Key Contacts: Angelyn Rowan – Head of Construction | Michael Cahill – Partner | Claire Wallace-Duffy – Senior Associate | Cilian MacNamara – Associate | Paddy Mockler – Associate |
Introduction
The Construction Contracts Act 2013 (the “Act”) does not provide for any explicit consequences of a failure to respond to a payment claim notice in accordance with section 4(3)(a), and there has been a long-standing question over whether a default obligation to pay in those circumstances (known as ‘smash and grab’) would be implied by the Courts.
The recent High Court case of Tenderbids Ltd t/a Bastion v Electrical Waste Management Ltd [2026] IEHC 5 addresses several issues such as the validity of the referral and definition of “payment dispute”, but of significant interest is the Court’s ruling on ‘smash and grab’ adjudications.
Background
The case relates to a contract for the construction of a metal waste recycling facility in Rathcoole, Co. Dublin (the “Construction Contract”). The Construction Contract, being a RIAI form of contract, with a contract sum of €6,986,339.73 (excluding VAT).
In this case, Tenderbids Ltd t/a Bastion (the “Contractor”) had served a payment claim notice to Electrical Waste Management Ltd (the “Employer”) on 17 May 2024. The Employer failed to deliver any response to such notice. The Contractor commenced an adjudication process that was rendered a nullity by the High Court in a related case (Tenderbids Limited trading as Bastion v Electrical Waste Management Limited [2025] IEHC 139) due to failure to adhere with the contract’s notice requirements. The Contractor served a second notice of intention to refer a payment dispute to adjudication on 18 March 2025.
The Contractor argued that a failure to respond to the payment claim notice prevented the Employer from defending the claim on the merits, and it was obliged to make payment. This was the sole basis of the claim in adjudication. The Adjudicator determined the matter in the Contractor’s favour, treating the Employer’s failure to respond to the payment claim notice as determinative of the dispute, and the Contractor sought to enforce the award.
Whilst the Employer had accepted during the adjudication that the Contractor’s interpretation of section 4 of the Act was correct, it later objected to this position, for the first time, at the enforcement stage. Mr Justice Simons was highly critical of this change of position, and has flagged that negative costs consequences will likely flow from this belated change of approach by the Employer. However, the Court accepted that on an exceptional basis, it would permit the Employer to raise the ‘default decision’ issue for the first time at enforcement stage “in the interests of ensuring the integrity of the overall system of adjudication and enforcement”.
Ruling out ‘smash and grab’ adjudication
The Court held that ‘smash and grab’ adjudications are not provided for under the Act, finding at paragraph 85 that:
“The adjudicator erred in law in determining that the employer’s failure to deliver a response to the payment claim notice triggered an entitlement, on the part of the contractor, to payment in full for the amount specified in the payment claim notice. This is not the proper interpretation of the Construction Contracts Act 2013. The Act does not provide for such a default direction to pay”.
Section 4 of the Act provides that if a party receives a payment claim notice and contests that the amount is due and payable, it shall deliver a response within 21 days of the payment claim date. However, the Act is silent as to the procedure in the absence of a paying party delivering a response. The Court noted that silence was not determinative and considered what may be properly implied from the “language used and the legislative context”.
However, the Court found that there were multiple implications that could be drawn by the Courts from the Act and it was not apparent from the wording of the Act as to which implication was to prevail. Accordingly, Mr Justice Simons concluded that deriving an implied term from the Act would “represent judicial law-making” for the Court to choose one consequence over the others.
Mr Justice Simons found that the Adjudicator had erred in the interpretation of the Act and that “the error of law goes to the very core of the adjudication process and compromises the fairness of the same”. In the application of a ‘default direction’ to pay, a paying party, who failed to respond to a payment claim notice, would be precluded from defending a claim in adjudication on the merits, of which is not provided for under the Act.
Key takeaways
This judgment confirms that the Act does not imply a ‘default direction’ to pay where the paying party has failed to respond to a payment claim notice under section 4 of the Act. While the Act does promote the principle of “pay now, argue later”, the drafting used by the legislature does not confer a provision to impose automatic liability upon paying parties who fail to respond to a payment claim notice. Although a failure to respond can have the effect of crystallising a dispute, a paying party retains the right to contest the merits and there is no automatic entitlement to an adjudicator’s decision directing payment in the amount specified in the payment claim notice. This differs from the UK position which makes explicit provision for such an automatic entitlement in its equivalent legislation.
This judgment answers a fundamental question regarding adjudication under Irish law and marks a significant ruling which confirms that ‘smash and grab’ adjudications are not provided for under the Act as currently drafted.
To read the full judgment, please click here.
This article was prepared with the assistance of Intern, Scott Carney.
