Adjudication Case Law Update 2025: Part 3
In Part 3 of our 2025 Court Decision Summaries, Kenneth Salmon MCIArb, consultant solicitor to Slater Heelis Limited and Kuits LLP, summarises recent court decisions concerning the enforcement of adjudicators' Awards under the Housing Grants, Construction and Regeneration Act 1996.
This issue highlights the application of the Act to a settlement agreement, the power of an adjudicator to award payment to a responding party, and the latest case in which the residential occupier exception was considered, and where there was an attempt to overturn the adjudicator’s decision regarding fee payment.
In Part 3
Jurisdiction – right to adjudicate under a settlement agreement and whether settlement agreement was a construction contract or a variation of the original construction contract
London Eco Homes Ltd v Raise Now Ealing Ltd [2025] EWHC 1501 (TCC) District Judge Baldwin (judgment 25 March 2025)
Jurisdiction - power to award payment to a responding party
VMA Services Ltd v Project One London Ltd [2025] EWHC 1815 (TCC) Adrian Williamson KC (judgment 18 July 2025)
Jurisdiction – application of residential occupier exception and overturning adjudicator’s order as to fees
RBH Building Contractors Ltd v Ashley James and Tracy James [2025] EWHC 2005 (TCC) Neil Moody KC (judgment 10 June 2025)
Legislation
The ‘Act’ means the Housing Grants, Construction and Regeneration Act 1996, as amended by the Local Democracy, Economic Development and Construction Act 2009 Part 8. The ‘new’ provisions apply to contracts entered into on or after 1 October 2011. The Act applies to England and Wales, Scotland and Northern Ireland.
The main regulations are contained in the Scheme for Construction Contracts (England and Wales) Regulations 1998 (the ‘Principal Regulations’). [1] They have been amended by the Scheme for Construction Contracts (England and Wales) (Amendment) (England) Regulations 2011 [2] (the ‘new Regulations’). The new Regulations apply only to contracts for construction operations in England entered into on or after 1 October 2011.
For earlier contracts, the Principal Regulations apply. Northern Ireland has its own scheme: the Scheme for Construction Contracts in Northern Ireland 1999, as amended by the Scheme for Construction Contracts in Northern Ireland (Amendment) Regulations (Northern Ireland) 2012. The Northern Ireland Scheme is broadly similar to that in force in England and Wales.
There are separate regulations for contracts for work in Scotland, applicable to contracts made on or after 1 November 2011. [3] The new regulations apply only to contracts for work in Scotland entered into on or after this date. For earlier contracts, the Scheme for Construction Contracts (Scotland) Regulations 1998 [4] applies. There are new separate regulations for Wales, applicable to contracts for construction operations in Wales entered into on or after 1 October 2011. [5]
A reference to ‘the Scheme’ is to the Principal Regulations for England and Wales, or the Scheme for Scotland, Wales or Northern Ireland, as the context requires.
Summary
Jurisdiction – right to adjudicate under a settlement agreement whether a settlement agreement was a construction contract or a variation of the original construction contract
London Eco Homes Ltd v Raise Now Ealing Ltd [2025] EWHC 1501 (TCC) District Judge Baldwin (judgment 25 March 2025)
The settlement agreement related to construction operations and ‘other matters’ and therefore s.104(5) of the Act applied. Since the dispute arose out of the ‘other matters’ the implied provision for adjudication didn’t enable the dispute to be referred to adjudication. However, having regard to its terms and purpose, the settlement agreement was a variation of the original joint contracts tribunal (JCT) construction contract, which contained adjudication provisions. It preserved the right to adjudicate any dispute arising under the settlement agreement.
Jurisdiction – power to award payment to a responding party
VMA Services Ltd v Project One London Ltd [2025] EWHC 1815 (TCC) Adrian Williamson KC (judgment 18 July 2025)
In a true value adjudication commenced by a contractor, the adjudicator found the responding sub-contractor entitled to payment of what he decided was the notified sum. The court enforced the decision, finding that it had power to order payment of a sum that the adjudicator determined was due.
Jurisdiction – application of residential occupier exception and overturning adjudicator’s order as to fees
RBH Building Contractors Ltd v Ashley James and Tracy James [2025] EWHC 2005 (TCC) Neil Moody KC (judgment 10 June 2025)
On the facts and the evidence, the defendants had a prospect of succeeding in their defence that they had the intention, at the time the contract for construction of a dwelling house was made, of residing in the house, so that the residential occupier in s106 of the Act applied. This was so, despite such intention being in breach of the terms of an undertaking in an agreement with a lender to fund the construction works - and despite the fact the parties later changed their minds and decided to rent, then later sell the house, when completed.
It was sufficient that one of the parties acting as employer under the (oral) construction contract was an individual, while the other party was a development company. In the result, the adjudicator had lacked jurisdiction, and the award could not be enforced.
The court found that the pay less notice given by the defendants was valid. It stated the sum due as ‘nil’, set out the way in which the sum was calculated to arrive at nil, and, in accordance with case law, could be understood by the parties and provided ‘an agenda for trial’. Following a decision in a Scottish case, the court also decided that it had no power to overturn the adjudicator’s award of fees, even though the result of the adjudication could not stand.
Court decision summaries in full
Jurisdiction – right to adjudicate under a settlement agreement and whether settlement agreement was a construction contract or a variation of the original construction contract
London Eco Homes Ltd v Raise Now Ealing Ltd [2025] EWHC 1501 (TCC) District Judge Baldwin (judgment 25 March 2025)
The defendant (RNE) hired the claimant (Eco) to carry out construction works under a JCT intermediate contract with contractor’s design (‘the Contract’). The Contract contained an express term entitling either party to refer any dispute ‘under the contract’ to adjudication. Various disputes arose which the parties agreed to resolve under the terms of a settlement agreement.
The settlement agreement provided for the termination of the Contract under its termination provisions, the agreement of the final account, and the payment of an agreed sum by RNE to Eco by instalments under a payment schedule. Eco agreed to procure a warranty and, if necessary, to carry out further works to facilitate the procurement of the warranty. The terms were expressed to be in full and final settlement of all claims under the Contract and there was an ‘entire agreement’ clause.
RNE did not make payment as agreed and Eco started adjudication proceedings to enforce the terms of the settlement agreement. RNE challenged the jurisdiction of the adjudicator on the grounds that the settlement agreement was not a construction contract and contained no right of adjudication. They also raised a defence that the payment was not due as Eco had failed to procure the warranty. However, they later accepted that payment was due subject to the jurisdiction argument. The adjudicator decided there was jurisdiction and ordered RNE to pay the sum claimed.
RNE did not make payment and Eco started proceedings in court and applied for summary judgment. RNE appeared by a Director and Eco by Counsel, and the application was heard in March by District Judge John Baldwin.
The Judge declined to consider a claim that the adjudication decision was procured by fraud, which was only raised by RNE for the first time late in the hearing and was unsupported by any evidence. Eco relied on two alternative ways in which the adjudicator would have had jurisdiction.
Was the settlement agreement a ‘construction contract’ carrying a right of adjudication?
Eco contended that as the settlement agreement provided for the carrying out of ‘construction operations’ it was a ‘construction contract’ within the meaning of the Act, with an implied right to refer any dispute to adjudication. The Judge found that the settlement agreement did provide for the carrying out of construction operations. But it also provided for other matters, such as the termination of the Contract, settlement of the final account, a varied payment plan and the provision of a warranty. It therefore fell within the scope of s.104(5) of the Act, which states: ‘Where an agreement relates to construction operations and other matters, this Part applies to it only so far as it relates to construction operations.’
As the dispute related to one of the ‘other matters’ and not to the ‘construction operations’, it was not subject to Part II and there was no right of adjudication under the settlement agreement.
Did the settlement agreement preserve the right of adjudication under the Contract?
The settlement agreement contained no adjudication clause and neither did it preserve any such rights under the Contract. The question was whether it was a stand-alone agreement (as RNE contended) or a variation of the Contract (as Eco argued).
The Judge reviewed the provisions of the settlement agreement and had regard to the adjudication and arbitration provisions of the Contract, noting the difference in the wording of the two alternative dispute resolution (ADR) provisions. In the case of the former, it applied to any dispute ‘under the contract’, while the latter applied to any dispute ‘arising out of or in connection with’ the Contract.
It was not necessary to take the broad view that the adjudication provision was to be regarded as being as wide as the arbitration provision nor to have regard to commercial logic in construing the use of the provision. The question was whether the dispute could be said to be one under a variation of the original Contract, as Eco contended.
The Judge concluded that the settlement agreement was a variation of the Contract because:
- The Contract contained a mechanism for the termination by the employer on the grounds of the contractor’s default;
- Termination required a default notice and termination notice which, under the settlement agreement, were deemed to have been given and accepted in accordance with the JCT terms;
- The settlement agreement went on to vary the original mechanism for determining the final sum due and that it was ‘in full and final settlement of the final account in relation to the project and the JCT contract, and all claims that may have existed prior to and after this agreement’.
The only way that clause could be read to make commercial sense was that the settlement agreement as a whole was an agreement for the termination of the Contract, not in substitution of it. To achieve this, the Judge went on to imply into the entire agreement clause the words ‘termination of the’ before ‘JCT contract and project’, to make clear that the settlement agreement related to the termination of the JCT contract and project.
Comment
The effect of the agreement clause is of some interest. The judgment doesn’t record whether the implication of the additional words into the clause was something urged by the counsel for the claimant or argued in submissions. One might wonder whether the outcome have been the same but for the limiting effect of the implication.
The use of these agreement clauses can’t be taken as a sufficient means of excluding certain provisions from original or underlying contracts. To the extent the law permits, and assuming that a settlement agreement is not of itself a construction contract, parties should consider whether they wish to exclude provisions from the original contract like adjudication or other ADR clauses, or to provide for their inclusion.
Jurisdiction – power to award payment to a responding party
VMA Services Ltd v Project One London Ltd [2025] EWHC 1815 (TCC) Adrian Williamson KC (judgment 18 July 2025)
The Claimant (VMA) sought summary judgment to enforce the decision made in its favour in an adjudication. The adjudicator had decided that he could not entertain a true value adjudication (TVA) brought by the defendant (POL) because POL had not paid a notified sum and that VMA should be awarded that sum (‘the Notified Sum’). The question for the court was whether the adjudicator had jurisdiction to make this award in favour of VMA, as the respondent to the adjudication.
The claims arose out of a sub-contract order given by POL to VMA for mechanical and electrical works at a premises in London. The sub-contract incorporated the JCT Design and Build Sub-Contract Agreement and Conditions 2016 containing what the Judge described as the ‘usual payment provisions’ complying with the Act and the Scheme. VMA made an application for payment for a net sum of £106,434.88 (AFP8). POL did not pay the sum and gave no payment or pay less notice. Instead, POL started the TVA.
By way of defence, VMA relied on settled law as preventing POL from starting or maintaining a TVA unless and until it had paid the Notified Sum. They said the adjudicator had jurisdiction to order POL to make payment of the Notified Sum. The adjudicator found that:
- AFP8 was a valid payment application
- There was no payment or pay less notice
- The net sum claimed under AFP8 was the Notified Sum
- He could not entertain the TVA because the Notified Sum had not been paid
- He could order POL to pay the Notified Sum to VMA
The court referred to the well-established principles laid out by Justice Finola O'Farrell, Judge in Bexheat Ltd v Essex Services Group Ltd , [6] noting: ‘unless and until an employer has complied with its immediate payment obligation under s.111, it is not entitled to commence, or rely on, a true value adjudication under s.108.’
The court noted that while a responding party could raise any defence available, including cross-claims by way of set-off, and while an adjudicator could make a declaration as to any sum which was found due to it, a responding party would not be able to make a monetary recovery on its set-off and counterclaim. This restriction was explained by Lord Briggs in Bresco [7]: the ‘set-off may be advanced by way of defence to the exclusion of the claim referred to adjudication, but not as an independent claim for a monetary award in favour of the respondent to the reference.’
Here, VMA relied on the judgment of Andrew Singer KC, in WRW Construction Limited v Datblygau Davies Developments (DDD) Limited [8], where the referring party, DDD, sought determination from an adjudicator of a post-determination final account. In its response, WRW argued the account should be determined as a sum due in their favour. The adjudicator agreed and ordered a sum be paid to WRW. WRW was successful in obtaining summary judgment of the sum due.
The Judge held:
‘18 - I accept that the adjudicator did not have jurisdiction to award a monetary sum to the Claimant as the responding party to the adjudication. However, in my judgment, it is not the relevant issue, nor was it an issue which arose for determination in Harrington or Bresco. The issue before me is whether on the basis of a valid, binding valuation of the post-termination account, a court's enforcement of that valid award can include an order for payment of the sum due as a consequence of the binding valuation, or not.
19 - In my judgment, there is no bar on the basis of the authorities cited to me to the court enforcing a temporarily binding valuation in an adjudication award by making an order for payment of the monies due as a result of that valuation. Indeed, in my judgment it would be contrary to principle and established authority for the court to effectively force a party who has the benefit of an award in its favour as far as a balance being due to it, to have to commence a further adjudication (to which there is no defence) for the purpose of obtaining an order for payment from the adjudicator before returning to the court if necessary, for further enforcement proceedings.
20 - In my judgment, the submission that a further adjudication award is required is not supported by the authorities’.
The court found this persuasive in the circumstances of the present case where the adjudicator found that the Notified Sum was due. The court allowed that in many cases the rationale in Bresco ‘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.’
The court was fortified in this approach by paragraph 23(2) of the Scheme, which states that ‘the decision of the adjudicator shall be binding on the parties, and they shall comply with it until the dispute is finally determined.’ The adjudicator decided that the Notified Sum was due to VMA, and both parties were bound to comply. It would be an arid exercise to require VMA to start another adjudication to recover a sum already determined to be due to them, and quite contrary to the policy of the Act and the Scheme.
Other issues raised by POL were dismissed by the Judge as an attempt to comb through the reasons to identify points which might be used to challenge the decision – a practice long since deprecated. The adjudicator had considered the issues, and each party had commented on them at length. The adjudicator had acted within their jurisdiction, finding that the sum due to VMA was enforceable.
Comment
As in the case of WRW, a distinction appears to be drawn between the power of an adjudicator to order payment of a sum of money to a responding party on the one hand, and the power of the court to order payment to be made to give effect to an adjudicator’s decision, whether it be expressed as a declaration as to a sum due or a finding and order for payment. It may even be possible for the court to go one stage further and order such payment when that is the unarguable effect of the adjudicator’s findings.
Jurisdiction – application of residential occupier exception and overturning adjudicator’s order as to fees
RBH Building Contractors Ltd v Ashley James and Tracy James [2025] EWHC 2005 (TCC) Neil Moody KC (judgment 10 June 2025)
This was a case about the construction of a house by the claimant contractor (RBH) on a site owned by one of the defendants (Mrs James) and which the defendants (Mr and Mrs James) claimed they intended to occupy on its completion. There were two applications before the court: one by RBH for summary judgment to enforce the decision of an adjudicator, and Mr and Mrs James’ application for declarations under Part 8 of the Civil Procedure Rules (CPR).
Mr and Mrs James resisted summary judgment on the footing that the contract was a construction contract with a residential occupier, such that, pursuant to s106 of the Act, the statutory scheme of adjudication was inapplicable – meaning the adjudicator had no jurisdiction to determine the dispute between the parties. Mr and Mrs James sought declarations pursuant to CPR Part 8 to the effect that their payless notice was valid (contrary to the finding of the adjudicator). If successful, Mr and Mrs James would ask the court to reverse the adjudicator's order as to payment of fees.
By agreement, the court ordered the applications should be heard together. The court noted that, in 2019, Mr and Mrs James purchased a property in North Devon with the intention of demolishing and reconstructing it. In January 2022, RBH, whose Managing Director was known to and had worked with them before, was engaged by Mr and Mrs James to provide site and project management services in relation to the construction of a large luxury house on the site. RBH was to be paid a fee to cover costs and overheads and profit for supervision and project management. It was also to engage subcontractors to carry out the works.
The agreement was made orally and was one to which the Scheme would have applied (subject to the point about residential occupation). Work began in January 2022 and ceased around April 2024 after the parties fell out, by which time RBH had been paid just over £1.3 million. In November 2024, a claims consultant acting for RBH served Mr and Mrs James an application for payment of £663,016.16 with a detailed breakdown of costs. On 27 November 2024, Mr and Mrs James responded with what they said was a valid payless notice (PLN). It too gave a breakdown, valuing various claims for invoices and costs and arriving at a figure of ‘Nil’ as the sum due.
The adjudication
RBH started a ‘smash and grab’ adjudication. Mr and Mrs James objected to the adjudicator's jurisdiction on the basis that they were residential occupiers. They said that at the time of the contract, they intended to occupy the property on completion but subsequently changed their minds and decided to rent it out. Then later, they decided to sell it. RBH argued that Mr and Mrs James were property developers who had never occupied nor ever intended to occupy the house. The adjudicator rejected the jurisdictional objection and decided he had jurisdiction. The facts appeared to have been first, that the planning application for the new home included a ticked box for ‘market housing’, and second, the submission of a purported payless notice which was taken as an admission that the statutory scheme applied.
Mr and Mrs James also argued that the payless notice was valid. The adjudicator rejected this argument. The adjudicator decided that RBH was entitled to be paid the sum of £663,016.16, plus interest, and ordered that Mr and Mrs James be responsible for his fees and expenses of £9,000. Mr and Mrs James did not pay any sum.
Enforcement
The court reminded itself of the test for summary judgment set out in Part 24.3 CPR and in case law applicable to adjudication proceedings where a jurisdictional defence was raised [9] noting that in this case the jurisdictional challenge was dependent on fact and evidence and the court had to consider whether, on the evidence before it, Mr and Mrs James had no real prospect of succeeding in their defence.
The Law
The court was referred to multiple reported and unreported cases. In none of these had the occupier exception been held to apply. The leading and most helpful case appeared to be Westfields Construction Ltd v Lewis [10] a decision of Coulson J who noted at paragraph 10 that:
"Section 106 was intended to protect ordinary householders not otherwise concerned with property or construction work, and without the resources of even relatively small contractors, from what was, in 1996, a new and untried system of dispute resolution. In this way, section 106 excluded adjudication in respect of construction works carried out for those who occupied and would continue to occupy as their home the property that was the subject of the works (even if they had to move out when those works were carried out), or who had bought the property and intended to live there when the construction works were completed.’
At paragraph 11, he noted this needed ‘to be approached with common sense: it ought to be plain, on a brief consideration of the facts, whether the employer is or is not a residential occupier within the terms of the exception.’ At paragraph 6, Coulson J, referring to his own earlier decision [11] concluded that, in relation to intention to occupy, ‘what mattered was the employer's intention at the time of the formation of the contract’ which the court agreed ‘must be right’.
A ‘substantial body of evidence’ was put before the court (much more than was available to the adjudicator) as to Mr and Mrs James’ intentions both at the time of the contract and subsequently. The facts were that Mr and Mrs James purchased the property in 2019. They planned to construct a new home on the site to reside in. It was the culmination of years of planning after they decided to move from Essex to Devon. They paid an additional 3% stamp duty surcharge for a second residential property. They sold their house in Essex and moved to Devon and reclaimed the additional stamp duty surcharge.
They now owned one house and lived in a caravan on the site during construction. They registered with the local GP and were put on the electoral register. The property was designed to Mr James' personal specification. While they said that, at the time of the contract, they intended to live in the property, they did accept that it was always their intention they would let the property out during holiday periods – about 13 weeks of the year – to repay the financing of the property. The project’s architect, David Plant, who had known Mr and Mrs James for years, had provided a witness statement confirming that they intended to live in the property.
RBH relied on several points:
- Mr and Mrs James did not occupy the property at the date of the contract and never occupied it and had since admitted that they did not intend to occupy it in the future.
- Mr James was a property developer.
- One of the two owners of the property was a limited development company. Therefore, it could not be a residential occupier, and it was not sufficient that one of two co-owners intended to occupy the property.
- Any intention to occupy was conditional upon repayment of the loan – that was not a sufficient intention to satisfy s106.
- They intended to rent it out for 25% of the year – that meant it was not ‘principally’ occupied as a residence.
- The planning document referred to the property as being for ‘market sale’ as opposed to ‘self-build’, demonstrating the property was intended to be sold.
The court did not agree that any or all of these features prevented the James’ from being residential occupiers for the purposes of s106. The court applied Coulson’s ‘common sense’ approach. As to the meaning of the word ‘principally’ in s106, the court found it was being construed out of context and a let for 13 weeks a year would not take it outside the Section.
The court said that RBH was ‘on firmer ground’ in referring to the terms of the development loan which enabled Mr and Mrs James to finance the development of the property and in which they agreed not to occupy the property as a residence. However, the court held that this did not make any occupation unlawful (as had been held to be the case where occupation was in breach of statutory planning rules). If anything, this put Mr and Mrs James in breach of contract – a civil matter which did not make occupation ‘unlawful’.
Finally, RBH relied on various documents which identified Mr James' property company, Trilogy, as the client. The court accepted that the loan documents and the Trilogy documents required explanation and raised the possibility that the house was being constructed as a development for onward sale. But in the judgment of the court, this was ‘part of the picture’ and had to be set against the James' own evidence, which, if accepted, would be determinative of the s106 point.
The court could not decide which evidence to accept on a summary basis. Looking at the evidence overall, Mr and Mrs James surmounted the Part 24 test. They had a real prospect of establishing that the residential occupier exception in s106 was engaged. In that event, it was common ground that the adjudicator would not have had jurisdiction. The court declined to enforce the adjudicator's decision and dismissed the application for summary judgment.
The PLN
The court determined that the PLN was valid.
Adjudicator’s fees
The court agreed with and followed the Scottish case of Castle Inns (Stirling) Ltd v Clark Contracts, [12] holding that there was no power to reverse or overrule the adjudicator’s order as to the allocation and payment of their fees for the reasons given in that case by Lord Drummond Young, which had not been departed from in previous English cases.
[1] Scheme for Construction Contracts (England & Wales) Regulations 1998 (SI 1998/649).
[2] Scheme for Construction Contracts (England & Wales) (Amendment) (England) Regulations 2011 (SI 2011/2333).
[3] Scheme for Construction Contracts (Scotland) Amendment Regulations 2011 (SI 2011/371).
[4] Scheme for Construction Contracts (Scotland) Regulations 1998 (SI 1998/687) (S.34).
[5] Scheme for Construction Contracts (England and Wales) Regulations 1998 (Amendment) (Wales) Regulations 2011 (SI 2011/1715) (W.194).
[6] [2022] EWHC 936 (TCC)
[7] Bresco Electrical Services Ltd (in liq) v Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25, (2020) 190 ConLR 1
[8] [2020] EWHC 1965 (TCC).
[9] Akenhead J in Estor Ltd v Multifit (UK) Ltd [2009] EWHC 2108
[10] [2013] EWHC 376
[11] Shaw v Massey Foundations Piling Ltd [2009] EWHC 493 (TCC))
[12] [2005] Scot CS CSOH 178
Kenneth Salmon MCIArb is a qualified solicitor in England, Wales and Eire. He is a Ciarb qualified and practising Mediator and Chair of Education at Ciarb North West Branch. Kenneth is a construction specialist currently working as a consultant to Slater Heelis Limited and Kuits LLP. He has extensive experience of all forms of dispute resolution including arbitration, adjudication, expert determination and mediation.
He is the author of Cases on the Enforcement of Construction Adjudication Awards (2012) and the series Cases (on adjudication enforcement) published in Ciarb’s academic journal Arbitration: The International Journal of Arbitration, Mediation and Dispute Management 1999-2017 and as now published in Ciarb’s newsletter from 2018 to present.
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Other articles by Ken:
Adjudication Case Law Update 2025: Part 1
Adjudication Case Law Update 2025: Part 2
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