Question: can an employer, who fails to issue a valid payment or pay less notice, pay the contractor the sum stated as due in the contractor’s interim application and then, in a second adjudication, dispute that the sum paid was the ‘true’ value of the works for which the contractor has claimed?

Applying first principles, in a case where an adjudication decision on an interim application for £14 million was in issue, the court said it could, for six separate reasons. Where the parties have given an adjudicator power to decide all disputes between them, the adjudicator has the same wide powers as the court, including the power to decide the ‘true’ value of any certificate, notice or application. There is no limitation, in the Construction Act or the Scheme, on the nature, scope and extent of the dispute which either party can refer to an adjudicator and the dispute that the employer would raise in the second adjudication is different to the dispute decided in the first.

It was also instructive to look at the contract wording and the court noted the deliberate distinction made between “the sum stated as due” and “the sum due”. Considerations of equality and fairness also apply. If a contractor can attack the “sum stated as due” in a pay less notice, because it says it is too low, there would need to be clear words in the Construction Act and/or the Scheme and/or the contract in question to prohibit the employer from doing the same. There are, however, no such words anywhere, and there is nothing in the Act or the Scheme to justify treating interim and final payments differently. On the contrary, sections of the Act apply to both and the JCT contract in question treated interim and final applications/payments in the same way.

The court also analysed the case law and concluded that the Court of Appeal’s decisions on the issue confirmed its view. Two Technology and Construction Court cases, ISG Construction Ltd v Seevic College [2014] EWHC 4007 and Galliford Try Building Ltd v Estura Ltd [2015] EWHC 412 did, however, take a “different line” but Mr Justice Coulson considered that there was, for the reasons given, a “powerful reason” for not following those cases. He believed that his decision will strengthen the system, because it will reduce the number of ‘smash and grab’ claims which, in his view, have brought adjudication into a certain amount of disrepute.

See: Grove Developments Ltd v S&T (UK) Ltd [2018] EWHC 123