Smash and Grab Adjudication: How the Notified Sum Works and When to Use It

Smash and grab is the label the industry gave to the most mechanical dispute in construction. The Construction Act requires the payer to serve a payment notice, and if it wants to pay less than the notified sum, a pay less notice, each within strict time limits. If it serves neither validly and in time, section 111 obliges it to pay the notified sum. The application becomes payable in full, whatever the account is really worth.

Subcontractors are usually on the receiving end of payment games. This is the mechanism that turns the tables, and every commercial manager should understand exactly how it works, whether to use it or to avoid being caught by it.

The machinery in four steps

First, the payee makes an application which, under most JCT and NEC arrangements, is capable of standing as the default payment notice: it states the sum considered due and the basis of calculation. Second, the payer has a window to serve its own payment notice. Third, if the payer intends to pay less, it must serve a pay less notice no later than the prescribed period before the final date for payment, again stating the sum considered due and the basis of calculation. Fourth, absent valid notices, the notified sum is payable, and an adjudicator will order it paid without ever opening the measure.

Everything therefore turns on validity. Was the application clear, in the right form, at the right time, and detailed enough that the payer could understand how the sum was calculated? Was the pay less notice in time, and did it set out a real calculation rather than a bare refusal? These are document questions, not valuation questions, which is why these adjudications are quick and comparatively cheap.

What the payer can and cannot do

Since S&T v Grove the position is settled: the payer must pay the notified sum first, and only then may it start a true value adjudication for that cycle. So a successful smash and grab gets cash in the door, but it does not necessarily end the argument. If your account is genuinely soft, expect a true value adjudication to follow, and weigh that before you refer. For a subcontractor whose account is solid but starved of cash, the calculation is usually easy. For one whose application was optimistic, the notified sum can be a loan you repay with costs.

Using it well

The best use of the notified sum regime is quiet. A letter that sets out the missing or late notices, the statutory position and a seven day deadline resolves a remarkable number of payment problems without a referral, because the payer's advisors know exactly how the adjudication ends. Escalate to a referral when the letter does not move them, and keep the referral tight: the application, the notice dates, the contract payment terms and nothing that invites a valuation argument.

And protect yourself in the other direction. If you are a contractor with subcontractors below you, your own pay less notices need the same discipline you exploit upstream. Serve them in time, with a real calculation, every cycle. Our guide on what to do when a main contractor is not paying covers the wider options, and our adjudication support service runs referrals and defences for both sides of the table.

Common questions

What makes a pay less notice invalid?

The two usual killers are timing and content. The notice must be given no later than the prescribed period before the final date for payment, and it must state the sum the payer considers due at the date of the notice and the basis on which that sum is calculated. A bare assertion that money is withheld, with no calculation, is vulnerable. So is a notice served even one day late.

Can the main contractor just adjudicate the true value straight back?

Not before paying. Following S&T v Grove, the payer must discharge its immediate obligation to pay the notified sum before it can commence a true value adjudication in respect of the same payment cycle. Once paid, a true value adjudication is a genuine risk, so treat a smash and grab as leverage and cash flow, not as the final word on the account.

How long does adjudication take and what does it cost?

The statutory timetable is 28 days from referral, extendable to 42 with consent. A straightforward notified sum adjudication is one of the cheapest disputes in construction because the merits of the account are largely irrelevant: the questions are whether a valid application was made and whether valid notices were served in time.