‘Smash and grab’ adjudications, which force employers to pay disputed bills to contractors, could be a thing of the past after a Technology and Construction Court (TCC) ruling. The news will be welcomed by construction employers who have often had to wait months or even years for the project and its attendant billing to catch up with the payment.
The so-called ‘smash and grab’ adjudications came into being in 2014 after the payment arrangements created by the Construction Act were interpreted in a court decision, ISG -v- Seevic. This led to contractors quickly taking employers to adjudication where a valid payment or pay-less notice was not received in time, helping the contractor’s cashflow at the expense of the employer.
Now in a new case, the Seevic ruling has been challenged. It involved Grove Developments, who had appointed S&T (UK) to build a new hotel at Heathrow Airport. S&T had issued an interim payment request and subsequently took Grove to adjudication alleging it had failed to issue a valid pay less notice.
In court, Mr Justice Coulson ruled that payments must still be made where valid pay less notices have not been issued. However he went on to comment that following payment, the employer is permitted to raise their own adjudication to consider the correctness of the sum paid. These comments mean that in future, employers may be able to recover any overpayment far quicker, discouraging opportunistic adjudications by contractors.
“This ruling will be welcomed by employers and is likely to greatly reduce the number of smash and grab adjudications,” said James Burgoyne, Director – Claims & Technical, Brunel Professions. “But it may not be the end of the matter as S&T has been granted leave to appeal. Given that Grove clearly contradicts Seevic, there may yet be another twist to the story.”
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