Posted by Andrew Ash, Partner
S&T (UK) Limited v Grove Developments Limited  EWCA Civ 2448 – Court of Appeal upholds Coulson J’s first instance decision – “Smash and grabs” – but there’s still life in the old dog yet
The Court of Appeal has today handed down its decision on the appeal by Grove Developments Limited against the first instance decision by Coulson J, in which he decided that a party who had failed to issue an effective payment or pay less notice against a contractor’s application for interim payment could refer a dispute as to the true value of the Contractor’s works to adjudication.
The Court of Appeal has upheld Coulson J’s decision. However, the Court of Appeal has also clarified that the right to seek a true valuation is dependent upon and subject to payment by the Employer of the “nominated sum” contained in the Contractor’s application.
The Court of Appeal’s reasoning for this is that:
“…the [Construction] Act cannot sensibly be construed as permitting the adjudication regime to trump the prompt payment regime. Therefore, both the Act and the contract must be construed as prohibiting the employer from embarking upon an adjudication to obtain a re-valuation of the work before he has complied with his immediate payment obligation.”
So although Employers may breathe a sigh of relief knowing that a failure to issue a timely payment and pay less notice isn’t absolutely fatal to their position, never the less , if they wish to contest the value of a Contractor’s application in such circumstances it looks as if they will still have to pay first and then argue later.
This reasoning appears to kill off the notion that an Employer will be able to seek a true valuation and then race the Contractor to enforcement proceedings without first having to part with its cash.
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