The Act introduced a statutory right to suspend works for non-payment. It is one of the most powerful provisions in the Act for parties who are not getting paid in accordance with the contract.
Suspension can be used where:
- A claimed amount has not been paid in full by the due date and no payment schedule has been issued by the respondent;
- A scheduled amount has not been paid by the due date; or
- The respondent has not complied with an adjudicator's determination to pay an amount claimed by a particular date.
However, where the contract is a residential contract, there is no right of suspension of the works.
The procedure for suspending building and construction works includes:
- A notice of intention to suspend works must be served on the defaulting party stating the reason for the proposed suspension and stating that the notice is issued under the Construction Contracts Act 2002;
- If you are relying on the fact that an adjudicator's determination has not been complied with, you must wait the 2 working day period after being served with the determination before issuing a notice of intention to suspend the works
- If the defaulting party fails to pay the required amount within 5 working days after the notice of intention to suspend is issued, then the unpaid party can suspend works under the Act.
If you are considering exercising your right of suspension, it is important that you are fully familiar with the process under the Act to protect yourself from allegations and consequences of wrongful suspension.
If works are suspending in accordance with the Act, the Act provides that:
- the suspension is not in breach of the construction contract; and
- the unpaid party is not liable for any loss or damage suffered as a consequence of the suspension; and
- is entitled to an extension of time to complete the works but is not entitled solely by reasons of the Act to recover any costs incurred as a consequence of the extension of time; and
- maintains all its rights under the construction contract including its right to terminate the contract; and
- may lift the suspension at any time regardless of whether payment has been made or not.
Obviously the right to suspend works comes to an end when all outstanding money is paid.
To view a flowchart illustrating this process, click here...
To download an example of the Notice of Intention to Suspend Works, click here...
