Welcome to the August 2025 edition of Adjudication Matters, where we discuss the latest key developments in adjudication.
In this month’s bulletin we look at:
- The importance of clarifying jurisdiction in the building contract and preserving your jurisdictional challenges when they arise
- What makes a Pay Less Notice Valid?
- Can an adjudicator award payment to a responding party?
1. The importance of clarifying jurisdiction in the building contract and preserving your jurisdictional challenges when they arise
APEX AR HOUSE Ltd v Adston UK Ltd [2025] WLUK 412 [ex tempore judgement]
Factual Background
APEX AR HOUSE Ltd (Apex) and Adston UK Ltd (Adston) entered into an amended JCT Design & Build Contract 2016 edition in 2020 for the construction of apartments in London (the Building Contract).
Eight adjudications arose out of the Building Contract. The first adjudication secured a victory for Adston (Decision 1), and Adston initiated enforcement proceedings in Northern Ireland to enforce that decision. Apex sought to resist the enforcement by challenging the jurisdiction of Northern Ireland as a venue to enforce the decision.
In 2024, the parties agreed a timetable for Apex to serve a summons to challenge the jurisdiction of the Northern Ireland Court. However, within this time Apex also made payment of the sum that was awarded in Decision 1. This only left the issue of costs (for the enforcement action) to be determined, but Apex took no further action with respect to Decision 1.
Subsequently, a third adjudication also concluded with a decision in Adston’s favour (Decision 3), and once again Adston sought enforcement of Decision 3 in the courts of Northern Ireland. Apex responded to these proceedings by entering a conditional appearance and therefore continued to protest the jurisdiction of Northern Ireland. In November 2024 an order by consent was made by the Northern Ireland Court in favour of Adston for Decision 3.
Shortly before the conclusion to Decision 3, a fourth adjudication was initiated and concluded with a decision in favour of Apex (Decision 4). Adson quickly sought a declaration in the courts of Northern Ireland challenging Decision 4, and once again Apex entered a conditional appearance. No further steps were taken by Apex in protest to the jurisdiction of the Northern Ireland Court. Instead, Apex sought to enforce Decision 4 in the English High Court.
Judgment
The parties agreed that the English Court had jurisdiction over the dispute owing to the application of the Civil Jurisdiction and Judgements Act 1982 Schedule 4 (Apex are registered in England and Adston in Northern Ireland, and the place of performance was England). However, it was recognised that it was inherently undesirable that proceedings that related to the same subject matter (i.e. Decision 4) should be before both courts concurrently.
It was therefore determined that Adston could proceed with their declaratory proceedings in Northern Ireland, and Apex could challenge the jurisdiction of the Northern Ireland Court. If Apex was successful in challenging jurisdiction, then the threat of any stay in the English Court could be lifted and Apex could continue with its enforcement proceedings.
For one reason or another, however, Apex dithered and didn’t robustly pursue their challenge to the jurisdiction of the Northern Ireland Court. Owing to this, Adston’s application to stay the English Court proceedings was granted
Takeaway Points
The back and forth in this case demonstrates the time and costs that can be wasted by parties where jurisdiction isn’t clear. Parties must make sure at the outset that their building contract clearly identifies both the governing law and the governing jurisdiction that will apply in the event of a dispute arising. The need for clarity in respect of jurisdiction is amplified in circumstances where the Parties aren’t domiciled in the same country.
It is also important that, when a Party becomes aware of a possible jurisdiction issue, they raise this issue at the earliest opportunity and see that challenge through. If a Party fails to do so, then they could be considered to have waived their right to rely on that jurisdiction issue, or could be determined to have submitted to the jurisdiction that they are challenging.
In this way, Parties should keep in mind that you can shed a jurisdiction challenge at any time but once withdrawn (or seen to be withdrawn), you will not be able to resurrect it (and that should feed into your overall strategy).
2. What makes a Pay Less Notice Valid?
RBH Building Contractors Ltd v Ashley & Tracy James [2025] EWHC 2005 (TCC)
Factual Background
RBH Building Contractors Ltd (“RBH“) was engaged by Mr and Mr James to manage the construction of a luxury home in Devon. Following a breakdown in relations, RBH submitted a payment application for £663,016.16. Mr and Mrs James responded with a letter (“the Letter“) disputing the claim, which they asserted was a valid pay less notice under the Housing Grants, Construction and Regeneration Act 1996 (as amended) (“the Construction Act“).
RBH commenced a “smash and grab” adjudication on the basis that the sum claimed in the payment application was the notified sum and was due because there was no valid pay less notice. The adjudicator found in favour of RBH, ordering payment of £663,016.16 plus interest and the adjudicator’s fees. When no payment was made, RBH applied for summary judgment to enforce the adjudicator’s decision.
In response, Mr and Mrs James issued a Part 8 claim, seeking declarations that:
- The adjudicator lacked jurisdiction because the contract was with a residential occupier, falling within the exception under section 106 of the Construction Act; and/or
- Their Letter constituted a valid pay less notice.
Judgment
The court dismissed RBH’s application for summary judgment and upheld Mr and Mrs James Part 8 claim, holding that Mr and Mrs James had a real prospect of establishing that the section 106 residential occupier exception applied – meaning the adjudicator may have lacked jurisdiction. The court found that the Letter was a valid pay less notice, leaving RBH with no entitlement to the sums claimed. On the issue of fees, the judge decided that he lacked jurisdiction to interfere with the adjudicator’s decision so the adjudicator’s direction that Mr & Mrs James pay their fees should be complied with.
(1) Jurisdiction (Residential Occupier Exemption)
Section 106 applies where the construction contract is for a single dwelling which the Employer intends to occupy upon completion of the Works. Here Mr & Mrs James’ position was that they originally intended to occupy the Property and during the course of the Works changed their mind and decided instead to rent out the Property on AirBnB. The judge adopted the approach taken in Westfields Construction Ltd v Lewis, advocating a common-sense interpretation of section 106. It should be readily apparent, based on a straightforward assessment of the facts, whether the Employer qualifies as a residential occupier. Crucially, the intention to occupy must be evaluated at the time the contract is formed, ensuring certainty throughout the project as to whether the statutory adjudication regime applies. Whilst post-contract events may be considered, they are relevant only insofar as they help clarify the parties’ intentions at the time of contracting.
On the facts, the court held that Mr and Mrs James had a real prospect of establishing that they intended to occupy the property as their residence when the contract was entered into, thereby engaging the residential occupier exception under section 106. Factors which persuaded the judge included Mr & Mrs James’ registration with a local GP, entry onto the electoral roll, and the bespoke nature of the design, which reflected Mr James’ personal specifications.
(2) Validity of Pay Less Notice
The court referred to Advance JV v Aniska Limited, which provides a helpful summary of the legal principles governing the content and interpretation of payment and pay less notices under the Construction Act which include:
- Notices must be interpreted objectively, i.e. based on how a reasonable recipient would understand them.
- The purpose of the notice is relevant to its interpretation.
- Courts adopt a common-sense, practical view and are unimpressed by “nice points of textual analysis or arguments which seek to condemn the notice on an artificial or contrived basis.” Provided the notice makes it “tolerably clear” what is being withheld and why, the court will not intervene to find reasons to render it invalid.
- A notice must comply with statutory requirements in both substance and form. It must clearly set out the sum due, the basis on which the sum is calculated, and be “free from ambiguity.”
- The notice should provide an “adequate agenda for an adjudication as to the true value of the works.”
The court found that the Letter satisfied the statutory requirements for a valid pay less notice. It clearly stated the amount due (£0) and set out the reasons for withholding payment, referencing specific items from RBH’s payment application in a series of bullet points. Some of these bullet points cited insufficient supporting evidence or a lack of entitlement to the sums claimed. The judge rejected the argument that the letter needed to include a detailed arithmetical breakdown in order to constitute a valid pay less notice.
(3) Adjudicator’s Fees
Despite overturning the adjudicator’s decision, the court ruled it had no power to alter the adjudicator’s fee allocation, citing consistent case law that such decisions are final. The judge recognised that the principle was well-established and confirmed he would not depart from it unless persuaded it was incorrect, which, in this case, he wasn’t. Accordingly, Mr & Mrs James were required to pay the adjudicator’s fees despite the adjudicator’s Decision not being enforced.
Takeaway Points
The courts favour a practical, common sense interpretation of payment notices and discourage overly technical challenges. A payless notice will be deemed valid if it clearly identifies the sum due and the basis for withholding payment.
The judgment reaffirmed that an adjudicator’s decision regarding liability for fees is final and cannot be revisited in subsequent litigation, even where the substantive award is later overturned.
3. Can an adjudicator award payment to a responding party?
VMA Services Ltd v Project One London Ltd [2025] EWHC 1815 (TCC)
Factual Background
VMA Services Ltd (“VMA”) was engaged by Project One London Ltd (“POL”) under a JCT Design and Build Sub-Contract for mechanical works at a residential development in London. VMA submitted Application for Payment No.8 on 21 June 2024, claiming £106,434.88. POL failed to issue a valid Payment Notice or Pay Less Notice.
POL initiated a “true value” adjudication, challenging the valuation of VMA’s application. In response, VMA argued that POL’s failure to pay the notified sum barred POL from pursuing a true value adjudication. VMA counterclaimed for payment of the notified sum.
The adjudicator agreed with VMA, finding that the application was valid, no valid notices had been served by POL, and the notified sum was due. He declined to assess the true value of the works, concluding that POL’s failure to pay the notified sum precluded it from pursuing a valuation dispute. The adjudicator ordered POL to pay the notified sum plus interest.
POL resisted enforcement, arguing that the adjudicator lacked jurisdiction to award payment in favour of VMA, the responding party to the adjudication.
Judgment
The Court confirmed that whilst adjudicators generally cannot without agreement between the parties’ order payment to a responding party, an exception arises where the adjudicator determines that a notified sum is due under section 111 of the Construction Act.
The judge held that requiring VMA to initiate a second adjudication to recover a notified sum already determined to be due would be contrary to the purpose of the Construction Act and the Scheme which aim to improve cash flow and facilitate swift dispute resolution. The adjudicator was found to have acted fairly, and there was no breach of natural justice or excess jurisdiction.
Takeaway Points
This case is the first judgment where a responding party has sought payment of a notified sum as a defence to a true value adjudication.
This judgment makes clear that:
- a responding party can be awarded payment in adjudication where the adjudicator determines that a notified sum is due under section 111 of the Construction Act;
- The principle of “pay now, argue later” remains a key principle to adjudication under the Construction Act and
- Parties cannot pursue a true value adjudication without first making payment of a due notified sum.
