We were paid short for months and never checked their notices
The certificates kept coming in low, and we never had time to check whether their notices were even valid.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
What's happening?
Each low certificate was paid and the job moved on, so nobody checked whether the notice behind it was valid or in time. Some of those cycles may still owe you money. But a low certificate on its own does not prove that. Later certificates, payments, credits, settlements or decisions may have changed the balance.
So each cycle has to be rebuilt, one at a time. Keep every application, notice, proof of sending, valuation, payment record and agreement. Then separate two questions: what the documents show, and whether it is worth pursuing now, given the cost and the legal position.
Older cycles may raise time limits, known as limitation, or questions about what was agreed or relied on since. Your solicitor has to answer those, and you decide whether a claim is worth it. Leave it too long and the records go missing, the people move on and more cycles run up against the time limit.
The solution
Rebuild each past cycle from the application as sent, the notices received, the proof of sending and the bank statements. Then reconcile the running total, so a shortfall that a later certificate corrected is not counted twice.
Underpayment Claim does that rebuild, tests every notice for validity and timing, and puts a figure and a limitation date on each cycle worth pursuing. You then decide what to claim in the final account or refer to adjudication. Limitation questions go to your solicitor. Underpayment Prevention then puts the notice check into your team's routine, so the next low certificate is tested the day it lands.
Example
Illustrative example. The scenario and figures are invented.
The facts
A subcontractor closing out a 14-month job thinks the certificates were low all along, but never checked the notices. All 14 cycles are rebuilt from the applications, the notices received, the send and receipt records and the bank statements.
What happens
- Nine cycles show a valid Payment Notice, and the notified sum was paid.
- Three show no Payment Notice and no Pay Less Notice, against applications totalling £48,600 more than was paid.
- Two show a Pay Less Notice sent after the contract's last date.
- The running total is reconciled, so a later certificate that corrected an earlier one is not counted twice. That brings the figure down to £31,900.
- That figure, with its three cycles, dates and documents, is put to the main contractor as part of the final account.
- Before anything is referred, the solicitor is asked whether the oldest cycle raises a limitation question.
The underpayment in figures
| Item | Amount |
|---|---|
| Applications above payment, three cycles | £48,600 |
| After reconciling corrected certificates | £31,900 |
| Settled at the account | £24,000 |
The outcome
The main contractor settles £24,000 of the £31,900 at the final account, with the three cycles and their documents behind the figure.