In the twenty or so years since the Construction Act came into force, few cases have generated quite so much excitement and debate as S&T (UK) Ltd –v- Grove Developments Ltd.
This case is very exciting because it appears to sound the death knell for what have become known as “smash and grab” adjudications.
These are claims for payment based solely upon a paying party’s failure to serve relevant notices as required by the Construction Act. The courts have held that the underlying entitlement to payment (or not) is irrelevant, if the proper notices are not served payment will be ordered.
Unsurprisingly, smash and grab adjudications became a quick and relatively easy way to get paid. The courts made it very clear that a party could not start another adjudication on the true value and instead the losing party had to wait for a subsequent application/payment cycle, to claw back any overpayment. This could potentially be a long wait, depending on the extent of overpayment if the contract (like the JCT) did not provide for negative certificates.
Arguably this upheld the original spirit and intention of the Construction Act, which was to facilitate cash flow through the construction industry. However, perhaps it took the “pay now, argue later” approach a step too far.
In S&T (UK) Ltd – v Grove Developments Ltd the TCC and then the Court of Appeal held that, following a successful “smash and grab” adjudication, the paying party is entitled to start a new adjudication dealing with the underlying entitlement to payment. But, before it does so, it must pay the first adjudicator’s award. This represented a sea change from the earlier authorities and has the effect that any victory in a smash and grab may be short lived.
In other words, you can argue, but only after you have paid.
The case is now going to the Supreme Court, although when the judgement will be handed down is not certain. What is certain is that whether it upholds the Court of Appeal decision or overturns it the decision of the Supreme Court will have huge implications for adjudication practice in the UK.
We shall of course report upon the judgment as soon as it becomes available. Watch this space!