Construction Contracts Act 2013 Briefing to Engineers Ireland Roads and Transport Group

12 OCTOBER 2016

Robert Rooney

What we’ll look at today…

Aims and application of the CCA

Payment provisions

Adjudication

Why are we here?

Poor cashflow in construction industry

Serial insolvency

Industry credit reliant on lowest tiers

Perception of better approach in UK

Enter Sean Gallagher and Feargal Quinn

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Construction Contracts Act 2013

Pillars of the CCA

(1) regulate payment cycles

(2) introduce a more effective dispute resolution mechanism

PAYMENT

PAYMENT

PAYMENT

Does the CCA 2013 apply?

What’s in

» After 25 July 2016

» Written or oral agreements

» Broad definition of construction

operations

» Includes design, project

management and advice on

decoration or layout

» whether parties to a construction

contract attempt to limit or

exclude its application or where

the applicable law is Irish or

otherwise.

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What’s out

» valued under €10,000 (but

valued when?)

» employment contracts

» supply only contracts

» owner occupier projects where

dwelling has ≤ 200m² floor area

» PPPs (top tier only)

Payment

Construction Contracts Act 2013

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What’s changed since July?

» payment claim notices

» responses to payment claim notices

» implied payment terms

» rights of suspension for non-payment

» outlaw of ‘pay when paid’ clauses

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New obligation

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Adequate mechanism for

» interim payments and final payment

» dates of payment cycles

Danger – if you don’t

» Schedule to CCA will apply

» Loss of control

» Loss of clarity

The new regime - timing

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Payment Claim Date

» Date on which a payment claim is

required to be made

Payment Claim Dates

» First - 30 days after commencement

date

» Regular - 30 days thereafter

» Final - 30 days after date of final

completion

Notices: contractor’s – and yours

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Payment Claim Notice

» The amount claimed, even if zero

» Period, stage or activity to which

the payment relates

» Basis of calculation

» Subject matter of the claim

Payment Response Notice

» No later than 21 days from

Payment Claim Date (not notice

date!!)

» Must be issued if payment

contested

» Must specify:

– Amount to be paid (even if

zero)

– Reasons for difference in

amounts

– Details of a claim (if that’s

why there’s a difference)

Late response – the consequences

If the matter is not resolved by the Payment Due Date then the “payment

due” must be paid.

No guidance on what is the “payment due” or who decides what payment

is due.

Arguable - if there is no Response to the Payment Claim Notice, then

» lose right to contest

» amount due and payable

» debt

» suspension of works

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New contractor rights

Introduces suspension right for non-payment

» 7 days’ notice

Suspension – contract v statute

» Query – one statutory suspension mechanism better than two potentially

conflicting mechanisms?

Pay-when-paid clauses prohibited (save for specific insolvency situations)

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Key actions

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Ensure adequate mechanism for date and

valuation

Know your dates

Issue payment response notice

Prepare for spotlight

Dispute resolution

Construction Contracts Act 2013

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Dispute Provisions

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What has brought us here?

» ineffective dispute resolution

What’s the change?

» adjudication – pay now, argue later

What’s the implication?

» greater emphasis on administration, to

avoid and manage disputes

Mandatory tight timelines

Notice

+ 5 days

Appointment

+ 7 days

Referral

+ 7-14 days

Reply

+7-14 days

Decision

+ 7 days

Payment

Adjudication – your role

Lead advocate

Or alongside legal representative

Compiling documentation

» Contract

» Correspondence – in order

» Internal records, diaries

After the decision

» 7 days to pay

» Temporarily binding – decision to litigate or arbitrate

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Adjudication - Readiness

Most of the initial work in adjudication is carried out by the referring party

» But you can be ready

Identify the signs

Identify the dispute early

Ensure that copies of relevant correspondence and documentation are

available

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Going forward

Focus on administrative processes

Be alert

If in doubt, check

QUESTIONS

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