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Payless notices & retentions - what will 2019 hold?

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We’re running a short blog series on the legal changes and events that we expect to see in the construction industry over the course of 2019. In part three, we examine the effect of legislative changes and court decisions on the industry this year…

Payless notice - Court of appeal decision

The decision in Grove Developments Ltd. vs S&T (UK) Ltd. by the Court of Appeal is expected to lead to an increase in ‘true value’ adjudications. The Court found that an employer who fails to provide a valid payment notice or payless notice can subsequently challenge the interim payment through adjudication, with the employer determining the true or correct value of the work done at the time, rather than wait until the final account stage. This decision should signal the end of ‘smash and grab’ adjudication and potentially lead to further distortion of supply chain payment, as money is paid, only for it to then be recovered.

Protecting retentions

The Construction (Retention Deposit Schemes) Bill continues to linger before parliament, despite nearly one-third of all MPs and more than 70 industry bodies backing the legislation, which would protect retentions, requiring them to be held in a third-party trust scheme and not mixed with general funds. New rules will also be introduced this autumn to ensure that the government only appoints as main contractors on public contracts those firms that pay their supply chain on time. It remains to be seen if these changes will have any effect. No government initiative has had an impact.

Keep your eyes peeled for the final part of our series looking ahead at what 2019 holds for the construction industry, which we’ll be publishing on this blog soon.

If you would like more information, please contact our Construction Team.

Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.