A smash and grab adjudication is one of the most effective remedies available to contractors, subcontractors, and other payees seeking payment under a construction contract.
Where a paying party fails to comply with the statutory payment notice regime, the payee may be entitled to recover the full amount stated in its payment application or notice, regardless of any dispute about the underlying value of the works. The remedy is fast, enforceable, and deliberately procedural in nature: the adjudicator is concerned not with who is ultimately right on valuation, but with whether the correct notices were served on time.
This reflects the fundamental principle underpinning the Housing Grants, Construction and Regeneration Act 1996 ("the Construction Act"): pay now, argue later.
The Legislative Framework
Smash and grab adjudications arise from the Construction Act and the Scheme for Construction Contracts (England and Wales) Regulations 1998. Together, they establish a mandatory payment and adjudication regime for most qualifying construction contracts, with the Scheme operating as a statutory fallback where contractual provisions fail to comply with the Act.
The statutory payment regime is mandatory, and parties cannot generally contract out of it.
Which Contracts Are Covered?
The Construction Act applies to most construction contracts for building, engineering, and associated installation works (sections 104–105 of the Act). Certain specialist operations are excluded, and the statutory regime does not apply to contracts with residential occupiers who intend to occupy the property as their main residence (section 106 of the Act), meaning standard smash and grab rights do not automatically exist.
Whether a particular agreement falls within the legislation can sometimes be less straightforward than it first appears, particularly in relation to specialist engineering works or mixed-use developments, and early legal advice may be advisable.
The Statutory Payment Regime
Every smash and grab adjudication begins with the statutory payment process.
- Payment Due Date: Construction contracts must contain an adequate mechanism for determining when payments become due (section 110 of the Act).
- Payment Notice: Following the due date, the payer, or another person specified by the contract, should issue a Payment Notice setting out the amount considered due and the basis upon which it has been calculated (section 110A of the Act). Where no valid Payment Notice is issued, the payee’s interim application may look to dictate the notified sum, provided it is completely unambiguous, clear, and issued in immaculate compliance with the contractual terms and deadlines (section 110B of the Act).
- The Notified Sum: The amount identified in the applicable Payment Notice or payee's notice becomes the notified sum (section 111 of the Act). Importantly, the notified sum is not necessarily the true value of the works. It is simply the amount that becomes payable unless the payer serves a valid Pay Less Notice.
- Pay Less Notice: If the payer intends to pay less than the notified sum, it must serve a compliant Pay Less Notice within the contractual timescale (section 111 of the Act). The notice must identify the amount the payer considers due and explain the basis upon which that figure has been calculated. A failure to serve a valid Pay Less Notice in time may leave the payer liable for the full notified sum, even where there are genuine disputes about valuation, defects, or delay.
What Is a Smash and Grab Adjudication?
A smash and grab adjudication is a claim for payment based on the paying party's failure to comply with the statutory notice requirements.
Unlike a conventional valuation dispute, the adjudicator is not normally asked to determine the true value of the works, the existence of defects, or the merits of any counterclaim. Instead, the dispute is usually confined to two questions:
- Was a valid notified sum established?
- Was a valid Pay Less Notice served within the required time?
If a valid notified sum exists and no effective Pay Less Notice has been served, the adjudicator will generally order payment of that sum.
This procedural approach is intended to ensure that cash continues to flow through the construction supply chain, with any dispute over the true value of the works being resolved separately.
The Right to Adjudicate
Parties to qualifying construction contracts have a statutory right to refer disputes to adjudication at any time (section 108 of the Act). The process is designed to produce a binding decision quickly, usually within 28 days of the dispute being referred.
A typical smash and grab adjudication involves:
- service of a Notice of Adjudication;
- appointment of an adjudicator;
- exchange of the referral documents and response; and
- the adjudicator issuing a decision.
Because the issues are often limited to the validity and timing of payment notices, smash and grab adjudications can frequently be determined relatively quickly.
The Decision and Its Enforcement
An adjudicator's decision is temporarily binding and must generally be complied with immediately (section 108 of the Act). If payment is not made, the successful party can usually seek summary judgment in the Technology and Construction Court to enforce the decision.
In most cases, the paying party cannot resist enforcement simply by arguing that the works were overvalued or defective. The primary exception to this rule is if the payee is insolvent or facing liquidation, in which case the court may grant a stay of execution to prevent money being paid out that could never be recovered. The court will generally expect compliance with the adjudicator's decision, leaving any dispute over the true value of the works to be determined separately.
True Value Adjudications
A smash and grab adjudication determines only whether the notified sum became payable under the statutory payment regime. It does not finally determine the actual value of the works carried out.
The paying party may subsequently commence a true value adjudication, or pursue litigation or arbitration where appropriate, to establish the amount genuinely due under the contract. In those proceedings, the substantive merits of the dispute can be considered, including the valuation of the works, alleged defects, incomplete items, set-offs, and other contractual deductions.
However, the paying party will usually be required to comply with the smash and grab adjudicator's award before obtaining a determination of the true value dispute. This is a central feature of the Construction Act's "pay now, argue later" philosophy.
Common Reasons Smash and Grab Claims Arise
In practice, these disputes frequently arise because the paying party:
- fails to serve any Pay Less Notice;
- serves the notice after the contractual deadline;
- fails to explain the calculation of the reduced sum adequately;
- serves the notice on the wrong party; or
- fails to comply with the contractual requirements governing service.
Even where there are genuine disputes concerning defects, delay, or overvaluation, those matters will not usually prevent the notified sum from becoming payable if the statutory notice requirements have not been observed.
How We Can Help
Smash and grab adjudications are highly technical disputes in which the outcome often turns on the validity of payment notices and strict compliance with statutory and contractual deadlines.
Whether you are a contractor seeking payment or an employer defending a claim, early legal advice is essential. Our construction disputes team regularly advises contractors, subcontractors, employers, and developers on adjudications, enforcement proceedings, and true value claims, helping clients protect both their cash flow and their commercial position.
How to get in contact
To find out more or if you require assistance with these matters, speak with Jamie Short or a member of our Construction Disputes team on +44 (0)204 600 9907 or email info@culbertellis.com.
Accurate at the time of writing. This information is provided for general information purposes only and should not be relied upon as legal advice.
