How construction payment disputes arise
Payment issues often turn on strict deadlines and technical requirements. Typical flashpoints include disputed interim valuations, variations, delays and extensions of time, liquidated damages set‑off, defects and snagging, retention release and final account disagreements. Many disputes also centre on the validity or timing of a payment notice or a pay less notice, and whether a party is entitled to be paid the “notified sum”.
The Construction Act imposes a clear sequence: due date, payment notice, final date for payment and any pay less notice by the contractual deadline. If a paying party fails to serve a compliant notice in time, the payer can become liable to pay the full notified sum, regardless of the true value at that point. Subsequent “true value” valuation can then be addressed separately, often by a further adjudication.
Common issues we handle
- Non‑payment or underpayment of interim and final applications
- Validity and timing of payment notices and pay less notices
- Smash and grab adjudications and subsequent true value adjudications
- Valuation disputes over variations, loss and expense and preliminaries
- Set‑off for defects, liquidated damages and contra‑charges
- Release of retention and sectional completion issues
- Suspension of performance for non‑payment under section 112
- Enforcement of adjudicator’s decisions in the Technology and Construction Court
- Negotiated settlements, mediation and without prejudice meetings
Why choose us
Stephensons is a national, full‑service law firm with a dedicated construction and engineering disputes team. We combine deep sector knowledge with decisive litigation experience to deliver commercial, practical outcomes under tight timeframes.
We hold the Law Society’s Lexcel quality mark, reflecting our commitment to excellence in client care and practice management. Our lawyers are recognised in leading legal directories for their work in dispute resolution, and we are regulated by the Solicitors Regulation Authority. Clients value our responsive, straight‑talking approach and our proven track record in adjudication, negotiation and court proceedings.
As a multi‑disciplinary practice, we can also draw on specialist colleagues in areas such as regulatory, insolvency and, where relevant, criminal law, ensuring that any connected issues are considered and managed seamlessly.
How we can help
Construction payment disputes often move quickly. We mobilise promptly and can take urgent steps within hours where deadlines are imminent. Our team advises on strategy from the outset to maximise leverage and minimise risk.
- Emergency triage and strategy on notice deadlines and payment cycles
- Drafting or challenging payment applications, payment notices and pay less notices
- Preparing and defending adjudications, including referral and response submissions
- Negotiation and mediation to achieve swift, cost‑effective resolution
- Enforcement or resisting enforcement of adjudication decisions in the Technology and Construction Court
- Issuing or defending Part 7 and Part 8 claims, including claims for declarations
- Advising on suspension of works, termination risks and project continuity
- Final account strategy, quantum evidence and expert input where required
We provide clear, commercial advice about prospects and options at every stage. Where appropriate, we will agree fixed fees for discrete tasks, staged pricing for adjudications or blended arrangements that align cost with the key steps in your matter.
Time limits and technical pitfalls
Payment disputes frequently hinge on short and immovable deadlines. Payment notices typically must be served within a set period after the due date, and any pay less notice must be served no later than the contractually prescribed period before the final date for payment. Missing a deadline or serving a non‑compliant notice can decisively alter the balance of a dispute. Early advice can prevent technical missteps and protect your position.
If you have received a notice of adjudication, the timetable is equally tight, often requiring a response within seven days and a decision within 28 days. We can step in immediately to defend your position and manage the process effectively.
Who we act for
- Main contractors and specialist subcontractors across all trades
- Developers, employers and public sector bodies
- Construction professionals, including quantity surveyors and project managers
- Suppliers and manufacturers within the construction supply chain
Our approach to adjudication
Adjudication is designed to maintain cash flow, delivering a rapid, temporary binding decision. We build focused, evidence‑led cases that address the statutory framework and your contract, supported by contemporaneous records, programmes and expert valuation where necessary. We are also experienced in follow‑on enforcement proceedings and in defending challenges based on jurisdiction or breach of natural justice.
Where a smash and grab adjudication is brought due to an alleged failure to serve a valid notice, we assess the validity of both the payment and pay less notices, the operation of the contract’s timetable and any grounds to resist payment or to commence a subsequent true value adjudication once any notified sum has been discharged.
Practical tips to protect your position
- Diary all contractual payment milestones, including due dates and final dates for payment
- Ensure payment notices and pay less notices are served on time, to the correct address and in the required form
- Keep contemporaneous records of progress, variations, delays and site instructions
- Act promptly on any notice of adjudication and seek early legal advice
- Consider commercial routes to settlement in parallel with any formal process
Funding and costs
We will discuss costs openly from the outset. For many payment disputes and adjudications we can offer fixed fees for specific stages, capped fees or blended rates. While parties typically bear their own legal costs in adjudication, the adjudicator can allocate their fees between the parties. We will explain the likely cost profile and recovery prospects at each step.
Frequently asked questions
What is a smash and grab adjudication?
This refers to an adjudication where the claiming party seeks payment of the notified sum because the paying party failed to serve a valid payment notice or pay less notice on time. The focus is on notice compliance and timing rather than the underlying valuation at that stage. The true value can usually be assessed later through a further adjudication once the notified sum has been paid.
What happens if no pay less notice is served?
If a compliant payment notice has been issued and no valid pay less notice follows by the contractual deadline, the payer generally must pay the notified sum by the final date for payment. Failure to do so opens the door to adjudication and, if necessary, enforcement in the Technology and Construction Court.
Can i suspend work for non‑payment?
Yes, section 112 of the Construction Act allows a party to suspend performance for non‑payment of a notified sum after giving the contractually required notice. Suspension must be exercised carefully to avoid breach. We can advise on the correct notice and timing.
How long does adjudication take?
Adjudication is expedited. From the notice of adjudication, the referring party typically has seven days to serve a referral. The adjudicator usually aims to decide within 28 days of the referral, which can be extended by agreement.
Can the adjudicator award legal costs?
As a general rule, each party bears its own legal costs in adjudication unless both parties have agreed otherwise after the dispute has crystallised. The adjudicator can decide how their own fees are apportioned.
What evidence will i need?
Key materials include the signed contract or terms, programmes, applications for payment, payment notices, pay less notices, site diaries, valuations, variation records, correspondence, meeting minutes and any expert assessments. The stronger your contemporaneous records, the better your position.
Contact us
If you are facing a construction payment dispute or need urgent advice about an adjudication, call Stephensons on 0161 696 6170. Alternatively, fill in our enquiry form for a prompt callback. Early, decisive action can make the difference between prolonged disruption and a swift, commercial outcome.
