A Further Jab To The 'Smash And Grab' Adjudication?

S&T (UK) Limited v Grove Developments Limited [2018] EWCA Civ 2448


In our edition of the HTML last April we reported on the decision in the Technology and Construction Court, which signified the ability for employers to bring separate (counter) adjudications to decide the true value of an amount due where there is either no Payment/Pay Less Notice, which in turn signified a potential reduction in the amount of "smash and grab" adjudications.

The matter was heard on appeal in November and the original decision of the TCC was upheld in respect of each of the three issues raised by way of S&T's appeal. Dealing now with these three issues:

Court Judgment:

Pay Less Notices:

The Court ratified Coulson J's (as he then was) reasoning. In doing so it confirmed that the test to be applied to the proper construction of such notices under the Construction Act 1996 (as amended) is how a reasonable recipient would have understood the notice. Thus, if a reasonable recipient of a notice (which only complied because it referred back to documents previously sent but were not reattached) would have understood what was in actual fact being referred to, the notice would be deemed to be valid Pay Less Notice.

"True value" adjudications:

The Court of Appeal upheld the first instance judgment, considering the six reasons why Grove was entitled to bring a separate adjudication to determine the correct value of their interim application, even if it was being argued there was no valid Pay Less Notice. The six reasons provided were:

Courts and adjudicators have the power to open up, review and revise sums shown as due in interim applications in any case where the interim application determines what is payable Under section 108(1) of the Construction Act (as amended) and paragraph 20 of the Scheme (as amended) there is no limit on the nature of disputes which either party may refer to adjudication. A distinction is made between a dispute about the sum which must be paid ("notified sum") and the true valuation of the work done. These raise different disputes. The "sum due" (clause 4.7) is different from the "sum stated as due" (clause 4.9). Section 4 of the contract in its entirety is designed to achieve payment of the true sum which is due under clause 4.7. The idea that an employer has the right to adjudicate over the true value of an interim payment is fair...

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