NEC3 Option A - Payment certificate

NEC3 and NEC4 Contracts Payment
1

We have an interesting scenario. For the purpose of brevity, I will mention some key points to the issue:

  1. The contractor has not fully completed all the work as per the WI.
  2. The completion date has not occurred.
  3. Pm has not certified completion.
  4. The PM issues a “Final payment certificate”.
  5. Deductions for an “advanced payment” is made. Contractor contends this advance was never paid. If any figure could relate to this, it would be a payment that was in relation to a retention bond.
  6. Further deductions / corrections on this payment certificate relating to previous payments that thereafter resulted in a dispute. Arbitration hearings are scheduled for later in the year.
  7. Curiously this payment certificate was issued a few days prior to the Employer submitting their statement of defense and counter claim for arbitration matter.
  8. Nett result is that the Contractor suddenly has to pay about 5 million to the Employer rather than getting around 20 million paid to them.

I am hoping to get some opinions regarding what the contract says about this and even some case law to study regarding this matter.

1 Like
2

Jaco - This is a rather complex question heavily reliant on some in depth facts which as you say you have provided just some key points to.

The contract payment provisions don’t, in the standard form, provide for a “final payment certificate”. The assessment date after Completion is likely to generate pretty much the equivalent of a final certificate but there are numerous reasons why this may not be the case.

In terms of what the PM has done in issuing the certificate in the way he has he may not be acting within his presumed obligation of impartiality. There are a lot of cases on this but start with Costain -v- Bechtel (which is under the NEC2) and that will take you to Sutcliffe v Thackrah which is the key judgment in this area.