I have a query with regards to a scenario where a Project Manager fails to issue a payment notice. In this case Y(UK)2 applies and is un-amended.
My understanding is that in the event that the Project Manager fails to issue a certificate within one week of the assessment date then the Contractor is obliged to issue a default payment notice as soon as the PM has defaulted. I also understood that the Contractor is required to issue this default payment notice even in the event that the Contractor has already submitted an application for payment in advance of the assessment date as NEC3 does not expressly provide for the giving of a payment application.
I have since received conflicting advice with one position being that in the event that an application for payment has been submitted then this automatically becomes the default payment notice. There would therefore be no requirement for the Contractor to issue a default payment notice after the PM has defaulted if this were the case.
Another piece of advice received is that the Scheme cannot step in to assist as there is no deeming / default notice mechanism in the Contract and that the only route of recourse would be to adjudicate on the matter.
Appreciate any comments / feedback on the above.
Section 110B of the amended HGCRA 1996 applies in this instance where the ‘specified person’ (Project Manager) has not given a payment notice (payment certificate) required by the contract within 5 days of the payment due date.
NEC3 does not require a payment application to be given but does provides for one to be submitted (see clause 50.3). To satisfy the requirement under s 110B (4) (a) and be treated as the default payment notice, the payment application would need to;
- state the sum that is considered due,
- provide the basis on which that sum is calculated,
- be given in accordance with the contract.
The last part is probably the most difficult to reconcile with the above requirements as the NEC3 ECC does not provide an express requirement to submit a payment application, notwithstanding clause 50.3.
If such a payment application has been submitted, however, I see no sensible reason why this should not be treated as the default payment notice, although in the absence of an express contract requirement I would give a payment notice to comply with s110B (2) of the amended HGCRA 1996, which would postpone the subsequent dates in accordance with s110B (3).
There is, of course, the continued right of the payer (Employer) or specified person (Project Manager) to give a notice of intention to pay less than the notified sum (‘payless notice’), provided it is given by the prescribed period before the (postponed) final date for payment.