Smash and grab vs true value adjudication: Can you do both together?

The first TCC judgment handed down in 2024 should be of interest to those in construction adjudication. The decision in Bellway Homes Ltd v Surgo Construction Ltd relates to the enforcement of an adjudicator’s award where the underlying adjudication concerned both a ‘smash & grab’ and true value assessment, on alternative bases. In short, the defendant sub-contractor’s jurisdictional challenges were rejected, and summary judgment was granted to the claimant contractor for the sums claimed.

The adjudication

The adjudication concerned a disputed application for payment between the contractor, Roundel Manufacturing (RM), whose claims were subsequently assigned to Bellway Homes Limited, and the subcontractor, Surgo Construction Limited (Surgo).

RM had submitted an application for payment for £152,225.23 on 22 December 2022, against which Surgo had failed to issue either a payment or pay less notice.

RM subsequently commenced an adjudication on the basis of first, a ‘smash & grab’ for Surgo’s failure to issue a valid payment or pay less notice and, secondly, if that failed, on the basis of a ‘true value’ assessment of the application itself.

A decision dated 2 May 2023 awarded RM £148,431.70 on a true value basis. The adjudicator declined to award the relief sought on the basis of the “smash & grab” - he was not satisfied that the application for payment met the requirements of the Construction Act for a "smash and grab" payment. He explained that the application “comprises no more than a number of accountancy summaries that do not seem to correlate with each other. It was not and cannot readily be demonstrated to be an Application stating the sum that the Contractor considers would become due to it. Certainly it is not in substance, form and intent an Application, and it is not free from contradiction and ambiguity”. Accordingly, it did not meet the relevant tests under the Act. The award based on the true value of the application was, however, consistent with the approach taken by RM and Surgo during its works - effectively their course of dealing.

Enforcement

Surgo did not pay the sum that fell due following the adjudication, and the claimant (now Bellway in RM’s stead) issued a summary judgment application to enforce the decision. Surgo sought to resist enforcement on two grounds:

• The adjudication addressed multiple disputes

Surgo alleged that multiple disputes (i.e. a smash and grab for a technical failure to pay a notified sum, and a true value assessment addressing the value of the works carried out) had been referred to adjudication without consent, and subsequently determined without jurisdiction.

The court found that there was only one dispute, concerning the sums due from the payment application and the failure to pay them. The fact that Bellway ran alternative arguments as to the basis on which the sums fell due did not mean this constituted multiple disputes. The court looks to take a practical approach to this question, and there is no principle to say that alternative arguments cannot be advanced.

• The adjudicator breached their own jurisdiction

Surgo argued that the adjudicator breached their jurisdiction by considering the true value adjudication after deciding the application for payment was not sufficient for the smash & grab to succeed.

Again, the court rejected this jurisdictional challenge. The fact that the adjudicator had concluded that the payment application didn’t comply with the statutory requirements for a “smash & grab” did not mean that he was “rejecting the Application as being capable of being an application for payment in any circumstances.���

Accordingly, the court granted summary judgment in favour of Bellway for the sums claimed.

Comments

This is an interesting case for lawyers and practitioners. It raises a number of issues. First, it is now clear that an adjudication can be commenced on alternative bases. Clarity on this is welcome, and may lead to an uptick in adjudications of this nature, not least where the “smash & grab” position may not be watertight.

The second point is the clarification that an application for payment, even where it is not Construction Act compliant, is capable of assessment in a dispute in the usual way. This probably has to be the conclusion, otherwise a claimant would never be entitled to an assessment. It is equally clear that for a “smash & grab” to succeed the payment application must comply with the Construction Act - making applications consistent with a course of dealings between the parties will not suffice.

The final point to note for parties is the need to be alive to (and to meet) notice deadlines. Many payment application disputes could be avoided or reduced in scale if parties issued valid and timely payment or pay less notices at the outset.