Link to Introduction Introduction

Since the inception of the Construction Contracts Act 2013 (CCA 2013), discussions have taken place regarding whether an obligation to make a default payment arises in circumstances where the payer fails to issue a response to a payment claim notice. An adjudication about default payments is often referred to as ‘smash and grab.’ In Tenderbids Limited t/a Bastion v Electrical Waste Management [2026] IEHC 5, the Irish High Court held that a default payment does not arise and refused to enforce the adjudicator’s decision, which contained an error of law that went ‘to the very core of the adjudication process and compromises the fairness of same.’

Link to The CCA 2013 The CCA 2013

Section 4(3) of the CCA 2013 provides that if a payer contests a claimed amount, it shall issue a response to a payment claim notice within 21-days of the payment claim date. Unlike equivalent UK legislation, the CCA 2013 does not set out that the amount claimed is payable by default. Indeed, the CCA 2013 does not specify any consequence for failing to issue the response. Therefore, the main issue in Tenderbids was whether the obligation to make a default payment could be read into the CCA 2013.

Link to Tenderbids Tenderbids

Because of the significance of the judgment in relation to the CCA 2013, unusually the court allowed new arguments at enforcement stage, which were not argued before the adjudicator. The court concluded that the obligation to make a default payment does not arise noting that the court leans in favour of a determination on the merits rather than a determination for procedural reasons. The court stated that:

‘75 … it is impermissible to impose upon legislation an outcome simply because it appears reasonable or sensible to an individual judge or aligns with his or her instinct as to what the legislators would have said had they considered the problem at hand.’

76 It is necessary to distinguish between (i) construing statutory language in its proper context, and (ii) supplying, by judicial choice, a consequence which the statute has not expressed and for which no clear and specific legislative intention can be inferred.  Where a statute prescribes a procedure but does not specify the consequence of non-compliance, the court may, in an appropriate case, imply a consequence that is decisively supported by the statutory language and context. But where multiple, materially different consequences are plausible, and in the absence of textual or contextual guidance, it would represent judicial law- making for the court to make the policy choice.

77 This is especially so in circumstances where the Act provides for payment of the amount proposed in a response to a payment claim notice (section 4(3)(b)) but contains no corresponding provision addressing the contingency of the paying party failing to deliver any response.  The absence of any corresponding express obligation to pay the amount specified in the payment claim notice, in circumstances where no response has been delivered, is a strong indicator that the court should not supply such an obligation by implication.’

Link to Conclusions Conclusions

The judgment is important and confirms that a default payment does not arise where the payer fails to issue a response to a payment claim notice. Where a matter is very significant, the court may allow new arguments to be raised at enforcement stage, which were not put before the adjudicator. Where an error of law goes to the core of the adjudication process the court may not enforce the adjudicator’s decision. A question arises as to the purpose of s4(3) of the CCA 2013, is it now redundant? Further, if a payer issues a response to a payment claim notice, and say for example it contains an overpayment, it is bound to make payment of that amount. Therefore, is it better for a payer not to issue a response?