Case Study of Construction Company X
This case study will discuss the adjudication in a case we recently dealt with. This case originally arose due to a payment dispute which arose when the Plaintiff submitted a payment application and the Defendant failed to make payment within the stipulated time period.
The Plaintiff made an application for adjudication pursuant to the Construction Contracts Act 2013. There are four main issues which were raised and considered by the adjudicator.
The first issue questions if the payment provisions within the sub-contract have been replaced by those in relevant Schedule to the Construction Contracts Act 2013. The Plaintiff has stated that the sub-contract being disputed is less favourable for them compared to the defendant. However, the defendant claimed that the sub-contract does not breach the 2013 Act. Despite the sub-contract being unfavourable towards the Plaintiff, the adjudicator decided that applicable Schedule from the 2013 Act replaces those within the sub-contract.
The second issue arises in relation to payment claim under Application 15. As previously mentioned, this is in relation to the payment, which was decreased after retention was factored in. There was a variety of issues in relation to the validity of this application presented by the defendant. They are as follows:
Timing: Not issued seven days before the Payment Claim Date.
Content: Did not include the sum due up to the Payment Claim Date.
Deductions: Incorrect retention deduction (3% instead of 5%).
Previous Payments: Did not account for total previous payments.
Stage of Work: Lacked specific details on the stage of work.
Progress Information: Insufficient progress details.
Main Contract Compliance: Lacked supporting evidence for Main Contract compliance.
Personnel Certificate: Missing required "Pay and Conditions of Employment of Sub-Contractors Personnel" certificate.
Despite these minor breaches, the adjudicator decided that Application 15 continues to be valid.
The third issue questions whether the plaintiff is entitled to payment for Application 15. As previously mentioned, the defendant had 21 days to respond to Application 15, if they intended to pay less than the decided sum. However, they have never responded. Thus, the adjudicator confirmed that the plaintiff is entitled to payment for Application 15 based on the defendant's failure to respond adequately.
Lastly, the fourth issue aimed to determine whether the plaintiff was entitled to interest. The adjudicator determined the interest based on the European Central Bank’s Refinancing Operations Rule and added 8 percentage points.
Conclusion:
The adjudicator found that the defendant should be responsible for costs of the adjudicator fees, as well as, paying the determined sum to the plaintiff within seven days of the adjudicator’s decision.
Commentary:
This case perfectly illustrates how payment disputes can be conducted in the Republic of Ireland as this is the only type of dispute that can occur according to the Construction Contracts Act 2013. It highlights the importance of clear contractual terms, adherence to procedural requirements, and understanding statutory provisions related to payment disputes and interest calculations. The outcome of this case reinforces the importance of appropriate contract administration and management. It underscores the implications of failing to adhere to contractual timelines and procedures, such as the consequences of not responding within the stipulated timeframe to payment claims.