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On my reading of the recent case of VMA Services Ltd vs Project One London Ltd [2025] EWHC 1815 (TCC) 鈥� and on my reading of the blog by the barrister for Project One Ltd 鈥� I conclude that he is unsurprised by losing on his first point but completely surprised by losing on his second point. Miffed, I think! Useful lesson, though. The first point is the uphill task of bringing a true-valuation adjudication (TVA) when a smash-and-grab adjudication is still unpaid. The second point is the uphill task of bringing an adjudication that results in a counter-claim for money due.

VMA Services Ltd (VMA) took on the M&E subcontract for main contractor Project One Ltd (POL) at Cheyne Walk, Chelsea. The building will provide offices and shops, with new flats above. The contract documents involved JCT Design and Build Subcontract 2016. 

Interim account #8 is when the drama started. The gross valuation by VMA arrived with POL in June 2024. It sought 拢274,259.81 less retention and previous payments, net claim 拢106,434.88. By the time of the final due date for the cash to flow, POL had sent neither a sum due notice nor a pay less notice. 

The pub quiz question is: Now what? The answer is: The 拢106,434.88 must be paid, whether right or wrong. 

Since POL failed to issue a payment due notice or a pay less notice then, by default, VMA鈥檚 application for payment was due. That鈥檚 how adjudication works 鈥� it鈥檚 not litigation or arbitration. It鈥檚 a cash flow device

VMA waited  six months. Then an unusual, if not odd, thing happened. The ostensible payer of the 拢106,434 played a strange hand. It, as payer, started an adjudication. It wanted an adjudicator to carry out what we call a true-value adjudication (TVA) calculation for interim account #8. 

Now, it is ever so well known that only in rare and exceptional circumstances can a TVA go ahead when the payer has failed to send those key notices (the sum due notice or the pay less notice) and failed to pay up. Undaunted, POL鈥檚 referral said the adjudicator was requested to determine the true value was 拢0, rather than 拢106,434. POL was pushing uphill to get a TVA off the ground before paying the 拢106,434.

You might guess that VMA鈥檚 defence was to reject any notion of POL being able to carry out a TVA. VMA just pushed back a tad more by also saying in its defence or response that the adjudicator was invited to order that the 拢106,434  cash sum be paid to VMA.

Counsel for POL pounced on that second point. I suspect he knew the court would reject his client鈥檚 claim that zero pounds was owed instead of 拢106,434. After all, the client had utterly failed to issue any payment notices, making the payer鈥檚 application for payment due by default. But he argued, with some authority, that if the 拢106,434 really was due to be paid by his client, then the adjudicator had no jurisdiction to actually order payment, because it is a separate and independent counter-claim.

The adjudicator鈥檚 approach was to announce that since POL had failed to issue a payment due notice and failed to send a pay less notice then, by default under JCT, VMA鈥檚 application for payment was due and payable in the sum of 拢106,434, and to that extent the adjudicator said: 鈥淚 am not required to embark on the 鈥榯rue value鈥� calculation for the account,鈥� and he ordered payment of the 拢106,434. POL still refused to pay.

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VMA issued papers in the High Court seeking enforcement of the adjudicator鈥檚 decision. POL鈥檚 barrister got to grips; he argued that there was no right to run a defence that is an independent claim for a monetary sum in favour of a defending party in an adjudication. That principle is derived from Bresco vs Michael J Lonsdale, when Lord Briggs dealt with their dispute at the giddy heights of the Supreme Court. Put another way, it means a responding party such as here in VMA will not generally be able to make a monetary recovery arising from an an independent counterclaim.

The judge in the VMA case acknowledged this principle. He said: 鈥淭here will be many cases where the usual Bresco approach will prevail and there will be no jurisdiction to make a monetary award in favour of a respondent. However, where there is a determination that a particular sum is immediately due to a respondent, different considerations apply.鈥� 

He gave an example where the employer sought a true-value determination of the builder鈥檚 final account. The employer said the builder owed a sum to the employer, but it turned out to be the opposite. The counter-claim succeeded, and so the adjudicator ordered the employer to pay the builder the money owed. But the employer went to court and ran the Bresco argument, saying 鈥渘o jurisdiction for recovery of money from the counter-claiming party鈥�. The call for that money would have to be via another adjudication by the putative payee. So the adjudicator鈥檚 decision 鈥� despite it being binding 鈥� was, as it were, stuck in the mud and unenforceable.

The court in VMA said that 鈥渋t would be an arid exercise to require VMA to commence another adjudication to recover the sum which has already been determined to be due to them鈥�, adding 鈥渢hat would be quite contrary to the policy of the [Construction] Act and the Scheme [for Construction Contracts] to improve cash flow and encourage the rapid, but temporary, resolution of disputes鈥�. And, on that basis, VMA was to get its 拢106,434. That shows how adjudication works 鈥� it鈥檚 not litigation or arbitration. It鈥檚 a cash flow device. 

Then the next question in the pub quiz asks: 鈥淐an Project One Ltd now call for a true-valuation adjudication, if it pays 拢106,434?鈥�

Tony Bingham is a barrister and arbitrator at 3 Paper 微密圈s, Temple