** WON ** Notice to withhold - Building contract anyone know about them?

**andrew1** · 8th October 2006 18:25

Is there anyone out there familiar with Building contracts where the ' Notice to Withhold ' Payment has been issued?

It won't mean much to anyone who hasn't heard of them.

I am trying to sort something out and could do with a bit of help if someone knows.

A sub contractor to a big project was paid 5 regular part payments. Sub Contractors terms were 14 days after Application for payment, the main contract states 30 days from Final Payment Date. 13th July Application for payment No6. Subbie was not paid and main contractor kept on snagging, complaining and snagging finding any excuse not to pay so subbie eventually left the site without the certificate of completion. 6th August Notice to Withold received and a list of items taken out of overall contract ( full of excuses).

My question is,
Under the Housing Grants Construction & Regeneration Act 1996 / 8 there are laws relating to Notice to withhold payment in that they should be supplied 7 days prior to final payment date.

Does the scenario above, in your opinion fall within the Act as the Notice to Withhold came well after the Application for payment and 14 days therafter?
what is the status of the Notice to Withhold if a) the certificate of completion for ' final' payment is not received or signed.
b) the situation with regard to walking off site due to non payment.

It has since been established that in the list of items included in the Notice to Withhold the Subcontractor has perfectly documented authorisations for the work detailed and told they won't get paid for.

Does this make sense?

Any help appreciated.

Similar Threads:

**rosierose** · 24th October 2006 12:44

Hi

Which contract was being used? I am OK on most standard JCT documentation.

Rosie

**andrew1** · 24th October 2006 13:16

Originally Posted by rosierose

Hi

Which contract was being used? I am OK on most standard JCT documentation.

Rosie

Rosie - you angel ! I thought no one knew what I was talking about!

Now, I'm not too sure what you mean by 'which contract'. What I can tell you is that it stated in the subcontract " The main contractor confirmed the form of main contract as being Defcon 2000( Contractors Design) with amendment icon

1,2002 and the subcontract will be Defcon subcontract.

This was an MOD site, but I understand the Defcon contracts relate to design I think and that the type of work being undertaken would fall under the Housing Grants Construction & Regeneration Act 1996 / 8 , but in the subcontract it only mention Defcon.

Does that make any sense?

**rosierose** · 24th October 2006 14:20

Very sorry A, defence contracts are a bit outside my area

If you can get hold of the contract I'd be happy to take a peak though.

R

**andrew1** · 24th October 2006 14:41

You are not getting off that easily now I've got you !

This is not exactly a 'defence contract' in the pure sense of the word ( not selling shooters & tanks !). This was a building contract with one of the big names in the building industry who were commissioned to undertake a rebuilding excersise in Northumberland on an MOD site!

The subbie was a small building subbie ( as they are !) who undertook work on the accomodation buildings and ripped off by the main contractor ( not the MOD ).

Would that make a difference to you. Also, I have only a few pages of what appears to be a large swathe of contract so letting you see a copy wouldn't make a lot of difference I don't think.

I'm more interested in finding out about this Notice to Withhold business and the Act I referred to without the certificate of completion becasue the subbie walked off site due to the frustration of constant snagging and non payment.

I am not familiar with building contracts or practices, but from what I've heard so far about the tactics of these large contractors in bankrupting subbies so they can enhance their own profits from the jobs is well documented. One consulting firm who specialises in dispute resolution ssaid this practice was out and out fraud - nothing more nothing less. I am assisting this subbie to get his money and so far I'm getting to the bottom of the laws like we all are on this forum site and I am beginning to win - these contractors are going to lose too once I get a hang of the law.

Whadya think?

**rosierose** · 25th October 2006 13:03

Ok Then!

Try to bear in mind that this is coming from the point of view of a Contract Administrator rather than a contractor. Meaning that I don't actually get to see many subcontracts.

The MOD is subject to the Act. And my understanding is that subcontract agreements are construction contracts under the Act and the provisions apply.

What I do know is that without completion the Contractor may have a strong case for withholding payment, particularly if there is a design element to the works/subcontract. If that is the case I will explain in more detail.

Other than that, the subcontractor has recourse under the act if his payment are staged: “Where a sum due under a construction contract is not paid in full by the final date for payment, and no effective notice to refuse or withhold payment has been given, the payee has the right (without prejudice icon

to any other right or remedy) to suspend performance of his obligations under the contract to the party by whom payment ought to have been made. The right may not be exercised without first giving to the party in default at least seven days’ notice of intention to suspend performance, stating the ground or grounds on which it is intended to suspend performance. The right to suspend performance ceases when the party in default makes payment in fullof the amount due.”

Sorry if this is just a regurgitation of what you already know. Of course, there is always arbitration.

R

**andrew1** · 25th October 2006 13:34

Originally Posted by rosierose

Ok Then!

Try to bear in mind that this is coming from the point of view of a Contract Administrator rather than a contractor. Meaning that I don't actually get to see many subcontracts.

The MOD is subject to the Act. And my understanding is that subcontract agreements are construction contracts under the Act and the provisions apply.

What I do know is that without completion the Contractor may have a strong case for withholding payment, particularly if there is a design element to the works/subcontract. If that is the case I will explain in more detail.

Other than that, the subcontractor has recourse under the act if his payment are staged: “Where a sum due under a construction contract is not paid in full by the final date for payment, and no effective notice to refuse or withhold payment has been given, the payee has the right (without prejudice icon

to any other right or remedy) to suspend performance of his obligations under the contract to the party by whom payment ought to have been made. The right may not be exercised without first giving to the party in default at least seven days’ notice of intention to suspend performance, stating the ground or grounds on which it is intended to suspend performance. The right to suspend performance ceases when the party in default makes payment in fullof the amount due.”

Sorry if this is just a regurgitation of what you already know. Of course, there is always arbitration.

R

No Rosie, don't stop - that's exactly what I want to hear - Thank you so much.

Now, can you define EXACTLY ( or near as you can

) my highlight in red - the ' final date for payment' the subbie had terms of his own of 14 days from' application of payment' and on average the staged payments were made 14 days after ( implied contract?). The subbie was provided with copies of what look like the MAIN contract as it refers to the ' works contractor' and the works contractor is who we are chasing for payment, In it it states " The final date for payment to the WORKS Contractor of any sum due under the WORKS Contractors Contract shall be 30 days after the date the payment became due plus the number of days that lapse from the Works Contractor receiving a form AG200D signed by the Proiject Manager and the DEPM........ etc.

Now, this is the MAIN contractors contract and I would imagine that this has no bearing whatsoever on the subbies contract. Would you think then, given the fact that there was no certificate of completion that the 14 days from the date of Application applies?

( By the way - we have since provided all the supporting documentation dated prior to the notice to withhold arguments put forward by the main contractor for not paying, supporting our claim - they still are not paying!)

**rosierose** · 27th October 2006 10:42

Sorry not have replied yesterday. I was having to read up on my own contracts…

The final date for payment should be described in the subcontract - I would assume that it would be contingent upon the certification of the works.

In the absence of a certificate I think the subcontractor would have to prove the works compliance with the specification/schedule of works. If he can prove that certification was not forthcoming despite the works compliance then he has a case for suspending performance - so long as his actions have been in accordance with the Act, ie., 7 days notice etc.

As I see it the real argument is about whether the works were complete. If they were then the Contractor will find it very hard to resist a claim. If however the works were not complete and the subcontract was at final payment stage, then I can’t see the Act helping.

Hope this helps.

**andrew1** · 27th October 2006 12:13

Yes it does Rosie and thanks for your help, I really appreciate it. This is where the negotiating skills of mine are going to have to be tip top because the work, as far as the subbie was concerned was as complete as it could be, and the contractor is coming up with a wide stack of unsubstantiated reasons for not paying in the Notice to Withold, but this Main contractor kept snagging and snagging and snagging for 2 months after the application and still not making the final payment so they were written to stating that the subbie would come off site. Then the contractor came back with a counterclaim and said the whole lot had to be redone, refused us access to a site meeting to prove what they were claiming and it's been batting and balling since. I am trying to adjudicate/ negotiate and get some kind of common sense going without going legal - I will have to if necessary, but that just benefits lawyers and this could be resolved by sitting down and discussing the issues - they won't. So we have sent all our documentation to them supporting every one of their reasons outlined in the notice and awaiting their reply. If and when it comes I'll decide which route to take but we have the resources now to sue to the hilt and defend if necessary and we will.

I have spoken to many an adjudicator and our legal team ' fraud' is what some call it - "not suprised say others - that's how the contractors make their money by bankrupting the subbies" - I hope the foundations to their buildings are firmer than their morals if these comments are to be believed.

It's a difficult one I know, but the devils in the detail and I believe we have the upper hand on that part of the equation.

**andrew1** · 5th December 2006 14:53

Just to follow up, I won a substantial settlement figure in this claim for my client of my business and had a counterclaim of over a quarter of a £million scrapped. It is subject to a confidentiality agreement so I can't name names. But, basically, this was a big plc company who had an enormous firm of solicitors trying to pressure me to back off, but I issued a 21 day winding -up order on the company. Along with the backing of Rosie's information which directed me to the right information to fight them with, and the negotiating stance and looking them squarley in the eye and saying " NO, we will not be intimated by your size, manipulation, skullduggery and corporate fraud to rob the subbie of his money through your intimidating tactics, we are going to force you to recognise the little man and pay your debts" - Which is exactly what they did.

This is a major victory, not for the consumer because it was a corporate debt, but it was a small businessman who invested his life into his business. It is also a victory for the strength this forum gives us to stand up and be counted in all walks of life. Let this be a lesson to anyone who doubts the power of this synergy this forum provides. I have collected business debt for many smaller businesses but this was a challenge on a major player in an industry where small contractors are regularly put out of business due to intimidation by big companies.

I am, to say the least, a little chuffed at pulling this off as it has not been easy to keep quiet about it especially as I attended the party and met so many. I owe my special thanks to Rosierose and to the site which I keep telling everyone is empowering - it certainly helped me pull this off and the company I did it for are very happy indeed.

If anyone wants to know more about how it worked or how to get paid - for their own business you can PM me with pleasure and I will explain what I did, but I will not name names. ( this is not an add for my business, I will not be charging anyone anything if they just want to know! My client paid his bill to me but that's different - CAG icon

's for free

) I will only give guidance on what I did.

Rosie / CAG icon

- THANK YOU - donation icon

en-route

**rosierose** · 5th December 2006 17:51

Bravo!

**mcuth** · 5th December 2006 23:02

w000t, congrats Andrew, what a result mate

Sounds like a really interesting battle, and just goes to show that none of us should be intimidated by the "big guys" when we have right on our side!

Congrats again

Cheers

Michael

**Karnevil** · 6th December 2006 17:56

I won a substantial settlement figure

NOW those are lovely words

Well done andrew.

**katesage** · 6th December 2006 18:09

Congratulations Andrew!

**demon_x_slash** · 6th December 2006 18:33

Congratulations ROSIEROSE for being able to understand and give advice on all that above contract-blather! Fair made my head spin... shame about the confidentiality clause, andrew, I was dying to know who it was...

**andrew1** · 6th December 2006 18:35

Thanks everyone - now on with the next one - a £42k Carpet rip - off, same Act of Parliament, different contractor, same [problem], same subbie - he needs some admin icon

help !!! wish me luck

**reidnet** · 8th December 2006 10:30

Good work Andrew, It is about time these big companies learn that they cannot rip off the small companies and other consumers.

Keep up the fight mate, your doing a great Job

Ian

**meagain** · 8th December 2006 15:46

David, meet Goliath. Goliath, meet sling-shot.

A good job well done.

**andrew1** · 9th December 2006 01:41

Oaky Rosie, No 2.

Part 1.This time, subbie has had a tender accepted, had the contract sent to him, apparently he signs it, sends it back to contractor, contractor signs and sends it back to subbie. After that he gets on with the job which is exactly what he has done. Problem is the contractor sent the contract back UNsigned and now the contractor is saying ( because there are other issues to resolve which I will go into later if necessary, but have little bearing on this particular issue) " if we really want to be pedantic we can push the point that there's no signed contract". Actually, this particular contract is one of two, but the issue with this one is purely a timesheet issue. Director says x hours subbie has signed timesheets for y and wants paying for it on the strength of the timesheets. Simple solution on this. They pay.

Bit weired if you ask me as it was the contractor that allowed them on site to do the job and the contractor who failed to sign the contract not the subbie.

Can you, with your wealth of experience point out any obvious problems with a contract not signed by the contractor but who allows the work to go on?

The subbie seems to think we can use this against them on Health & Safety issues - but I can't guite connect on why that might be a bargaining point - as I have learnt already, these construction people are in a world on their own, maybe you can spot something of significance other than H&S I can get my teeth into. I have a meeting with the whole lot involved on Wednesday to ' negotiate a settlement ' so I have my work cut out sorting the issues out.

What fun !

ian cognito · 9th December 2006 02:04

Just subscribing as if you don't get an answer from RosieRose on this, I can clarify on Monday, think I know the answer but I'd rather have it confirmed first.

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