This is a case examining issues around ‘smash and grab’ (or ‘technical’) and ‘true value’ adjudication. In the following article, Natalie Warren examines the case of VMA Services Ltd v Project One London Ltd [2025] EWHC 1815 (TCC) (18 July 2025).
In a recent decision the Technology and Construction Court (TCC) decided that a ‘smash and grab’ adjudication can be argued in defence of a true value adjudication despite the smash and grab never having been commenced. This case is an excellent demonstration of the TCC prioritising the original aims of adjudication to ensure money moves through the industry. It highlights the fundamental importance of the obligation to pay.
The Facts
VMA Services Limited entered a contract with Project One London Ltd on 16 October 2023 which was in the form of Project One’s Sub-Contract Order. The agreement incorporated the JCT Design and Build Sub-Contract Agreement Conditions 2016. The works were the design and installation of mechanical works at properties in London. As you might expect, the contract provided for interim payments.
VMA submitted its payment application 8 in the amount of £274,259.81on 21 June 2024 with a net valuation of £260,546.83. This left a payment due of £106,434.88 after the deduction of sums previously paid.
Neither a payment notice, nor a payless notice was issued by Project One.
On 16 December 2024, Project One referred a dispute concerning the true value of the works to adjudication. The adjudication ran throughout January with both parties submitting documents required of the process. On 7 January 2025, VMA submitted its Response relying on Project One’s failure to certify or pay Application 8 for the period up to 30 June 2024. VMA argued that Project One should not be permitted to bring/continue to seek a true value determination in light of the non-payment of the earlier payment application.
The Adjudication
The adjudicator set about assessing whether in fact application 8 had been a valid application and whether the sum of £106,434.88 had become the notified sum. The adjudicator asked the following questions:
“2.1.1 Issue 1-Has VMA provided a valid Application for Payment which is compliant with the Contract and/or the Act and the Scheme?
2.1.2 Issue 2 – If VMA’s Application for Payment is valid, has [Project One] issued a valid Payment Notice and/or Pay Less Notice?
2.1.3 Issue 3- If VMA’s Application for Payment is valid, and [Project One] has not issued a valid Payment Notice and/or Pay Less Notice, then what sum (if any) is due as the notified sum?
2.1.4 Issue 4 – If VMA is entitled to the notified sum, what interest and compensation (if any) is VMA entitled to pursuant to the Late Payment of Commercial Debts (Interest) Act 1998?
2.1.5 Issue 5 – If the notified sum (“Smash and Grab”) is not successful, then what is the gross value of the Works up to and including 30 June 2024, and therefore, the net sum less previous payment and retention?
2.1.6 Issue 6 – If there has been an overpayment by POL, is POL entitled to repayment of such sum (if any) that has been overpaid?
2.1.7 Issue 7 – Which Party is responsible for paying the Adjudicator’s fees and expenses?”
The adjudicator concluded that the application for payment was valid (issue1) and that no payment notice or payless notice was issued (issue 2). The adjudicator decided that the sum of £106,434.88 became the notified sum (issue 3).
It is clear that the adjudicator considered he only needed to undertake an assessment of the true value of the works if the smash and grab alleged by VMA was not successful (issue 5).
To be clear, the smash and grab adjudication had never actually been commenced by VMA.
The Adjudicator’s Decision
The adjudicator decided the smash and grab was successful and acted as a full defence to Project One’s true value adjudication. Therefore he asserted he did not need to undertake an assessment of the true value of the works, stating:
“4.6.4 Therefore, having found that the notified sum is successful in this adjudication as a defence, I am not required to embark on the true value of the Works as the immediate payment obligation is required to be made by POL to VMA.
4.6.5 Accordingly, I find that the notified sum is successful in this adjudication, and I am not required to embark on the true value of the Works as the immediate payment obligation is required.”
The adjudicator went further and awarded the notified sum and interest to VMA. Payment was to be made, “forthwith”.
Legal principles
The case progressed to the TCC whereupon the court set out the applicable legal principles as follows:
- The principle of subjugation is that the right to adjudicate under s108 of the amended HGCRA is secondary to the statutory right to immediate payment of the notified sum. This is defined under s 111 of the amended HGCRA as decided in Bexheat Ltd v Essex Services Group Ltd [2022] EWHC 936 (TCC).
- The court further relied upon AM Construction v The Darul Amaan Trust [2022] EWHC 1478 (TCC) (paras 102-106) which held that the principle of subjugation applies whether or not the contractor has first obtained an adjudication award in its favour.
- The court concluded VMA could raise the smash and grab in its defence in accordance with the principle that a party may raise any matter by way of counterclaim and defence and this is not referring more than one dispute as held in Global Switch Estates 1 Limited v Sudlows Limited [2020] EWHC 3314 (TCC).
- The court relied upon WRW Construction Limited v Datblygau Davies Developments Limited [2020] EWHC 1965 (TCC)to deviate from the principle of Bresco Electrical Services Ltd (in liq) v Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25, (2020) 190 ConLR 1 that the responding party will not generally be able to make a monetary recovery arising from its defence and counterclaim stating:
“There 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.”
In summary, the court held that the adjudicator was within his jurisdiction to award a payment to VMA as the responding party. This is because the right to immediate payment overrode the right to refer a dispute to adjudication. It was irrelevant that VMA had not actually obtained that award. VMA was perfectly entitled to raise the smash and grab defence and could obtain a monetary amount award. The court considered it was contrary to the policy of the Act and the Scheme to make VMA actually issue a smash and grab adjudication.
Commentary
- A party can rely on a smash and grab defence to a true value adjudication.
- It is not necessary to have actually made a smash and grab referral or received a decision in order to rely upon it as a defence to a true value adjudication.
- An outstanding notified sum will take precedence over any other claim or dispute.
- This case demonstrates adjudication working exactly as it was intended to and the TCC enforcement procedure seeking to enforce an adjudicator’s decision.
- There are very few reasons why an adjudicator’s decision will not be enforced at the TCC.
- The case provides an excellent summary of the principles and applicable case law on both smash and grab and true value adjudications.
- This case gives effect to the intention and policy of the HGCRA and the Scheme to move money through the industry and a legitimate claim following non-payment was not defeated by technicality or process.
Should you have any questions or need help with anything arising out of this article, get in touch with Natalie or one of team today.
