Session 2014 - 15
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Other Bills before Parliament


 
 

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“construction contract” has the meaning given to it by section 104 of the

 

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

 

“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.


 
 

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, continued

 
 

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

 

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.


 
 

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, continued

 
 

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).”

 

Clause, as amended, Agreed to.

 

Matthew Hancock

 

Jo Swinson

 

Agreed to  20

 

Clause  12,  page  14,  line  23,  at end insert—

 

“(1A)    

Section 58 (power to require disposal of interest in payment system) is amended

 

as provided in subsections (1B) and (1C).

 

(1B)    

In subsection (1), for the words following “interest in” substitute “—

 

(h)    

the operator of a regulated payment system, or

 

(i)    

an infrastructure provider in relation to such a system,

 

    

to dispose of all or part of that interest.”

 

(1C)    

After subsection (2) insert—


 
 

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“(2A)    

The reference in subsection (2) to a restriction or distortion of

 

competition includes, in particular, a restriction or distortion of

 

competition—

 

(a)    

between different operators of payment systems,

 

(b)    

between different payment services providers, or

 

(c)    

between different infrastructure providers.””

 

Clause, as amended, Agreed to.

 

[Adjourned until Thursday at 11.30 am


 
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