Problem: I run a groundwork subcontractor, and currently have a problem with a main contractor who is withholding monies, due to the quarrel between the main contractor and the client (a home owner). The client is happy with the works my company has completed but the job has been badly run (by the main contractor and has gone over budget. However, the client says he has paid the main contractor but the main contractor is disputing this.My main query is this: Whether the client has paid the main contractor, surely the contract is between my company and the main contractor. So no matter if the client pays the main contractor or not, he should pay us as we have completed our obligations to a high standard. Surely it’s up to the main contractor to find the funds to pay us?If this is not the case then surely sub-contracting is far too risky for us, as we can’t possibly afford to carry a debt of over £10,000. This has been going on since late last year and the architect has been promising to sort this out. We are a small business many contracts are verbal. Jobs may only be initially for a few days, but then go into 1 week, then 1 month, as a result of the changes and additions. I am instigating court proceedings via a solicitor but I am concerned for the next contract – being a subby.
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Response: Your contract is with the main contractor, not the main contractor’s client, and hence you are correct that [if there are] any problems that the main contractor has in obtaining monies from its client, this is not a concern of yours.
Even if there was term in your agreement with the main contractor that purported to allow the main contractor to only make a payment to you on condition that it had received funds from its client, under section 113 of the Housing Grants, Construction and Regeneration Act 1996, as amended by the Local Democracy, Economic Development and Construction Act 2009 (“The New Construction Act”), such a term would be unenforceable.
Further, if you have made an application / submitted your final account, the main contractor is under an obligation to pay the sum claimed within a certain time frame, unless it has issued either a timeous payment or payless notice, as required by The New Construction Act.
You have stated that you are now instigating proceedings via a solicitor – I hope that the solicitor has advised you accordingly, including considering adjudication proceedings under The New Construction Act; if not, then you need to seriously ask why not, as adjudication could be the most conducive route for you in your attempt to secure the monies owed.
A word of advice on your future projects – ensure you have Terms and Conditions that are properly drafted by a construction law specialist – the investment will pay for itself time and time again.
Good luck.
© Michael P. Gerard MSc, PGDipLaw, PGDipBar, FCIOB, MCIArb, MAE
The advice provided is intended to be of a general guide only and should not be viewed as providing a definitive legal analysis.
Author background
Michael is a Barrister, Chartered Builder, Registered Adjudicator & Accredited Expert in quantum and planning matters. He is Managing Director of Michael Gerard & Co www.michael-gerard.co.uk, a company of chartered building consultants and quantity surveyors who provide a specialised service in the areas of construction law, quantum, programming, business recovery and insolvency support to the construction industry. Michael is also a practising solicitor and consultant with Silver Shemmings LLP.