In Bellway Homes Ltd v Surgo Construction Ltd [2024], the TCC was asked to determine whether an adjudicator had jurisdiction to decide a payee’s claim for interim payment based on either a ‘smash and grab’ basis or a true valuation of the works, and whether these alternative bases of claim in fact comprised two separate disputes.

Background

By a sub-contract dated 2 October 2019, Surgo Construction Ltd (“Surgo”) engaged Roundel Manufacturing (“Roundel”) to supply and install kitchens in connection with a building development project.

On 22 December 2022, Roundel issued a payment application in the sum of £152,225 inclusive of VAT to Surgo (“the Application”). Surgo failed to issue either a payment or payless notice and made no payment to Roundel.

On 28 March 2023 following Surgo’s failure to pay, Roundel referred the matter to adjudication. Roundel’s primary case was advanced on what is commonly referred to in the construction industry as a ‘smash and grab’ basis. In its Referral, however, Roundel continued by stating that, “Further or in the alternative, and should payment not be awarded on the basis of the default payment provisions, then the Adjudicator is requested to ascertain the true value of the Application”.

By a decision dated 2 May 2023, the adjudicator instructed Surgo to the pay the sum of c.£148k plus VAT and interest to Roundel (“the Decision”). The Adjudicator had rejected the smash and grab attempt, but accepted the true value alternative.

Roundel subsequently assigned its rights to the sums due pursuant to the Decision to Bellway; and following Surgo’s failure to comply, Bellway applied for summary judgment to enforce the Decision.

Surgo sought to resist enforcement on the basis that the Adjudicator lacked jurisdiction. It contended that multiple disputes had been referred without consent; alternatively, that if jurisdiction did exist, it had been exceeded by the Adjudicator in deciding a true value payment was due having already decided the Application was invalid in the context of the smash an grab attempt.

What did the Court Decide?

The judge granted summary judgment to enforce the Decision and rejected Surgo’s attempt to separate the smash and grab claim and the true value elements of the dispute as “to characterise these as separate disputes would be to adopt too legalistic an approach”.

The court confirmed that a broad interpretation of the concept of a ‘dispute’ must be adopted and thus described the character of this matter as two routes advanced to the same goal of determining a sum owed.

As to Surgo’s second challenge, the judge found that just because the Adjudicator’s conclusion was that the Application was not compliant with the statutory requirements for the purposes of succeeding in a smash and grab, that did not mean the Adjudicator was rejecting the Application as being capable of being an application for payment in any circumstances.

Conclusion

The decision will be welcomed by prospective claimants as providing confirmation that a party can advance a true value claim in the alternative to a smash and grab claim, within the confines of a single referral to adjudication, as two alternative routes to recover the same sum due. This avoids the need for multiple adjudications over the same disputed sum.

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For more information contact:

David Spires 

Partner

E-mail: DSpires@hklegal.co.uk

 

This article contains information of general interest about current legal issues, but does not provide legal advice. It is prepared for the general information of our clients and other interested parties. This article should not be relied upon in any specific situation without appropriate legal advice. If you require legal advice on any of the issues raised in this article, please contact one of our specialist construction lawyers.

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