Construction claims: ‘Smash and grab’ or ‘true value’? How about both? Bellway Homes Ltd v Surgo Construction Ltd

The Technology & Construction Court has recently issued an interesting decision regarding whether an adjudicator can consider both a ‘smash and grab’ and a ‘true value’ claim on alternative bases in the same adjudication. This is the first time the court has considered this question.

Facts

The referring party commenced adjudication proceedings alleging a failure to pay a sum due. Two alternative ‘routes’ were put to the adjudicator:

1. the sum was due on a ‘smash and grab’basis; or alternatively,
2. the sum was due on a ‘true value’ assessment of the account.

A ‘smash and grab’ adjudication is a technical claim alleging that a party has failed to serve the correct notices on time and therefore must pay the sum that was claimed. No substantive assessment of the claim is carried out.

A ‘true value’ adjudication seeks a substantive assessment of the genuine value of the works. True value claims are often brought following the outcome of a smash and grab claim, so the paying party can claw back anything they think they have overpaid.

In this case, the adjudicator decided that the smash and grab claim failed but did award the sum to the referring party based on a true valuation of the works.

Judgment

An important rule of adjudications is that only one dispute can be considered in each adjudication.

The court therefore had to consider whether a smash and grab claim and a true value claim constituted two different disputes.

Ultimately, the court’s decision was that “the dispute can fairly and much more straightforwardly be described as a single, disputed claim for a sum due”. The question of whether the sum was due on a smash and grab, or a true value basis simply related to the legal basis for the claim. Either way, the referring party simply sought payment of the sum it considered it was due.

Analysis

This judgment provides clear authority for a referring party to combine a smash and grab with a true value adjudication, giving the referring party additional flexibility.

Whilst this is potentially useful, we doubt that it will become the norm in practice. Smash and grab claims are often quick and relatively cheap strategic gambits that are used to enhance a negotiating position. That strategic value may be diluted by including more lengthy and costly submissions regarding the true value of the works at the same time.

This is also a further reminder, if it were needed, to ensure you are familiar with the payment procedures in your construction contracts at the outset to avoid any potentially costly slip ups.

If you’d like more information on this case, or any other construction matters, please speak to a member of our team today.