Mr Justice Coulson and the Smash and Grab Adjudication

The case of Grove Developments Ltd v S&T, [2018] EWHC 123 (TCC), is likely to be Mr Justice Coulson's last case at the TCC before his elevation to the Court of Appeal. The case is an important one, as the Judge explains why, he disagrees with the ISG v Seevic line of cases, which have become the basis for "smash and grab" adjudications.

Mr Justice Coulson has said that an employer who has failed to serve its own pay less notice has to pay the amount claimed because that is "the sum stated as due". But the employer is then free to commence its own adjudication in which the "true" value of the application can be determined. In other words, if the employer fails to serve any notices in time it is not to be taken to be agreeing the value stated in the application, right or wrong.

In a packed judgment, the case also looks at the content of pay less notices and the requirement for employers under the JCT Contract to serve notices to allow them to claim or deduct liquidated damages for delay.

This dispute here arose out of the construction of a new Premier Inn Hotel at Heathrow Terminal 4. The contract incorporated the JCT Design and Build Contract 2011. The contractual completion date was 10 October 2016. Practical completion was not achieved until 24 March 2017.

The contents of the pay less notice

There had been three adjudications. In the second, S&T were awarded a partial extension of time. The third decided that Grove's Pay Less Notice of 18 April 2017 was invalid. This last decision meant that, on the face of it, S&T were entitled to be paid in excess of £14 million pursuant to their interim application no. 22. Grove had already commenced Part 8 proceedings which came before Mr Justice Coulson in his last decision as a judge at the TCC.

The first issue was whether or not Grove's pay less notice complied with the contractual requirement to specify the basis of the calculation. Mr Justice Coulson noted that:

"A pay less notice will be construed by reference to its background, in order to see how a reasonable recipient would have understood it. The court will be unimpressed by nice points of textual analysis, or arguments which seek to condemn the notice on an artificial or contrived basis. One way of testing to see whether the contents of the notice are adequate is to see if the notice provides an adequate agenda for a dispute about valuation and/or any cross-claims available to the employer."

Here, the pay less notice did properly set out the basis of the calculation. The Judge referred to a detailed spreadsheet attached to the payment notice which would have permitted the reasonable recipient to understand precisely how Grove's valuation was made up. In contrast to the notice in Muir, (see Dispatch 209) there were detailed figures for every separate element of the works. The same spreadsheet had been used by each party to identify their differences. Further, there was no objection in principle to a notice referring to a...