Subbie successfully uses smash and grab argument to counterclaim a payment when responding to contractor’s adjudication

• 6 August 2025
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We are all familiar with referring parties using “smash and grab” arguments in adjudication but, as explained below, in VMA Services Limited v Project One London Limited [2025] EWHC 1815 (TCC), the responding party (VMA) successfully used such arguments to obtain payment from the referring party when defending an adjudication. 

VMA was employed by Project One under a sub-contract order incorporating the JCT D&B Sub-Contract 2016.  In June 2024, VMA submitted a payment application in which it valued its works at £274k and sought payment of £106k.  In response, Project One issued neither a payment notice nor a payless notice, in time or at all.  Subsequently, in December 2024, Project One started an adjudication in which it asked the adjudicator to decide that the true value of VMA’s works was £85k. 

However, VMA argued, and the adjudicator decided, that:

• VMA had submitted a valid payment application, and no payment or payless notice was issued; 
• the payment application set out the notified sum of £106k to which VMA was entitled; and 
• therefore, the adjudicator was not required to decide the true value of the works as there was an immediate payment obligation on Project One. 

VMA subsequently commenced proceedings to enforce the adjudicator’s decision and obtain payment of the £106k plus interest from Project One. 

The court agreed that the payer (Project One in this case) is obliged to pay the notified sum unless it has issued a valid payment or payless notice, and then went on to consider the relevant authorities to establish whether the adjudicator had exceeded its jurisdiction in making its decision.

The court noted the critical principle that the entitlement to commence a true value adjudication under s.108 of the HGCRA 1996 (as amended) is subjugated to the immediate payment obligation in s.111, whether or not the unpaid party has first obtained an adjudication award in its favour. 

The court held that, although “a responding party will not generally be able to make a monetary recovery arising from its defence and counterclaim” and set-off may not be advanced as an independent claim for a monetary award, different considerations apply where the adjudicator has made a determination that a particular sum (i.e. the notified sum) is immediately due to a responding party.  Those considerations are that it would be an arid exercise, and contrary to policy, principle, and authority for VMA to have to commence an adjudication to recover a sum which has already been determined to be due to it.  As such, the court held that the adjudicator did have jurisdiction to order payment of the notified sum. 

It bears note that this case considers a situation where the sum counterclaimed is a notified sum. Therefore, given the court’s approach here, it is uncertain that an adjudicator would be found to have jurisdiction to order payment to the responding party where its defence is not based on the notified sum having been ascertained because of the absence of timely notices.  Nevertheless, this is yet another case that emphasises the importance of valid payment and payless notices, and it will be an important one to bear in mind for paying parties who are considering a true value adjudication without having served the correct notices: the main contractor here wasn’t safe from a “smash and grab” even though it was the main contractor that had commenced the adjudication 6 months after the subcontractor’s payment application.