan Trust[2022]).
• A responding party in an adjudication can make a counterclaim to set off a claim, but an adjudicator does not usually have jurisdiction to order a payment to the responding party.

Regarding the jurisdiction issue, the court referred to the decision in WRW Construction Limited v. Datblygau Davies Developments Limited [2020], in which the court enforced an adjudication decision ordering the referring party to pay money to the responding party.

The court followed the decision in this case and stated that, despite the usual position, it should follow the adjudicator’s decision where they decided that a notified sum was due to VMA and the parties were bound by the decision. The court noted that it would be an “arid exercise” to make VMA commence another adjudication decision for an order for payment.

The court therefore decided that the adjudicator had jurisdiction and enforced the decision in VMA’s favour.

Takeaways

This case is another affirmation of the “pay now, argue later” policy underlying the Construction Act. It further enhances the status of notified sums by subverting the usual principle that a responding party cannot recover money in an adjudication.

The case gives rise to some important lessons for parties to adjudications. Payer referring parties should carry out a review for any outstanding notified sums before starting a true value adjudication – otherwise a similar result to that in VMA v. Project One could follow, which essentially ended up with Project One scoring an own goal. Payee responding parties can use any outstanding notified sums to resist jurisdiction or recover the money in the adjudication – the strategy depends on the amount and strength of the notified sum.