9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 1

Transcription

1 STATUTORY IMPLIED PAYMENT TERMS AND STATUTORY ADJUDCIATION THE CONSTRUCTION CONTRACTS ACT Number 34 of 2013 SEPTEMBER 2013 Gerry O Sullivan FSCSI FRICS FCIArb 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 1

2 Introduction Current position re Act The Payment provisions Adjudication 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 2

3 CONSTRUCTION CONTRACT S BILL Progress government amendments passed Bill passed by Dail and Seanad end July 2013 possible SI early Key amendments No distinction between Public and Private Clients Decisions of an adjudicator will be binding and enforceable by Courts until overturned by arbitration /Court or otherwise settled by the Parties Value of applicable contracts must exceed 10,000 and if a dwelling built for owner occupation as residence must exceed 200 sq metres in area OUTSTANDING ISSUES Operational date for provisions of Act Establishment of National Adjudicator s Panel and Code of Practice for Adjudicators 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 3

4 CONSTRUCTION CONTRACT sec 1 Carrying out construction operations defined Arranging for carrying out construction operations by one or more persons Providing own labour for carrying out construction operations Executing party either contractor or subcontractor depending on contract parties Includes agreement to do work or provide services ancillary to the construction contract-architectural-design,-archaeological surveying engineering project management advice on building,engineering, interior or exterior decoration or on laying our of landscape 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 4

5 CONSTRUCTION CONTRACT sec 2 Excludes manufacture or delivery to construction site of component s, equipment, plant, materials or machinery Excludes value not more that 10,000 Excludes dwellings not greater than 200 square metres floor area and one of parties intends to occupy as residence Contract of Employment PPP where state involved Where other activities involved as part of the contract they are excluded The Act applies whether the Law of the State is otherwise the applicable law or the parties purport to limit or exclude its application 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 5

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7 NOTICE PARTIES MAY AGREE ON MANNER BY WHICH NOTICES WILL BE DELIVERED TO THE EXTENT THERE IS NO AGREEMENT THEY MAY BE DELIVERED BY POST OR OTHER EFFECTIVE MEANS WHERE NOTICE REQUIRED TO BE DELIVERED NOT LATER THAN A SPECIFICIED NUMBER OF DAYS AFTER A PARTICULAR DATE IN ACCORDANCE WITH THE ACT AND THE LAST OF THOSE DAYS IS A SATURDAY, SUNDAY OR PUBLIC HOLIDAY THE NOTICE SHALL BE TAKEN TO BE VALIDLY DELIVERED IF DELIVERED ON THE NEXT DAY AFTER SUCH A DAY 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 7

8 TERMS STATUTE IMPLIED PAYMENT CONSTRUCTION CONTRACTS SHALL PROVIDE PAYMENT CLAIM DATE (PCD)- date when a payment claim in relation to an amount due under the construction contract is required to be made s 1(1) s 3(2) (a) An adequate mechanism to determine this date (otherwise SCHEDULE applies) s 3 (2) (a) PAYMENT PERIOD between the PCD for each amount and the Date on which Amount Due shall be stated (otherwise SCHEDULE applies) s 3 (2) (b) Contract shall provide for the amount of interim and final payment or an adequate mechanism for determining the amount- s 3 (1) (a) (b) mechanism can include determination by third party certifier 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 8

9 TERMS STATUTE IMPLIED PAYMENT CONSTRUCTION CONTRACTS SHALL PROVIDE PAYMENT CLAIM NOTICE (PCN) -not later than 5 days after the PCD the Contractor/Subcontractor delivers a PCN relating to the payment claim to the other party or another person specified under the contract s 4 (1) RESPONSE TO PAYMENT CLAIM NOTICE (RPCN)-if contesting the amount due and not later than 21 days after the PCD the Payee shall deliver their response to the PCN s 4 (3) (a) PAID WHEN PAID TERMS PROHIBITED s 3(5) and (6) 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 9

10 TERMS STATUTE IMPLIED PAYMENT PAYMENT CLAIM NOTICE SHALL Sec 4 (2) STATE THE AMOUNT CLAIMED (EVEN IF ZERO) PERIOD/STAGE /ACTIVITY TO WHICH CLAIM RELATES SUBJECT MATTER OF CLAIM BASIS OF CALCULATION 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 10

11 TERMS STATUTE IMPLIED PAYMENT RESPONSE TO PAYMENT CLAIM NOTICE SHALL sec 4 (3) (a) (i) to (iii) and (b) STATE THE AMOUNT PROPOSED TO BE PAID REASONS FOR DIFFERENCE sec 4 (4) WHERE REASONS ATTRIBUTABLE TO CLAIM FOR LOSS OR DAMAGE ARISING FROM ALLEGED BREACH OF CONTRACT OR OTHER OBLIGATION OR ANY OTHER CLAIM STATE WHEN LOSS INCURRED OR DAMAGE OCCURRED OR HOW CLAIM AROSE PARTICULARS AND PORTION OF DIFFERENCE ATTRIBUTABLE TO EACH BASIS OF CALCULATION IF NO SETTLEMENT PAY WHAT IS NOTED AS DUE ON DUE DATE 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 11

12 TERMS STATUTE IMPLIED PAYMENT PAYMENT DUE NOT MADE EITHER IN PART OR IN FULL BY DATE AMOUNT DUE SUSPENSION sec 5 EXECUTING PARTY MAY GIVE NOTICE OF SUSPENSION SPECIFYING GROUNDS NOT EARLIER THAN DAY AFTER AMOUNT WERE DUE AND AT LEAST 7 DAYS BEFORE SUSPENSION BEGINS SUSPENSION STOPS IF PAYMENT MADE OF AMOUNT DUE OR NOTICE HAS BEEN SERVED OF DISPUTE RELATING TO PAYMENT OF THE AMOUNT CONCERNED WHERE SUSPENSION IS JUSTIFIED ANY CONTRACTUAL TIME LIMIT AFFECTED BY SUSPENSION SHALL BE DISREGARDED 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 12

13 TERMS STATUTE IMPLIED PAYMENT SUSPENSION sec 5 Where the ability of a subcontractor to complete within a contractual time limit is affected by the suspension of the work the period shall be disregarded for the purpose of computing the contractual time limit sec 5 (5) Period of suspension disregarded where it is a subcontract and the other contract is also a subcontract under the same main contract and the ability of the other subcontractor to complete is affected by the suspension of the work Without prejudice to rights to compensation or damages for unjustified suspension not affected 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 13

14 TERMS STATUTE IMPLIED PAYMENT SCHEDULE PAYMENT PROCESS MINIMUM FOR SUBCONTRACT-APPLIES TO OTHER CONSTRUCTION CONTRACTS IF THEY ARE SILENT OR CONFLICT WITH STATUTORY PROVISIONS sec 3( 4) and sec 3 (3) First PCD 30 Days after commencement PCD s every 30 days thereafter up to Date of Substantial Completion Final PCD 30 days after Date of Final Completion If period of Contract less than 30 days PCD due 14 days after completion of the Work under the contract 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 14

15 TERMS STATUTE IMPLIED PAYMENT SCHEDULE PAYMENT PROCESS MINIMUM FOR SUBCONTRACT-APPLIES TO OTHER CONSTRUCTION CONTRACTS IF THEY ARE SILENT OR CONFLICT WITH STATUTORY PROVISIONS Date payment due should be no less than 30 days after PCD Amount due is difference between the aggregate of the gross value ( determined in accordance with the contract) of the work done under the contract at the PCD for relevant payment PLUS any additional amounts in the interim payment under the contract LESS any deductions provided for by the contract and LESS aggregate amount of interim payments that have already been made at the PCD 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 15

16 EXAMPLES CURRENT PAYMENT TERMS RIAI STANDARD CL 35 First PCD period stated in Appendix-default 4 weeks date for Possession defined Date for PCN not PCD defined but nothing precludes them being the same by agreement. PCD before Practical Completion PC is not definite until cert issued-but does not affect periods of payment. RIAI PC cert releases retention ACT only envisages interim payments in advance of PC thereafter a Final Payment after Final Completion (not defined) Period of payment when amount is due is 12 working days from PCD/PCN or 16 days assuming presentation of cert on same day received (possible uncertainty) BUT WELL WITHIN 30 DAYS DEFAULT 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 16

17 EXAMPLES CURRENT PAYMENT TERMS RIAI STANDARD CL 35 Architect s cert =Response to PCN issued 7 days in request explanation of difference now mandatory and in accordance with ACT Failure to pay by Employer by date of due amount Contractor may suspend 5 working days ( 7 days) after notice ( as per ACT) Final Payment determined in respect to 4 events- Notice of intention to issue Final Cert given and unless notice given to refer to Arbitration within 10 working (14 days) final cert to be issued and payment in 7 days The 4 events invariably constitute Final Completion and are the later of 10 working days (14 days) end of defects liability period 10 workings days from completion of making good defects 10 working days from completion of all items of work outstanding at PC 10 working days from period of Final Measurement (should be 9 months from PC 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 17

18 EXAMPLES CURRENT PAYMENT TERMS PWC STANDARD CL 11 First PCD period stated in Schedule -default Monthly (not exact) date for Commencement (Starting Date determined by Contractor) Date for PCN not PCD defined but nothing precludes them being the same by agreement. PCD before Date for Substantial Completion DSC is not definite until Contractor requests and may issue within 20 working days of request -but does not affect periods of payment. cert releases retention ACT only envisages interim payments in advance of PC thereafter a Final Payment after Final Completion (not defined) 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 18

19 EXAMPLES CURRENT PAYMENT TERMS PWC STANDARD CL 11 Period of payment when amount is due is 25 working days from PCD/PCN or 35 days assuming presentation of cert on same day received (possible uncertainty) OUTSIDE 30 DAYS DEFAULT ER must include in statement opinions as to the amount due including calculations and reasons complies with Response Failure to pay by Employer by date of due amount Contractor must issue written demand and after 15 working days (21 days) may give notice to suspend (not as per ACT) Final Payment Certificate determined in respect to issue of the Defects Certificate- Issued 3 months after - payment in 15 working days (21 days) 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 19

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21 Adjudication Right to refer any dispute as to payment arising under the Construction Contract (Payment Dispute) to Adjudication sec 6 Adjudication commences when party serves notice on the other of an intention to refer any dispute relating to payment arising under the contract (Payment dispute) to Adjudication s 6 (1) May be served at any time after dispute arises s 6 (2) Within 5 days including day on which Notice is served parties may agree to appoint adjudicator (their own choice or from the Minister s Panel) s 6 (3) 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 21

22 Adjudication Failure to agree Adjudicator shall be appointed by chair of Minister s Panel s 6 (4) Notice Party shall refer the Payment dispute within 7 days ( 6 days from the date of the appointment of the Adjudicator) and copy the other party including all documentation S 6 (5) Adjudication shall reach a decision in 28 days beginning on date of referral or any longer period agreed by the parties after referral or an extension up to 14 days if agreed by Notice Party S 6 (6) (7) 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 22

23 ADJUDICATOR POWERS-DUTIES Act impartially in conduct of Adjudication s 6(9) Take the initiative in establishing the facts and the law s 6(10) May deal at time with a number of disputes under same contract or related contracts s 6 (9) Decision shall be binding on the parties until otherwise settled or a different decision reached in Court or Arbitration 6 (10) (11) (12) Decision in 28 days including date of referral unless otherwise agreed or can request up to an extra 14 days with consent of Notice Party s 6 (6) (7) May correct decision for clerical or typographical error only S 6 (13) 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 23

24 ADJUDICATOR POWERS-DUTIES Comply with Minister s Code of Practice s 6 (8) Not liable for anything done or omitted in discharging role/function unless in bad faith s 6 (14) Determines who and how much shall pay fees, expense, costs of Adjudicator s 6 (16) May resign at any time on written notice to both-due fees etc. on J & S liability up to date of resignation from both parties S 6 (17) 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 24

25 ADJUDICATOR S DECISION Binding on the parties until finally settled by parties or different decision reached in Court or Arbitration s 6 (10) Adjudicator s decision enforceable by leave or by action of the High Court in same manner as a judgement or order of the Court s 6 (11) Treated as binding for all purposes including by way of a defence, set off or otherwise in any legal proceedings s 6 (12) Adjudicator may not open or reconsider any part of his decision s 6 (13) If amount due pursuant to an adjudicators decision is not paid before the expiry of a period of 7 days beginning on the day on which the decision is made, the executing party may suspend work giving written notice as per previous procedure s 7 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 25

26 ADJUDICATION PARTIES RIGHTS Notice Party right to extend period for decision up to 14 days To agree together an extension of time with no limit Agree together to over turn the Adjudication decision Must bear their own legal and other costs in accordance with the statute s 6 (15) Joint and severally liable for Adjudicator s fees and expense until Adjudicator s decision determines apportionment of liability for his fees/costs May jointly agree to revoke the appointment of the Adjudicator but remain jointly and severally liable for Adjudicator s fees and expenses up to date of revocation Executing party has right to suspend if other party fails to pay on foot of Adjudicator s decision within 7 days 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 26

27 MINISTER S ADJUDICATION PANEL Section 8 Minister selects panel members to act as adjudicators from time to time Appoints chair of panel from its members Members selected shall remain on panel for 5 years and are eligible for reselection Members may be removed by Minister for good and sufficient reason Members may resign on giving notice to the Minister Minister to prepare and publish code of Practice 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 27

28 MINISTER S ADJUDICATION PANEL Selection of members regard will be given to their experience and expertise in dispute resolution procedures under construction contracts and they must be Registered Professionals as defined in Section 2 of Buiding Control Act 2007 Chartered member of the Institution of Engineers of Ireland Barrister Solicitor Fellow of the Chartered Institute of Arbitrators Person of equivalent qualification duly obtained in EC state 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 28

29 CONSTRUCTION CONTRACTS BILL THANKS FOR LISTENING! ANY QUESTIONS? 9/13/2013 gerard o sullivan Mulcahy McDonagh & Partners 29