The High Court confirmed that a paying party’s failure to respond to a payment claim notice under a construction contract does not entitle the payee, by default, to an adjudicator’s decision directing payment of the amount in the notice. This differs from the situation in the UK, where legislation provides for such a default decision. Adjudications seeking such default decisions are sometimes referred to as “smash and grab” adjudications.
In Tenderbids Ltd t/a Bastion v Electrical Waste Management Ltd [2026] IEHC 5, the contractor served a payment claim notice under a construction contract for a metal waste recycling facility. The employer did not deliver any response. An adjudication followed, but an application to enforce the adjudicator’s decision was dismissed for the reasons we outlined in our briefing: Construction Law Update: Court declines to enforce Adjudicator’s Decision.
The contractor served a fresh notice of intention to refer a payment dispute for adjudication. It alleged that the employer failed to issue a response to the payment claim notice and that this resulted in the full value of the notice falling due for payment on the payment due date. Failure by the employer to pay was identified as the “payment dispute” being referred for adjudication.
The adjudicator decided that, because the employer had not issued a payment claim response notice within the 21 days required under the Construction Contracts Act 2013 (the “Act”), the contractor was entitled to payment in full.
The High Court disagreed. It dismissed the contractor’s enforcement application. It considered three main issues.
1. There was a valid referral of a “payment dispute”
The Act gives a party to a construction contract the right to refer for adjudication any dispute relating to payment arising under the construction contract (a “payment dispute”). The Court found that the contractor at all times asserted a right to a payment under the construction contract read in conjunction with section 4 of the Act, and so the dispute met the definition of a “payment dispute” and was properly referred to adjudication.
2. As an exception, new arguments could be considered at enforcement stage, given the issue to be decided
The employer participated in the adjudication and made a concession to the contractor’s argument that there was a “default direction to pay”. Normally, a party would be held to concessions it made during the adjudication. However, on this occasion, the Court allowed the employer to raise a new argument in the interests of addressing the “default direction to pay” issue, which went to the architecture of adjudication itself. Any unfairness arising from allowing new arguments could be balanced by an appropriate costs order.
3. No default direction to pay
Section 4 of the Act allows the payee under a construction contract to notify a payment claim to the paying party. If the paying party contests the amount due and payable, they are required to deliver a response to the payment claim notice within 21 days of the payment claim date. Section 4 is silent as to what is to happen if the paying party does not deliver a response.
The Court stated that it was not appropriate to imply into the Act: (i) an obligation to pay the amount specified in a payment claim notice unless a response is delivered by the paying party within time, and (ii) an entitlement on the part of the payee to a default decision in the amount specified in the payment claim notice.
The Court found, therefore, that the adjudicator erred in law in determining that the employer’s failure to deliver a response triggered an entitlement by the contractor of payment in full for the amount in the payment claim notice. Error in law is not normally a ground to dismiss an enforcement application. However, in this case, the error went “to the very core of the adjudication process” and compromised its fairness. The adoption of a default direction to pay would prevent a paying party from defending a claim in adjudication on its merits. This would be contrary to the principle of natural justice that a party who is adversely affected by a decision enforceable under statute, (albeit on a provisional basis only), is normally entitled to be heard on the merits. It was not open to an adjudicator to derogate from fair procedures without legislative authority.
The judgment definitively settles an issue central to adjudication under Irish law. It is also a reminder that English case law on adjudication must be approached with some caution and cannot simply be “read across” to the Act in Ireland.