The importance of issuing Payment claims on a Cumulative basis…..

An issue arose today that I have not come across since the early days of the Construction Contracts Act 2013 and I feel it works as a timely reminder of the sometimes unnecessary black and white view that our system undertakes.

A Notice of Intention for an outstanding sum due and owing to a client was issued to the Responding Party. The sum due and owing was based on a payment process in a written term of agreement whereby a sub-contractor would issue a payment application to a main contractor. The main contractor would revert with a payment certificate for an agreed amount, to which the sub-contractor would issue an invoice and payment would subsequently be made.

The sub-contractor issued four such payment applications, received four such payment certificates and issued four such invoices but only one of the four payments was subsequently made. No dispute existed in respect to the payments and a notice of intention was issued to the main contractor for non-payment of the outstanding sum of the three payment certificates.

The parties failed to agree on an adjudicator and an application was made to the Ministers Panel of Adjudicators under Section 6 of the Act.

The Construction Contracts Adjudication Service on reviewing the application, rejected same on the basis that it contained in affect, 3 separate individual disputes for payment arising under the same construction contract and it therefore required 3 individual notices of intention to be issued to comply with section 2 of the Code of Practice Governing the Conduct of Adjudications. The service, following a notification by telephone to explain the issue, therefore rejected the application and closed the case.

The options available are:

(1) to collate the claims into a single payment claim notice for payment on a cumulative basis, with a deduction shown only for the payment received and submit same in accordance with the relevant Payment Claim Date under the contract and awaiting the run through of the cycle before, in the assumed absence of payment, issuing a Notice of Intention for the full amount again, or

(2) issuing three separate notices of Intention for the three separate disputed amounts and again in the assumed absence of payment, following on with three applications for appointment of adjudicators for the three references. It is assumed, but not guaranteed, that the same Adjudicator would be appointed on the three cases, but they would still require three sets of referral documents, should the claims proceed.

The issue brought home the reality and necessity of claiming for all works carried out under a construction contract on a cumulative basis with deduction from the value claimed, only made for payments having been received into your account.

In that way, unnecessary time, paperwork and cost will not be lost in attempting to recoup your entitlement.

Keith Kelliher is an Accredited Adjudicator, who has completed the Diploma in Adjudication in University College Dublin, specifically on the Construction Contracts Act 2013, and has represented Main Contractors and Sub-Contractors in payment disputes for over 20 years in the Irish construction industry. Contact Keith at [email protected] for any assistance with the requirements of the ACT. This article is a commentary piece and does not constitute nor should it be relied upon as legal or professional advice.