CCA 2013 – How can it help you to get paid as a contractor in Ireland?

Construction Contracts Act 2013 – How can it help you to get paid as a contractor in Ireland?

Why is it important?

In an effort to protect parties carrying out construction work, the stated intent of the Construction Contracts Act 2013 (the Act) is to regulate payments under construction contracts. This is achieved by providing a payment mechanism, and some other protections.

It applies to most contracts for construction work in Ireland (though not all), contracts for supply of materials and residential projects under 200m ² are expressly excluded.

Payment mechanism

The Act establishes regular payment claim dates, which are to be set out in the particular contract or default of every thirty days applies. The executing party (for example a “contractor”) is then permitted to submit a payment claim notice to the other party (for example an “employer”) not later than 5 days after the payment claim date. The Act defines a payment claim date with a rather confusing wording, which would suggest that is the date for submission of payment claims. However, it is instead more of a valuation date, the date to which the amount due is calculated up to.

A payment claim notice (payment application) sets out what was considered to be due at the payment claim date (amount claimed), how that amount has been calculated, and subject matter of the payment claim. It must also identify the timeframe, stage or activity related to the payment claim.

If a payment claim notice is received the Act permits the employer to respond within 21 days if it contests the amount claimed in it. The response should contain the same details as the payment claim notice.

The idea appears to be that there is an obligation to make payment of the amount due either the payment claim notice or the response. That is clear for the latter but a little less clear when it comes to the former.

Right to suspend works?

If an employer does not make payment of an amount due, then a contractor has a right to suspend work, by giving a seven-day notice to the employer of the failure to make payment. If the payment isn’t made within that timeframe the contractor can put down its tools until it is. This gives contractors some well needed leverage.

Adjudication?

Secondly, a speedy dispute resolution method has been introduced, called adjudication. It is an oversimplification to describe it as justice via post, but that description is not far from the truth. Essentially, a third party is appointed and receives submissions from both sides about their respective position. That third party then issues a decision which it believes to be the resolution, which if not complied with may be enforced by a court. The distinctive aspects of this process are:

• It is a statutory right – meaning it is implied in contracts and cannot be excluded by the terms; and
• Timeframe – once appointed the adjudicator has to make a decision within 28 days (though this can be extended in some circumstances).

Conclusion

To conclude, the Act provides payment mechanisms that if followed should help parties get paid on time. Suspension or its threat, provides potential leverage in negotiation which should assist with resolving matters amicably. If unfortunately, that is not possible, adjudication can assist by providing a quick method of obtaining a decision from a neutral party.

However, the Act is relatively novel, and related case law is still developing. As a result, there is some uncertainty over the Act’s interpretation. So far, the courts have supported the Act and the decisions issued by Adjudicators.

Accordingly, we would suggest there is cause for optimism. Though due to some of the quirks of the Act, if you are experiencing non-payment issues, or have questions about how to properly implement the payment process we would highly recommend obtaining legal advice for your particular circumstances.

John Doherty is a Senior Associate and Nouman Qadir MCIOB is a Junior Associate at Quigg Golden Solicitors.