People in the world of construction disputes get very excited by some things. One of those is the ‘smash and grab’ adjudication. But what exactly is it, and why does it matter?
As we discussed in a previous article, ‘statutory’ adjudication allows anyone with a valid construction contract to take a dispute to an independent decision-maker – the adjudicator. They will reach a temporarily binding resolution, and the process is usually dealt with in a 28-day period.
Smash and Grab (also known as ‘technical’) adjudications sound very exciting, compared to most things in construction law! They conjure up images of contractors stealthily turning up in masks, with stripey shirts and a bag marked ‘swag’.
The reality is sadly a little more pedestrian…
Smash and grab is actually not quite as exciting as all that. In fact, why it’s called ‘smash and grab’ is a bit of a mystery. We believe it was first coined in one of the early cases in which the mechanism was used.
However, it’s actually just the administration of the contract (or lack of) in accordance with the law, but often to the contractor’s advantage.
The Construction Act provides that in the absence of a payment notice from the employer to the contractor, the contractor may issue a ‘default payment notice’. Depending on the terms of the contract, a contractor’s application for payment may become the default payment notice. Alternatively, the contractor may give the payer a notice any time after the contract states, for the issue of an employer’s payment notice.
Note that the same principles apply throughout the construction supply chain. So whoever the employer/contractor relationship applies to, the same principle applies.
For a number of reasons.
Firstly, this has been identified as a useful way for a contractor (or sub-contractor) to get a successful result financially, without really having to do much themselves. If the employer is not on the ball or has not paid attention to the contract terms, payment might become due. If a notice is not issued in the correct form and/or no payment is not forthcoming, an adjudication will be decided on those terms. This could be seen as a technicality. Which to some employers seems a little unfair.
It has been hotly debated. Because of the many ways in which such a technicality can be put forward, there have been several cases which have sought to exploit, and in turn, rebut the arguments for payment.
Some of these cases, which you might like to take a look at, include the following. Helpfully good law firms have explained why each one is relevant, so we don’t have to…
The key here is to ensure, as an employer – whether as main contractor or contract administrator, or any superior contract role – that you understand the contract terms. This is something any good solicitor will always tell you. Understand the payment and notice terms, along with what and in what form your notices must be issued. Above all, ensure you meet those requirements. Otherwise, there is a risk that sums claimed become due by default, whether or not they should be due.
And as always, if you need advice on resolving a dispute either at final account or any other stage in the process, we and our solicitor friends will be delighted to help. Contact us through the website.