Mick Wallace (Wexford, Independent)

There is an uneven relationship between subcontractors and main contractors which is most evident in cases relating to small subcontractors. The notion that contracts with a value of less than €200,000 will not be included in the legislation is a joke and will completely nullify the good the Bill might do. Most contracts are for amounts less than €200,000. Those subcontractors carrying out work on contracts valued at more than this amount have a far better chance of receiving payment than their smaller counterparts. Those who do general labour work, carpenters, blocklayers, bricklayers, concrete finishers and pavers are in an extremely vulnerable position and require the protection provided by the legislation. There would be no difficulty in extending its provisions to cover them.

There are so many problems in this matter that I do not know where to begin. In most cases where main contractors failed to pay subcontractors, rows or disputes did not erupt. All that happened was that the main contractor did not pay when the subcontractor wanted to be paid. I did a great deal of work for local authorities, most of it for Dublin City Council, with which I had an arrangement, whereby I would submit invoices at the end of the month for the work I had carried out. When I submitted an invoice, it had two weeks to deal with it. If issues arose in respect of it, it would communicate further with me. Once it had been agreed, however, it had a two further weeks in which to issue payment. This was a very fair arrangement. I was always treated well by the council in all the years I worked for it. It was a good, fair and honest employer. Sadly, private contractors leave much to be desired in this regard. There are some very wonderful and honest contractors. Unfortunately, however, there are many about whom one could not say this. For some reason, the industry has attracted a large number of rogues. There are many involved in it who do not behave in an honest fashion. More often than not, subcontractors and small suppliers are on the receiving end of their behaviour.

There is a need to put a new system in place. If a subcontractor or supplier submits an invoice, there must be a fixed period within which a main contractor must deal with it and issue payment. Such a system could mirror the arrangement I had with Dublin City Council. As previous speakers stated, the fact that many of the contracts used in this area up to now have been too informal in nature has given rise to problems. Therefore, formal contracts should apply for any jobs with a value in excess of €10,000. The threshold of €200,000 to which I referred is crazy. A contract with a value of over €10,000 should be protected under the Bill.

As stated, it is vital that formal contracts be put in place and that there be a set period in which payment must be mad. It must be recognised, however, that huge problem remains in the context of how to organise adjudication if there are disputes. I had a meeting in a coffee shop this morning with a barrister and a solicitor at which we discussed this issue and making progress on it is not going to be easy. However, there is a need for a system to operate independently of the courts. The legal process is too long, onerous and expensive and, in many cases, the small contractors to whom I refer cannot afford to go to court. I am not sure how an adjudication process, particularly one which would give rise to speedy resolutions, might be structured, but there is no doubt that such a process should be incorporated in the Bill.

It is difficult to arrive at resolutions of disputes relating to construction contracts. For example, a contractor might state the relevant work was not done in the way it was supposed to be. I accept that this sometimes happens. On a number of occasions as a main contractor I gave subcontractors jobs and it turned out that they were complete chancers. They were bad calls on my part. If the work was done wrong in cases such as those to which I refer, I was obliged to pay someone else to do it again. There was no way I would have given the first individual a second chance, particularly as he was not able to do the work on the first occasion. There is a major problem in this regard. How does one prove one is more in the right than a subcontractor who has not done the job required? If an adjudication panel is going to be established, it must not only have a legal aspect to it but some of its members must also be able to understand the construction industry. Such individuals must have a knowledge, for example, of carpentry and how concrete and steel are used in construction. In other words, a broad cross section of individuals with engineering experience and with a background in the various trades must be involved.

The adjudication panel must be in a position to bring disputes to a speedy conclusion. However, its decisions must also be binding because it will otherwise be just wasting its time. If decisions are not binding, major contractors will go to the courts in order to delay matters for God knows how long. That was the position with regard to the individual to whom I referred who was determined not to pay the money he owed to me and dragged me through the courts for two years. Subcontractors who are owed large amounts of money and brought before the courts will simply not survive. They will go out of business long before the legal process reaches its conclusion. There is no need for me to refer to all of the knock-on effects when someone goes out of business, except to say there is no end to them.

Am I correct in stating, in the context of the withdrawal of services provision, that if the main contractor does not agree to the adjudication and does not pay the money owed, there will be a right to cease work on the project or close it down?

See this speech in context