Payment claim notices; failure to comply

Unlike the Housing Grants Construction and Regeneration Act (as amended) in the UK, the failure to issue a payment response may not necessarily mean that the payment claim notice amount that has been made is deemed accepted.

In a recent adjudication, the adjudicator opined that, as the Construction Contracts Act is silent on what happens in the event that a party fails to issue a payment response. Under the CCA, the adjudicator has no express authority to award the payment claim amount to sub-contractor.

The effect, the contractor can fail to issue a Payment Response and in such circumstances the subcontractor can suspend work.  If the matter is then referred to adjudication, the sub-contractor cannot thereafter suspend on foot of lack of payment. The Payment Claim Notice (and the amount of the Claim) will then need to be the subject of a dispute.

Given that the dispute process is likely to take at least another month and half, conceivably the sub-contractor can be out of funds for some time before getting a fair payment.

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ACUA are Chartered Quantity Surveyors, based in Dublin, Ireland, specialising in commercial risk management, dispute avoidance and resolution services, along with the traditional Quantity Surveying services.