Arbicon are construction law specialists, highly experienced in advising Main Contractors, Subcontractors and Building Employers in resolving payment issues. We advise Clients on Pay Less Notices, Payment Notices, late payment issues and default payments. With over 40 years’ experience dealing with construction disputes, we have the expertise to evaluate your position and resolve your dispute through adjudication, a quick ADR process to recover your money.
In the construction industry, payment issues regularly arise through
problems with the construction works, overpayment or underpayment,
damages/loss, late payment or simply an unwillingness to pay at all. Payment disputes often occur between the Main
Contractor and Subcontractor, where the Subcontractor is not paid, or a Pay Less Notice is served. Large sums of
money and complex construction projects can be involved, and the total amount
payable changes over time, all of which can have an impact and result in a payment
dispute. There are numerous reasons why issues with payment
occur including:
The Construction Acts provide a statutory right to payment for work carried out under a commercial construction contract and clauses that restrict or block payment are illegal. The payment must be calculated and notified by the payer in strict time limits otherwise the payee is legally entitled to the amount they request. Strict management of the payment notification process must be adopted.
Pay Less Notice
If an
invoice or payment application required by the contract is submitted and is
ignored or inadequately responded to, or that response is not done in time,
then the Invoice/payment application is automatically the legal sum due in default
and becomes what is known as the "Default Payment Notice". If payment is not
made, the payment dispute can be referred to Adjudication to obtain the correct payment due.
This
right has come about as the Construction Industry has suffered for years with a
reputation of bad payers ignoring those in need of payment and often the reason
behind much insolvency. The law was changed and even though the law has been in
force on Default Payment Rights since 1st October 2011, those used to not
paying their way have been caught out leading to a number of cases known as
"Smash and Grab" adjudications. It is not "Smash and Grab"
it is "Pay-up you are in breach of Contract for Non-Payment!".
Put simply the law is….
“If your invoice/payment application is ignored….what
you ask for is what you get!” Arbicon can adjudicate and obtain an order to pay.
The law dictates that if there is no contract remedy for late payment, you are entitled to simple interest at 8% over the Bank of England Base Rate and reasonable costs of pursuing the debt. The one proviso is that if the contract contains a reasonable remedy for late payment then the Act does not apply. Typically, a JCT contract includes 5% including all interest and costs, that is all that can be recovered.
