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Joshua
Joshua, Lawyer
Category: Law
Satisfied Customers: 25358
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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Hi Im about to complete a construction project and the client

Resolved Question:

Hi

Im about to complete a construction project and the client is requesting final certification such as test results for electrical building signoff , Emnergency certificates etc whilst withholding 550K until this is done.
Obviously the testing certificate issuing is roughly 5000.00 worth of work so why would they be justified in holding back the other 545K and threatening in that if the final documentation isn't issued they will look to utilise my money to bring another company to issue the documentation.

Wouldn't I be well within my rights to not issue until full payment has been made?
Submitted: 3 years ago.
Category: Law
Expert:  Joshua replied 3 years ago.

Joshua :

Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.

Joshua :

is this a residential project please or a commercial construction project?

Joshua :

Do you have a formal JCT or other formal agreement in place?

Customer:

It has been completed under the JCT contract.

Customer:

Sorry also it is a commercial project. IT is a hotel refurbishment.

Joshua :

Thanks. Have you inspected the terms of the contract in relation to provision of building regulations sign off including part P electrical certificates and so on please as in commercial contracts such terms can be individually negotiated?

Joshua :

Is there a delay in the issuing of certificates? Is this also delaying building regulation sign off?

Customer:

I have no issue in issuing the certificates and yes it would delay the building signoff.

Joshua :

Thanks. Can I clarify what the issue is regarding the certificates - is it that you don't want to issue them until you are paid and they don't want to pay until you do or is there a problem preventing the issue of the certificates?

Customer:

There is nothing bpreventing the issuing of the certificates . Only that they have already not willing to pay 900K worth of extras, we then renegotiated for two final payments of the balance 550K and now they are threatening to not pay until they receive the documentation or agree a final account with us.

Joshua :

Thanks. Finally have the standard terms of the JCT contract been altered in respect of what constitutes practical completion and works completion and so on to your knowledge or have you used standard terms?

Customer:

There have been alterations to the standard JCT.

Joshua :

Thanks. As you will be aware the JCT contract provides for payments to be made at various stages during constructions and provide for payment due at works completion and practical completion (the latter normally being when all legal formalities have been completed and works signed off and the former being when the physical works have been completion prior to this.

Customer:

Ok, this is understood to a degree but the balance payment is made up of the following.

Joshua :

Accordingly if you have a formal agreement in place the position should be determined by reference to the contract. If you have completed the works (albeit have not yet issued certificates) then although you cannot claim practical completion due to the lack of certification you can from what you say claim works completion and accordingly can demand payment to that point as defined in the contract. The contract should refer to percentage payments being payable at each stage. Assuming it does you should be able to demand payment as due under the agreement less any retention allowed by the contract pending defects snagging and the balance payable following practical completion.

Joshua :

If they have not paid such sum then you have what amounts to a dispute as to breach of contract on their part and are entitled to consider suspending work until such dispute is resolved including issuing of certificates as provided for by the contract. The contract will typically provide for arbitration in the absence of agreement.

Joshua :

It does not follow that the client can simply demand you to complete works if they are in breach of contract by failure to pay what is owed to date as above. Any deductions the seek to make must be made in relation to the terms provided for in the agreement.

Customer:

This is the way I would have thought it should have been done. So they really do not have any reason as they have my retention money + a Bond for non payment for works completed to this point and I am within my rights to suspend works and the Certification issuing until payment is made and final valuation agreed?

Customer:

I needed to understand this from someone whom has dealt with this before.

Joshua :

Once they have brought payments up to date - typically they would not need to pay everything that is due as above until practical completion and defect snagging has been completed - then they are entitled to require issuing of certificates to enable practical completion and snagging to be completed and final payments and / or snagging completed.

Customer:

We have been issued all snags and completed but they are continuing on a weekly basis or when we request payment they simply find something else which they believe constitutes a snag.

Customer:

We have requested a full and final snag list which has been issued and completed. Would this be enough to allow the abopve payment to occur.

Joshua :

Both your respective rights turn on the JCT agreement terms you have agreed and neither of you is entitled to legally depart from this agreement without agreement from the other. A starting point would typically be for you to spend some time one evening fully familiarising yourself with the terms of the agreement so you are clear in your mind as to the stage you consider you have reached and the consequent payment you are due - you may already be so - and then put this position to them and ask them to point you to the specific term in the agreement that authorises them to retain more than the contract provides. Anything they say should be asked calmly for specific authority in the agreement. This keeps the discussion grounded in law rather than their general opinion which can often be different to their actual rights and can serve to focus their minds. It does not always enable agreement to be reached but it gives you the best chance of doing so without recourse to arbitration or court.

Joshua :

Snagging should be dealt with in the agreement and you can refer back to this in terms of procedure but snagging is normally a final stage and therefore should not impact on the works completion stage which would normally trigger payment of most of the balance less as above.

Joshua :

If you cannot reach agreement then you may have to suggest arbitration as provided for in the JCT or ultimately court which can be disadvantageous to both of you potentially unless they are seeking simply not to pay what they owe because they dont want to pay in which case one of the above may be unavoidable.

Joshua :

Is there anything above I can clarify for you?

Customer:

One lasty question.

Joshua :

Certainly...

Customer:

Should the client simply just not wish to pay, and we do go to arbitration and the arbitrator agrees in our favour what would happen after this with regards XXXXX XXXXX

Joshua :

Assuming the JCT agreement provides for arbitration and that the arbitrators decision binds both parties - check your agreement for arbitration provisions as these bind you both - then the decision can if necessary be enforced directly through the courts to demand payment. If there is no arbitration provisions (which would be unusual) then both of you would have to agree to use an arbitrator failing which one you would need to issue an application in the county court for the money you claim you are owed.

Joshua :

Does the above answer all your questions or is there anything I can clarify or help with any further?

Customer:

Thank you very much for your help. Do you know any good solicitors in the London / Chelmsford area which could deqal with this

Joshua :

XXXXX XXXXX at Birkett Long has a decent reputation with construction contracts and should be able to assist if the dispute cannot be resolved between you. 01245 453813

Customer:

Thanks for your help and I will give him call to discuss should the dispute not be resolvable .

Joshua :

A pleasure. I hope you are successful in resolving the matter with the minimum of fuss. If you have no further questions for now I should be very grateful if you would kindly take a moment to rate my service to you today. Your feedback is important to me. If there is anything else I can help with though please reply back to me though.

Joshua, Lawyer
Category: Law
Satisfied Customers: 25358
Experience: LL.B (Hons), Higher Prof. Dip. Law & Practice
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