Contract Procedure Matters: Serve Those Notices To Protect Your Payment Position

Parties to a construction contract who have not been paid have a right to refer their payment claims to adjudication under the Housing Grants, Construction and Regeneration Act 1996 (as amended in 2011) (the Act). Adjudication is an essential tool for parties to enforce their contractual payment rights.

However, if payers do not comply with the notice procedures prescribed by the Act, the payee can start adjudication proceedings to recover - swiftly - payments they have applied for in what have become known as "smash and grab" proceedings. Payers can therefore end up having to make payments they do not consider due to a payee.

The question of whether (and when) such payers can start another adjudication to ascertain the true value owed to the payee (and recover any overpayment) has been considered at length by both the Technology and Construction Court (TCC) and the Court of Appeal (CA) recently in important decisions involving Grove Developments Ltd and S&T (UK) Ltd and, more recently, M Davenport Builders Ltd and Mr and Mrs Greer.

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Payers who haven't served payment/pay less notices must pay up first (the TCC's decision in Grove) Grove applied: M Davenport Builders Ltd v. Greer & another How to avoid similar payment disputes (serve those notices!) Does the Construction Act need to be amended to reflect Grove? Payers who haven't served payment/pay less notices must pay up first (the TCC's decision in Grove) In his first instance decision in Grove Developments Ltd v. S&T (UK) Ltd [2018] EWHC 123 (TCC), (Grove TCC), which we reviewed here Smash and grab adjudications - redressing the balance, Coulson J (as he then was) decided that:

if the paying party does not serve a pay less notice on time or at all, the payee is entitled to be paid the sum stated as due...