House of Commons Amendments

Session 2014 - 15
Internet Publications
Other Bills before Parliament

Notices of Amendments:
48

, continued

“construction operations” has the meaning given to it by section 105 of the

Housing Grants, Construction and regeneration Act 1996 (as amended).

“payee” refers to a party providing construction operations under a

construction contract who is entitled to a payment in respect of such

operations.

“payer” refers to a party procuring construction operations under a

construction contract upon whom is placed an obligation to ensure

payment is made in respect of such operations.

“retention monies” means sums of money withheld by or on behalf of a

payer from monies which would otherwise be due under a construction

contract the effect of which would provide the payer with security for the

current and future performance by the payee of any or all of the payee‘s

obligations under the construction contract.

(2)
In this Part, reference to “account” is bank account established in accordance with

section 144.

89A2
Status of retention monies

(1)
Where under a construction contract the payer withholds retention monies from

the payee the monies must be held in trust by the payer on behalf of the payee as

beneficiary.

(2)
The payer must establish a separate and independent account at a bank for the

purpose of depositing the withheld retention monies and must notify the bank

that—

(a)
the payer holds the retention monies on trust in accordance with the

provisions of this Part; and

(b)
that the payee is the beneficiary.

(3)
The status of the payer as a trustee of the retention monies does not preclude the

payer having access to the retention monies in accordance with section 147.

89A3
Duties of the payer as trustee of the retention monies

(1)
The payer shall be solely responsible for any costs uncured in establishing and

maintaining the account.

(2)
The payer shall issue the payee with the details of the account and at the request

of the payee issue the payee with the current statement of the monies held in the

account.

(3)
The payer shall deposit the retention monies in the account immediately

following their withholding.

(4)
Any interest paid by the bank in respect of the retention monies held in the

account shall accrue to the payee.

89A4
Failure to comply with sections 144 and 145

(1)
Where the payer fails to comply with any of the requirements in sections 144 and

145 the provisions of the construction contract permitting the payer to withhold

retention monies from the payee shall be of no legal effect.

(2)
Where subsection (1) applies the payer shall refund immediately to the payee any

retention monies withheld and, to the extent that the retention monies are not

refunded, those retention monies shall be recoverable under the relevant

construction contract as a debt exclusive of any right of sett-off or counterclaim.

89A5
Release of retention monies from the account

(1)
Subject to subsection (2) the payer shall instruct the bank to release the retention

monies to the payee on or before the date specified for release in the construction

Notices of Amendments:
49

, continued

contract and, at the same time, issue the payee with a copy of the instructions to

the bank.

(2)
Subsections (3), (4), (5) and (6) shall apply where the payer has issued a notice to

the payee not later than 14 days before the date referred to in subsection (1)—

(a)
stating that the payee has not complied with the contractual requirements

for the release of the retention monies;

(b)
setting out the reasons for the non-compliance; and

(c)
stating whether the payer requires the release to the payer of all the

retention monies in the account or a specified amount representing part

of the monies in the account.

(3)
On receipt of the payer’s notice the payee may issue a written authorisation to the

payer to instruct the bank to release to the payer the whole of the retention monies

or a specified amount representing part of the retention monies.

(4)
On presentation by the payer of the payee‘s written authorisation the bank shall

release to the payer such of the retention monies as have been authorised for

release by the payee under subsection (3).

(5)
In the event that the payee does not issue a written authorisation under subsection

(3) or the authorisation only permits the release of part of the retention monies

which is less than the specified amount in the payer’s notice under subsection 2,

the matter shall constitute a dispute arising under the contract which the payer

may refer to adjudication in accordance with section 149 provided that—

(a)
no later than the date specified for release in the construction contract the

payer has issued the notice of referral; and

(b)
the notice of referral has requested the adjudicator to decide to whom the

retention monies shall be released either in whole or in part and, if in part,

to decide the amounts that shall be released to either party.

(6)
Whichever party is entitled to the retention monies following the adjudicator‘s

decision has authority to instruct the bank, on presentation of the decision, to

release the monies in accordance with that decision.

(7)
Subsection (8) applies where the payer has failed to—

(a)
instruct the bank in accordance with subsection (1); or

(b)
issue the notice in accordance with subsection (2); or

(c)
issue a notice of referral in accordance with subsection (5).

(8)
On the expiry of seven days after the date specified for release in the construction

contract the payee shall have authority to instruct the bank to release the retention

monies to the payee provided that the instruction to the bank states—

(a)
which of paragraphs (a), (b) or (c) in subsection (7) applies;

(b)
the amount of retention monies due for release;

(c)
the date in the construction contract by which the amount should have

been released; and

(d)
that a copy of the instruction to the bank has been issued to the payer.

(9)
Where the payer has discontinued an adjudication commenced under subsection

(5) for reasons other than a settlement agreed between the payer and payee, the

payee shall have authority to instruct the bank to release the retention monies to

the payee provided that—

(a)
the payee has presented the bank with a statement from the adjudicator to

the effect that the payer has discontinued the adjudication; and

(b)
that a copy of the instruction to the bank has been issued to the payer.

Notices of Amendments:
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89A6
Conflict with provisions in the construction contract

These provisions shall prevail over any inconsistent express or implied terms in

any construction contract to which this Part applies but are without prejudice to

the right of the payer to have recourse to the retention monies in accordance with

the construction contract and section 147.

89A7
Disputes

In the event of any dispute or difference arising under the provisions of this Part

and subject to section 147 a payer or payee shall have the right to refer such

dispute or difference to adjudication in accordance with the Housing Grants,

Construction and Regeneration Act 1996 (as amended) and, where applicable, the

Scheme for Construction Contracts (England and Wales) Regulations 1998 (as

amended).

89A8
Guidance by the Secretary of State

(1)
The Secretary of State may issue any guidance as may be considered necessary to

facilitate implementation of the provisions in this Part.

(2)
The Secretary of State must publish any guidance or revised guidance issued

under this section.

89A9
Service of notices

Notices must be served in accordance with the provisions of section 115 of the

Housing Grants, Construction and Regeneration Act 1996 (as amended).

89A10
Periods of time

For the purposes of this Part periods of time shall be reckoned in accordance with

section 116 of the Housing Grants, Construction and Regeneration Act 1996 (as

amended).

89A11
Crown application

The provisions of section 117 of the Housing Grants, Construction and

Regeneration Act 1996 apply to this Part (as amended).”

Member’s explanatory statement

These amendments aim to require that retention monies provided for within construction industry

contracts are placed in an account, separate to and independent of those of the party withholding

the monies. That party is made a trustee of the monies, providing protection in the event of

insolvency. The release of cash retentions is expedited. The provisions apply to public sector

procuring authorities.

Andrew Griffiths

Clause  36,  page  31,  line  11,  leave out subsection (5)(b)(ii)

Andrew Griffiths

Clause  36,  page  31,  line  18,  leave out “their tied pub tenants” and insert “such

assessments”

Notices of Amendments:
51

, continued

Andrew Griffiths

Clause  38,  page  32,  line  15,  leave out from “(i)” to end of line 17 and insert “only

apply to new agreements or at agreed break points such as rent reviews within current

agreements”

Andrew Griffiths

Clause  42,  page  34,  line  43,  after “vexatious”, insert “or unsubstantiated”

Andrew Griffiths

Clause  49,  page  36,  line  41,  at end insert “or

(c)
the basis and reasoning behind the decision to impose a penalty.”

Andrew Griffiths

Clause  50,  page  37,  line  20,  after “merit”, insert “or unsubstantiated”

Andrew Griffiths

Clause  61,  page  41,  line  41,  at end insert—

“(e)
or franchise agreements accredited by the British Franchise

Association.”

Andrew Griffiths

Clause  61,  page  41,  line  42,  leave out “and includes a tenancy at will” and insert

“but excluding tenancies at will and agreements of less than 12 months”

Andrew Griffiths

Clause  62,  page  42,  line  15,  leave out from “tie” to end of line 16



© Parliamentary copyright	Revised 17 October 2014