Smash and Grab Adjudication — An Overview Guide
The term “Smash and Grab” is informal legal jargon that has come into widespread usage to describe a specific type of dispute process and resolution within the construction industry.
The construction industry routinely involves high value complex projects that can last for months, if not years. Cashflow via stage payments, interim payments, is crucial to the lifeblood of contractors.
Due to the value and complexity of the works and projects involved, typically complex contract mechanisms are agreed, including in relation to timing and amount of payment, and quality of works.
Employers and developers want to remain in a strong position by holding back monies and payments at an interim stage often based on the fear works will not be accurately or properly completed on time, or at all. Contractors obviously need and want to be paid.
“Smash and grab” most often falls within Adjudication, which is a type of dispute resolution within the construction industry. You can read more about adjudication here but a Smash and Grab adjudication is a type of adjudication that is primarily focused on recovering money that is owed. It can be used in a broader context, but is mainly geared around, or relates to, enforcing payments and recovering monies as quickly as possible in the construction environment.
The aim of a smash and grab adjudication is to get in and out of a dispute, with confirmation you are entitled to money/to be paid, as quickly as possible. Pursuing monies owed via a smash and grab adjudication can be quicker and cheaper rather than say issuing a money claim in court- which can take months if not years.
Smash and Grab adjudications are quick, preserving the movement of money without the need to become embroiled in expensive and protracted disputes in the courts.
Pursuing a smash and grab adjudication keeps the door open for more debate and argument over costs further down the line and is therefore not prejudicial to the rights of either party.
What Is “Smash and Grab” in Adjudication?
Smash and Grab in adjudication enables simple disputes over non-payment to be resolved quickly – usually within 28 days. Smash and Grab circumvents a more thorough examination of the contract between the parties and is an attempt to avoid having to have complex lengthy arguments over what was done, whether it was completed properly, the involvement of experts or more detailed exchanges.
Construction disputes that cant be dealt with via adjudication, or where that isn’t an appropriate approach, are most often pursued through the TCC, the Technology and Construction Court. We specialise in these types of claims and disputes, but they inevitably take time and incur costs.
Where available, Smash and Grab adjudications can try to secure a quicker ‘win’, and as the name suggests, do so in a way that limits discussion around other noise or matters that may not be directly relevant to the failure or delay in paying. An adjudication in this way is without prejudice to further disputes or claims later on, which can be pursued either via additional/further adjudications, or via litigation.
When To Use “Smash and Grab” Adjudication
Contractors can use “Smash and Grab” adjudication to insist upon payment of a notified sum to protect and preserve cash flow in the short to medium term.
This is a quick and more straightforward process designed to facilitate progress towards completing the contract and protecting the solvency of one of the contracting parties.
Court Decisions on Recent “Smash and Grab” Cases
The legal landscape is littered with relevant court decisions on “Smash and Grab” adjudications. This trend will likely continue beyond 2021 as a hectic construction industry tries to catch up with downtime following Covid, and contractors experience supply shortages and delays across the international economy.
Here are four of the most significant decisions of recent times.
- In ISG v Seevic and Galliford Try Building Limited v Estura Limited, the Technology and Construction Court ruled that there cannot be a subsequent adjudication to determine the merits of a previous adjudication in respect of an interim application for payment. In simple terms if an adjudication on a smash and grab basis is successful, it’s hard to revisit it via another adjudication. These two cases laid the groundwork for contractors to have a quick and relatively inexpensive way to obtain monies via Smash and Grab Adjudication without any meaningful form of challenge until the next interim payment point — unless the opposing party resort to litigation.
- In 2018, in Grove Developments Limited v S&T (UK) Limited, the Technology and Construction Court decided that an employer or contractor can now cross-adjudicate either at the same time or after the first decision in order to challenge the merits of the interim application.
- In M Davenport Builders v Greer the judge stated that payment of an interim adjudication application must be made before a ‘true value’ adjudication can commence.
Lawyers welcome the clarity offered by these recent cases. But the rulings also raise new questions, which only further legal opinion via the courts will resolve.
What’s The Difference Between “Smash and Grab” and “True Value” in Adjudication?
“True Value” is the overall value of the contract or project as agreed between the parties. True Value can be subject to dispute and adjudication and may not be the original value agreed in the contract. This can change for multiple reasons including but not limited to variations and price mechanisms built into the contract at the outset.
An adjudicated dispute in a “Smash and Grab” process can stand alone. The courts have ruled a Smash and Grab adjudication does not necessarily relate to the contract’s true value or commit either party to an acceptance of the true value.
However, case law has paved the way for cross-adjudications to challenge a True Value following a “Smash and Grab” adjudication.
How Helix Law Can Help
“Smash and Grab” in Adjudication is still alive, well, and is very relevant within the construction industry. A well pitched and precise smash and grab adjudication can be a very important tool available to contractors and employers/developers to obtain clarity at an interim stage on an important issue; money.
Equally smash and grab adjudications are only one part of a fast-moving and evolving landscape. The position has potential to change and each case needs to be assessed.
We expect that there will be fewer “Smash and Grab” adjudications than previously but they should not be discounted (at all), and we regularly act in very successful adjudications of this type..
Where a smash and grab adjudication is pursued, there is always a prospect of a cross adjudication being pursued to examine the merits of the conduct prior to the payment application, potentially in an attempt to recoup some of the monies paid and/or to increase complexity in what might otherwise be a straightforward liability to pay (for example if no pay less notice has been received)
Overall we view smash and grab adjudications as a relatively blunt instrument, but one that can be incredibly important and powerful to use. Any decision to adjudicate or litigate any dispute, especially in the construction and build environment, needs to be carefully considered, but there will always be some situations where there is no genuine dispute- merely a delay in paying. In these situations a well pitched smash and grab adjudication can improve your commercial position by ensuring there is a clear entitlement to the monies being claimed/which are outstanding.
If you would like to discuss any of the issues raised above, including on/re adjudication, construction law and/or payment or nonpayment in the context of construction don’t hesitate to contact a member of our team and we will be happy to assist you.