When are your retentions payable if you have been booted off the site?
Sometimes a subcontractor has to wait a long time for the release of its retentions, especially if it did its work very early in the piece (such as site decontamination, earthworks, or foundations), and the defects notification period specified in the head contract is particularly long. It’s bad enough having to wait until everyone else has finished their work. What if you have had a falling-out with the head contractor, and it has terminated your subcontract (rightly or wrongly) long before you were due to finish? Do you still have to wait, or can you claim your retentions there and then?
LEGAL
Retentions are a common feature of commercial construction contracts, and some residential construction contracts. They are deducted from each payment claim and paid out at the end of the project, to create a financial incentive for the contractor to complete all unfinished work and rectify all identified defects after he has completed the bulk of his work and has been paid for it.
07
The issue arose in a 2017 case There doesn’t appear to be much case law on the subject, but the situation did arise in a scrap between Security Systems Ltd and Smart Controls Ltd which was fought out in the High Court in 2017. Security Systems was subcontracted to provide security services for the Fletcher Campus at Penrose, Auckland, and it sub-subcontracted the CCTV work to Smart Controls. Eventually they had a dispute over payment, and Security Systems took umbrage to an abusive phone call from the owner of Smart Controls. So before Smart Controls had completed their CCTV work, Security Systems told them to pack up and leave, which they did.
If you have had a falling-out with the head contractor, and it has terminated your subcontract long before you were due to finish do you still have to wait, or can you claim your retentions there and then?
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