Smash and Grab Adjudication: How It Works and How to Protect Yourself

The phrase “smash and grab adjudication” is not in any statute. It was coined, colloquially, by the construction industry to describe something that feels aggressive: claiming the full amount of a payment application simply because the paying party missed the deadline to challenge it — regardless of whether the sum is genuinely owed. The name captures the reaction of whoever is on the receiving end. They feel robbed. But the mechanism itself is entirely statutory, and if you understand how it works, you can either use it effectively or protect yourself from it.

This post explains the payment notice regime in detail, how smash and grab claims arise, what the key cases say about them, and what to do if you receive a Notice of Adjudication out of the blue on a Monday morning.

The Payment Notice Regime Under the Construction Act

To understand smash and grab adjudication, you need to understand how the Construction Act 1996 (HGCRA) structures payment in construction contracts. The Act (as amended in 2011) creates a cascade of notices that determine what sum is payable and by when. If the paying party misses one of these deadlines, the consequences can be severe.

Under JCT Standard Building Contract With Quantities (JCT SBC), the sequence runs like this. The contractor submits a payment application by the application date specified in the contract (typically monthly). That triggers the due date, which under JCT SBC is 7 days after the valuation date. The employer (or contract administrator, acting on the employer’s behalf) then has until 5 days after the due date to serve a payment notice — also called the payee’s notice — specifying the sum the payer considers due and the basis of calculation. If no payment notice is served by the employer, the contractor can serve its own default payment notice (a payment notice from the payee), which then becomes the sum due.

The final date for payment under JCT SBC is 14 days after the due date. Between the payment notice (or default payment notice) and the final date for payment, the payer has a window to serve a pay less notice. Under JCT SBC, the pay less notice must be served not later than 5 days before the final date for payment. Since the final date is 14 days after the due date, and the pay less notice must be served at least 5 days before that, the deadline for the pay less notice is 9 days after the due date. This is a tight window and missing it by even one day has significant consequences.

The Notified Sum and Section 111

Section 111 of the Construction Act provides that a party to a construction contract must pay the “notified sum” by the final date for payment. The notified sum is the amount specified in the payment notice or default payment notice. If a valid pay less notice has been served, the notified sum is reduced by the amount of the deduction set out in the pay less notice. If no valid pay less notice has been served, the notified sum is the full amount in the application or payment notice — and it must be paid in full by the final date for payment, regardless of the payer’s view of what is actually owed.

This is the engine of smash and grab adjudication. The paying party’s assessment of the true value of the works is irrelevant if they have not served a valid pay less notice in time. The contractor’s application — which may contain claims, disputed variations, inflated valuations — becomes the contractual sum due, and the payer must either pay it or face adjudication for the full amount. The adjudicator in a smash and grab doesn’t consider the merits of the underlying claim. They ask only: was a valid pay less notice served? If not, the notified sum is payable. Decision in 28 days.

How to Identify Whether a Smash and Grab Opportunity Exists

Before serving a Notice of Adjudication, work through this checklist:

Step 1: Was a valid payment application served? The application must comply with the contractual requirements — submitted by the right person, on the right date, in the right form, specifying the sum claimed and basis. Some contracts require applications by the last day of the month; others by a specified day relative to the valuation date. Check the contract. An application served a day late is a defective application.

Step 2: Did the employer serve a payment notice in time? Under JCT SBC, 5 days after the due date. Check whether a notice was served, whether it was served by the right person (the contract administrator under JCT SBC, not the employer’s quantity surveyor acting without authority), and whether it specified the sum and basis. A payment notice that says “we value the works at nil” without any explanation of the basis of calculation is arguably defective.

Step 3: If no payment notice, did the contractor serve a default payment notice? If the employer failed to serve a payment notice, the contractor can serve its own notice specifying the sum it considers due. The contractor’s application typically doubles as this default notice under JCT SBC — but check the specific contract provisions.

Step 4: Was a pay less notice served, and was it valid in form and time? This is the critical question. Check: (a) Was it served by the deadline (9 days after due date under JCT SBC)? (b) Does it specify the sum the payer considers due? (c) Does it specify the basis of calculation — i.e., what deductions are being made and why? A pay less notice that simply says “we intend to pay £X less than your application” without specifying the basis is arguably invalid under s.111(3)(b) HGCRA. (d) Was it served by the right person under the contract?

If the answer to step 4 is that no valid pay less notice was served, you have a smash and grab claim for the full notified sum.

What Makes a Pay Less Notice Invalid

A pay less notice has two mandatory elements under s.111 of the Act: it must specify the sum the payer considers to be due on the date the notice is served, and it must specify the basis on which that sum is calculated. A notice that omits either element is not a valid pay less notice and cannot reduce the notified sum.

Timing is absolute. A pay less notice served one day late is invalid. There is no de minimis exception, no substantial compliance doctrine. If the deadline is 9 days after the due date and the notice is served on day 10, it is worthless for the purpose of the Act. Courts have applied this with no mercy.

Form also matters. The notice must be served in the contractually specified manner. Under JCT SBC, notices are typically required to be in writing and served at the address for service specified in the contract. An email to the contractor’s site manager when the contract requires service to the contractor’s registered office may not constitute valid service. Check the contract’s service provisions carefully before concluding that a notice is invalid on this basis — but do check.

ISG, Galliford Try, and Grove: The Key Cases

Three cases define the law in this area, and the third effectively modifies the first two.

In ISG Construction Ltd v Seevic College [2014] EWHC 4007 (TCC), the employer had failed to serve a pay less notice in time. ISG referred the dispute to adjudication and won. Seevic refused to pay and instead started a second adjudication to determine the “true value” of the works, intending to use any resulting award as a set-off. The court rejected this. Edwards-Stuart J held that by failing to serve a pay less notice, the employer had agreed — by operation of statute — that the notified sum was due. The employer could not avoid paying by running a parallel true value adjudication. ISG established the principle that if you miss the pay less notice deadline, you must pay first.

In Galliford Try Building Ltd v Estura Ltd [2015] EWHC 412 (TCC), the position was tested at the enforcement stage. Estura had lost a smash and grab adjudication and faced paying a substantial sum. It argued that the court should stay enforcement of the adjudication decision pending the outcome of a true value adjudication it wanted to start. Edwards-Stuart J refused the stay. The whole point of adjudication is immediate cash flow; a stay pending a second adjudication would defeat that purpose entirely.

The Court of Appeal then modified the ISG/Galliford Try position in Grove Developments Ltd v S&T (UK) Ltd [2018] EWCA Civ 2448. Grove had lost a smash and grab adjudication to S&T and was ordered to pay the notified sum. Grove then started its own true value adjudication, which resulted in a decision that the true value of the works was actually lower than the notified sum. The Court of Appeal held that Grove was entitled to bring the true value adjudication — ISG had been wrong to suggest otherwise. The Court also confirmed that Grove still had to pay the notified sum immediately, and could only set off any over-recovery once the true value adjudication produced a result in its favour. In practice, enforcement of a smash and grab decision will not be stayed, and the paying party is not permanently stuck with the decision — but they must pay first and argue later.

The practical consequence of Grove: if you lose a smash and grab, you pay, but you can immediately start your own true value adjudication to recover the overpayment. The two processes run in sequence, not simultaneously as a way to avoid payment. The contractor’s cash flow benefit is preserved; the employer’s ultimate right to a correct valuation is also preserved.

A Worked Example: JCT SBC With Quantities

Say the contract has a valuation date of the 25th of each month, and the due date is 7 days later — the 1st of the following month.

The contractor submits its monthly application on 25 February, claiming £480,000.

The due date is 1 March. The employer’s payment notice deadline is 5 days after the due date: 6 March. The employer serves nothing by 6 March.

The contractor’s application stands as the default payment notice. The notified sum is £480,000.

The final date for payment is 14 days after the due date: 15 March. The pay less notice deadline is 5 days before that: 10 March.

The employer serves a pay less notice on 11 March, saying it considers only £210,000 is due. The notice is one day late. It is invalid under s.111.

The contractor serves a Notice of Adjudication on 16 March (after the final date for payment has passed without payment). The employer raises three arguments: (1) the application was inflated; (2) the works are defective; (3) there are back-charges for delays. None of these arguments are relevant to the adjudicator’s question. The adjudicator asks only: was there a valid pay less notice? No. Is the notified sum £480,000? Yes. Was it paid by 15 March? No. Decision: pay £480,000 plus interest.

The employer must comply. It can then start a true value adjudication under Grove to recover any overpayment if its assessment of the true value succeeds — but it pays first.

If You Receive a Smash and Grab Notice of Adjudication: The First 24 Hours

A Notice of Adjudication lands on your desk alleging a smash and grab. What do you do?

First: don’t panic and don’t ignore it. The 7-day period for adjudicator appointment starts running immediately. If you don’t engage, the referring party will appoint, the adjudication will proceed without your input, and the decision will still be enforceable.

Second: find the payment application, the due date, and every notice you served in the relevant payment cycle. Calculate whether your pay less notice was valid and on time. If it was, you have a jurisdictional defence — there was a valid pay less notice, so the notified sum is not the full application amount, and the adjudicator has no basis to award the full amount. Prepare to argue this in your Response.

Third: if your pay less notice was late or invalid, take a commercial view quickly. The adjudicator will almost certainly decide against you on the notified sum question. Your options are: comply early and start a true value adjudication under Grove; negotiate a settlement; or resist enforcement on procedural grounds (which is difficult and often costly). Fighting a smash and grab adjudication on the merits of the underlying valuation is a waste of legal costs — that’s not the question being asked.

Fourth: get specialist advice immediately. Adjudication runs on a 28-day timetable from referral. Your Response needs to be with the adjudicator within 7–14 days. If there is a legitimate jurisdictional argument — the notice was served in time, or was valid — it needs to be properly formulated and presented now, not next week.

Protecting Yourself: Systems and Process

Smash and grab adjudications succeed because of missed deadlines, not because of any complexity in the law. The defence is almost entirely procedural: serve valid notices on time, every time.

Put a payment calendar in place. For every contract, map out the due dates, payment notice deadlines, and pay less notice deadlines for the full contract period. Most contracts run to a regular monthly cycle, so this is one afternoon of work at the start of a project. Assign someone responsible for each deadline — not “the accounts team” but a named individual. The deadline for a pay less notice is not the kind of thing that should live in a shared inbox.

When a payment application arrives, assess it immediately and open the pay less notice question from day one. Don’t wait until day 8 to discover that the application contains £200,000 of disputed variations you need to challenge. By then, your pay less notice deadline may have passed, or you have one day left to prepare and serve a notice that properly specifies the basis of each deduction.

Template pay less notices are useful but dangerous. A template that says “we intend to pay £X” without specifying the basis is invalid. Your template needs to capture the specific deductions being made and the basis for each. If you’re making multiple deductions — disputed variations, alleged defects, liquidated damages, contra charges — each one should be itemised.

Consider whether your contract terms are adequately protective. JCT SBC sets the pay less notice deadline at 5 days before the final date for payment (9 days after the due date). Some bespoke employer contracts extend this window. If you’re regularly finding that 9 days is too tight to assess a complex application, negotiate longer notice periods when you’re drafting the contract — not after you’ve missed a deadline.