Since the introduction of the Construction Act, the so-called 'smash-and-grab' adjudications have been used as a means of obtaining payment where there has been a failure in the payment process.
If a referring party is successful in a "smash-and-grab" and an award made in their favour, the other party from whom payment is sought is then entitled to launch their own counter-adjudication to establish the "true-value". However, crucially, not without paying the amount awarded in the 'smash-and-grab' adjudication first.
This was a principle established by the Court of Appeal in S&T v Grove. The underlying reasoning was that the utility of adjudication is lost if a party must wait for another round of counter-proceedings to take place before potentially receiving payment.
Since Grove, the right to payment of a smash-and-grab award before a true-value adjudication begins has become a recognised principle.
Now, in the recent case of Kew Holdings v. Donald Install Associates, the Courts have gone one step further. Not only must a losing party pay a smash-and-grab award before raising a true-value adjudication – they must also pay before they pursue court proceedings.
In Kew Holdings, a contractor referred a 'smash and grab' payment dispute to adjudication and obtained an award in its favour. The employer then failed to pay the award, so the contractor obtained judgment from the Court enforcing it. Without paying the award, the employer then raised its own proceedings in the Technology and Construction Court (TCC) seeking damages from the contractor in relation to the same contract.
In response, the contractor asked the TCC to strike out the proceedings; they argued that the employer had no right to raise its own action until they had paid the contractor's adjudication award. Instead, the TCC opted to "stay" the action, effectively freezing it until payment of the smash-and-grab award had been made.
For many, this will be viewed as a natural extension of the principle established in Grove.
However, by limiting a party's right to proceed with a court action, the TCC has shown the lengths it will go to in order to preserve the utility of adjudication.
By ordering a stay of the proceedings, rather than striking them out altogether, the TCC has sought to strike a balance; it is yet to be seen whether this is an approach which will be adopted in Scotland.