Notified sums still shape true value adjudication strategy.
True value adjudication is often described as the route by which a paying party can test the real value of the works. That is correct as far as it goes, but it does not mean the notified-sum regime disappears. A party seeking a true value assessment still has to deal with the consequences of the payment cycle that came before it.
The dispute in VMA Services Ltd v Project One London Ltd arose under a JCT Design and Build Sub-Contract 2016 for mechanical works. VMA submitted an interim payment application and Project One failed to issue a valid payment notice or pay less notice in response. Project One then sought to pursue a true value adjudication, but VMA relied on the unpaid notified sum as part of its response. That made the case commercially important because it showed that true value adjudication strategy cannot be separated from the payment cycle that preceded it.
For contractors, the case is commercially important because it confirms that a true value adjudication does not neutralise earlier payment notice failures. The statutory payment regime continues to matter. If the payer has failed to serve the necessary notice, the dispute may not be only about valuation. It may also be about whether a notified sum has become immediately payable and whether the payer is entitled to move straight to a true value argument without first satisfying that obligation.
Why the case matters
The significance of VMA v Project One lies in the interaction between two familiar principles. The first is that construction contracts are subject to a payment regime designed to support cashflow. Where a valid application is made and the payer fails to serve the correct payment notice or pay less notice in time, the sum applied for may become the notified sum. The second is that a party may, in principle, seek a true value adjudication to test what the works are actually worth.
The commercial difficulty arises when those principles collide. A paying party may want to move quickly to a true value adjudication, particularly if it considers the application overstated. But if it has failed to operate the notice machinery properly, it may first face the consequences of the notified-sum regime. The court’s approach in VMA v Project One reinforces that payment discipline is not bypassed merely because the payer now wants the true value assessed.
That matters to Legalbuild clients because the notified sum can operate as leverage. It may affect the timing of adjudication, the scope of the dispute, the relief available, the enforcement position and the commercial pressure on the parties. A contractor with a strong notified-sum position is not simply arguing about the value of the works. It may be able to say that the payer failed to comply with the payment machinery and that the statutory cashflow consequences must follow.
The notified sum is not procedural background
The notified-sum regime is sometimes treated as technical, but that understates its commercial importance. It is part of the payment architecture that gives construction cashflow its legal force. The issue is not simply whether the payer agrees with the contractor’s valuation. The issue is whether the payer responded to that valuation in the way and within the time required by the contract and the statutory scheme. That distinction is critical. A payer may believe it has strong arguments on true value, defects, contra charges, incomplete work or overvaluation. Those arguments may still matter. But if the payer has not issued the correct notice in time, the immediate payment position may be shaped by notice failure rather than by the payer’s later valuation analysis.
For contractors, this creates an important strategic opportunity, but only where the payment record is clear. The contractor must be able to show the application relied upon, the relevant due date, the final date for payment, the notice deadlines, whether any notice was issued, whether that notice was valid, and what sum became payable. If that chronology is uncertain, the notified-sum leverage may be diluted before it can be used.
True value strategy starts with the payment cycle
The practical lesson is that true value adjudication strategy starts before the adjudication notice is served. It starts with the payment application, the payment notice and the pay less notice. Those documents define the terrain on which any later adjudication is fought. A contractor responding to a true value adjudication should immediately examine whether there is an unpaid notified sum. That review should not be treated as a side issue. It may affect whether the adjudication can proceed in the way the payer wants, whether the contractor has a defence or counter-position, whether payment must be made first, and whether the adjudicator can or should award payment to the responding party. This is why payment administration must be integrated with adjudication strategy. Contractors who administer the payment cycle properly enter a dispute with more options. Contractors who do not may be forced to argue value alone, even where the statutory payment regime could have created a stronger position.
Why the responding party’s position matters
One of the important practical features of VMA v Project One is that the notified-sum point arose in the context of the responding party’s position in a true value adjudication. That is significant because adjudication strategy is often discussed from the perspective of the referring party. In practice, the responding party’s defences, cross-arguments and counter-position can materially affect the outcome.
For contractors, this matters because a true value adjudication brought by a payer should not be accepted at face value as merely a valuation exercise. The contractor should test the procedural foundation of the payer’s position. If the payer failed to pay an earlier notified sum, that failure may affect the adjudication strategy. It may also strengthen the contractor’s position if enforcement later becomes necessary. The wider point is that adjudication is not only about the substantive valuation dispute. It is about sequencing, jurisdiction, notices, payment obligations and the relief that can properly be awarded. The party that understands that structure will usually be better placed than the party that treats adjudication as a standalone valuation battle.
The practical message for contractors
Contractors should not treat payment notices and true value adjudication as separate worlds. The strategy must be built from the payment cycle upwards. That means identifying the application relied upon, checking that it was validly submitted, confirming the due date and final date for payment, reviewing whether the payer served a payment notice or pay less notice, and preserving evidence of service and receipt. The project record should make that analysis straightforward. Each application should be capable of being linked to the relevant payment cycle, the contract mechanism and the payer’s response. If a notice is missing, late, defective or unclear, that should be identified immediately. If a payer then seeks to pursue a true value adjudication, the contractor should already understand whether the notified-sum position affects the payer’s ability to do so.
This discipline is particularly important for subcontractors. In many project chains, subcontractors face cashflow pressure, delayed valuation responses and aggressive payment administration. A properly managed payment record can change the balance of leverage. It can move the dispute from a broad argument about valuation to a more focused question about statutory payment compliance.
Legalbuild’s view
For Legalbuild, VMA v Project Onereinforces a central point: adjudication strategy starts before the notice of adjudication. It starts with the payment application, the payment notice and the pay less notice. Contractors with disciplined payment administration enter adjudication with options. They can rely not only on valuation evidence, but on the structure of the payment regime itself. Contractors without that discipline may be left arguing value alone, even where the payer’s notice failure could have created a stronger cashflow and enforcement position. Payment notices are not procedural background. They are commercial instruments that shape leverage, timing, jurisdiction and recovery. A true value adjudication may test the value of the works, but it does not erase the consequences of a failed payment cycle. Contractors who understand that distinction are better placed to protect cashflow and control adjudication strategy.
Case reference: VMA Services Ltd v Project One London Ltd [2025] EWHC 1815 (TCC).
