In this case the Greers employed M Davenport Builders Ltd. In June 2018 Davenport issued their final account application which the Greers failed to pay or issue any payment or payless notice as required.

Davenport then commenced a smash and grab adjudication and was awarded the amount claimed in their Final Account. The Greers failed to abide by the Adjudicators decision and withheld the payment and then commenced an Adjudication of their own to determine the true valuation of the final account. In this instance the Adjudicator found that the final account was equal to the amount already paid by the Greers to Davenport. Following this Davenport by way of summary judgement sought to enforce his adjudication decision to which the Greers sought to set off the Adjudicator’s decision in the true valuation case.

The Court first considered the Court of Appeals judgement in S&T(UK) Ltd v Grove Developments Ltd [2018] which held that s111(1) of the Construction Act 1996 (as amended) created an immediate payment obligation where no payment or payless notice had been issued in response to a payment application. This meant that the contracting party is prohibited from commencing an adjudication for re-evaluation of the works before he has made the immediate payment.

The Court further considered the Court of Appeals decision in Harding v Paice [2016] where Harding had attempted to prevent a true valuation adjudication prior to Harding v Paice discharging his obligations under a previously awarded smash and grab decision. The Court of Appeal in this instance ‘refused to restrain’ and allowed the true valuation adjudication.

The Court finally ruled that the Court of Appeals judgement in S&T was clear when it stated that payment had to be made immediately and so therefore this would precede any other action. However, the Court then brought in Harding v Paige and said that this didn’t always mean that the Court would ‘always restrain the commencement or progress of a true valuation adjudication commenced before the employer had discharged his immediate obligation.

This case highlights that the Courts are keen to uphold the decision of S&T, however it does still leave open the question as to when the Court would interfere with the process and allow a true valuation adjudication to be commenced.

Care should be taken to ensure that project staff are aware of their payment obligations, the timeframes and relevant notices that should be issued. Urban Project Services can assist you in reviewing and identifying your contractual obligations and setting up robust payment procedures as well as offering strategic advice should the need arise.  

This article contains information of general interest about current legal issues and does not provide legal advice. It is prepared for the general information purposes only. This article should not be relied upon in any specific situation without appropriate legal advice.