Grove Developments Ltd, the employer, engaged S&T to design and build a new Premier Inn Hotel at Heathrow Terminal 4 under a JCT Design and Build Contract 2011. The dispute between the Parties arose when S&T issued its interim payment application which Grove contested with its payment notice and pay less notice. However, Grove’s payment notice was served out of time despite having attached sufficient information whereas its pay less notice was in time but did not re-attach the detail of the calculation. The pay less notice did, by reference, seek to incorporate the detail of the sum to be paid as set out in the earlier payment notice. The disputes between the parties were subsequently referred to an adjudicator. The adjudicator held that the payless notice was insufficient to stand as a valid pay less notice. Grove commenced Part 8 proceedings seeking an order that its payless notice was valid. S&T issued a counterclaim and sought to enforce the adjudicator’s decision.

Coulson J rejected S&T’s arguments and held that Grove had issued a valid pay less notice as it complied with the requirement to “specify the basis of the calculation” with a reference to the earlier spreadsheet in the payment notice. More fundamentally, Coulson J also held that Grove was entitled to commence a separate adjudication seeking a decision as to the “true value” of the interim application in dispute. In doing so, he expressly disagreed with the first instance decisions in ISG Construction Limited v Seevic College [2015] 2 All ER Comm 545 and Galliford Try Building Limited v Estura Limited [2015] BLR 321 insofar as those cases held that the failure to serve a valid payment or payless notice should amount to a deemed agreement on the part of the employer as to the true value of the interim application thereby preventing the employer from adjudicating again as to the true value of the interim application. Coulson J held that an employer was entitled to commence a separate adjudication to establish the true sum due and a claim for any consequential financial adjustment.

On a separate question, under Clauses 2.29.1.2 and 2.29.2 of the Contract, Grove was required to serve an intention to deduct liquidated damages as a “warning notice” and a subsequent notice actually making the deduction. However, Grove sent both notices on the same day within the space of one minute. S&T argued that the service of both notices was insufficient to enable the warning notice to be valid. Coulson J held that there was no minimum period required between the two. Therefore, the notices were valid as correct sequence had been used to send and receive the notices.

The impact of this case will be significant for future adjudication enforcement proceedings as it may serve to discourage “smash and grab” adjudications by allowing an employer to effectively cross adjudicate over the true value of the interim application. Coulson J emphasised that "there is no threat to cash-flow" to contractors as they will remain entitled to payment of the full amount applied in its interim application if the employer fails to issue a valid pay less notice in time, albeit that the benefit of any windfall might now be more short lived.