A time of year to take notice

And worrying about cashflow is exactly what led to the enactment of the “Housing Grants, Construction and Regeneration Act.”

A catchy title that is often thankfully shortened to “the Construction Act”.

In fact, this year marks two decades since the legislation came into force, so it’s been around for a while.

It was intended to make sure those working in the sector knew where they stood in terms of what payments were to be made and when.

That mechanism has two threads —

• Adjudication — where a knowledgeable third party decides disputes within a fixed, tight timetable, which often meant the justice served by the process was rough and ready (and occasionally questionable). That said, it has provided leverage in disputes where, previously, the odds were stacked against the person seeking payment.

• Requirement for formal notices to be issued — These set out what was to be paid and how that sum was calculated. There were also requirements that set out when those notices had to be issued and when payments had to be made.

Crucially, if notices weren’t issued by the required dates the payer could be forced to pay a higher sum than they had originally intended to: the pressure was on the payer to get their paperwork in order, and on time.

Two decades on

So where are we now, two decades on?

To put that 20-year anniversary in perspective, the very first smartphone (IBM’s Simon Personal Communicator) was released in 1992, with adoption of this technology really taking off in 1999 with the introduction of the first Blackberry phone, followed by the first-generation iPhone in 2007.

Advances in mobile technology have completely transformed our lives – to the extent that it often seems that we just can’t function without a 4G signal.

If, in the course of 20 years, a phone has evolved to the extent it’s essentially become part of our DNA, you’d think that the Construction Act mechanisms would have too.

But, a quick review of court cases from the last few months will, however, show that the need to get notices served on time and in the correct format is still not a natural reflex action, at least not for all.

Why is that?

In part, I think it is because the statutory regime is not an easy read.

Unlike your new smartphone, you can’t just take the act out of its box and feel comfortable that you know exactly how it works without reading the instructions.

It takes a bit of time to get your head around.

Another reason is because a live contractual relationship between two parties often appears to have more complications than are provided for in the legislation.

Trying to make the statutory regime fit (often retrospectively) with how things are actually “working” in practice is sometimes viewed as more hassle than it’s worth.

Ignoring the statutory timetable is all well and good when relationships between parties are working, but it’s when those relationships breakdown when you really want to have certainty of what will be paid, and when.

So, this new year, one resolution I’d suggest would be to spend some time with that crisp new diary and, for each contract, make a note of what notices need to be served on which dates.

Knowing in advance what needs to happen and when may well mean this time next year there’s less of a worry about cashflow.