A Last Refuge for "Smash and Grab" Adjudications?

On the 1 December 2015, the Court of Appeal decided the case of Harding (t/a MJ Harding Contractors) v Paice [2015] EWCA Civ 1231. This decision suggests that there may be a last refuge for payers (typically Employers or Main Contractors) when faced with a smash and grab adjudication.

  • A smash and grab adjudication arises out of an Employer's failure to serve their Contractor with a payment notice or pay less notice where the contract provides for an application for payment to be made. In these circumstances the amount applied for becomes the notified sum and has to be paid without any further enquiry into the sum applied for.
  • Prior to the judgment in ISG Construction Ltd v Seevic College it had been common for the Employer to begin its own cross adjudication against the Contractor to challenge the value of the sum requested. The door to such actions was closed following the cases of ISG Construction Ltd v Seevic College [2014] EWHC 4007 (TCC) and Galliford Try Building Ltd v Estura Ltd [2015] EWHC 412 (TCC), which prevented cross adjudications by the Employer in respect of interim applications on the basis that the Employer was deemed to have agreed the notified sum for the purposes of that interim application.
  • The Court of Appeal has now opened a window in respect of final account applications, having ruled that if the payment application was made in relation to a final account, as in the Harding case, the Employer will be able to cross adjudicate to challenge the value of the payment application. 
  • Whilst this does seem to provide a last refuge for Employers in respect of final account applications, the Court of Appeal declined to comment on whether the decisions in ISG and Estura were correct in respect of interim applications. The question remains as to whether this point will be considered by the courts at a later date.

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