Technology and Construction Court curtails “smash and grab” adjudications
It has recently been held that where an adjudicator decides that the amount of an interim application (however unreasonable that amount is) must be paid because neither a payment notice or pay less notice has been served (known as a “smash and grab” adjudication), the paying party can in fact immediately commence its own adjudication to establish the true value of the work done. If that is less than the amount that has been paid, then the over payment has to be paid back straight away.
Previously it had been thought that the paying party had to pay the amount of the application and that this could not be reviewed (and if appropriate paid back) until the final account, which might be many months (or years) in the future, at least where the contract did not provide for two-way interim payments.
This is likely to mean the end of “smash and grab” adjudications where the amount of the application is clearly overstated. It would be a pyrrhic victory if within a matter of weeks the amount has to be paid back. However there will still be some cases where a “smash and grab” adjudication will still be relevant, for instance where an employer consistently undervalues work or ignores applications for payment.
Click here for a full copy of the court judgment.
This court decision is also interesting in other respects such as what documents should be included with a pay less notice and what notices to serve and when if claiming liquidated damages under a JCT contract. Watch out for further blogs on these subjects.
The case: Grove Developments Limited v S&T (UK) Limited [2018] EWHC 123
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