05/06/2024

In the case of Bellway Homes Ltd v Surgo Construction Ltd [2024] EWHC 10 (TCC), the Court decided that a party can pursue both a smash & grab adjudication and, in the alternative, a true valuation in the same adjudication. The adjudicator will have jurisdiction to consider both arguments if they relate to one dispute i.e. the payment sum. 

Background 

Roundel Manufacturing (“RM”) entered into a sub-contract with Surgo Construction Ltd (“Surgo”). Surgo was the main contractor, appointed by Bellway Homes Ltd (“Bellway”). 

In December 2022, RM made a payment application for £152,225.23, which Surgo did not pay. RM argued that it was entitled to payment in full on the basis that Surgo did not issue a payment notice or any valid pay less notice.

Adjudication 

RM commence an adjudication on two bases; (i) primarily, a smash & grab adjudication since neither a payment nor pay less notice had been issued by Surgo; and (ii), in the alternative, a true value assessment of the application if RM’s payment application was invalid.

The adjudicator determined that RM’s payment application was invalid so RM was not entitled to a smash & grab adjudication. However, the adjudicator still went on to assess the application on a true value basis. 

Surgo contended that by relying on both a smash & grab argument and requesting a true value assessment, RM had referred multiple disputes without consent. 

RM assigned all its rights in the sums due under the adjudicator’s decision to Bellway allowing Bellway to commence proceedings to enforce the adjudicator’s decision. 

Decision 

The Court rejected the argument that multiple disputes had been referred. It held that the dispute in question was how much was due to RM under the contract, and that question could be argued in two ways; a smash and grab claim for a procedural technicality, or a true value assessment in the alternative. On that basis, the adjudicator had not exceeded his jurisdiction. 

As a note of caution to legal professionals, in its reasoning, the Court warned against adopting an overly legalistic approach when challenging jurisdiction and expressed a preference for a common sense approach having regard to the facts in dispute.

Comment

This case joins a wealth of legal authority grappling with the complexities of payment disputes in adjudications and will create another headache for paying parties. Not only must they delay commencing their own true value adjudications until they have satisfied any smash and grab decisions against them, they must now also be alive to the – now much increased – risk of having to simultaneously defend both smash & grab and true value adjudications commenced against them. This case does, however, highlight the importance of serving valid payment and pay less notices to limit the risk of an adjudication being commenced in the first place.

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