The dispute resolution provisions of the Construction Contracts Act 2002 and its Amendments (CCAct) are not as well known by the building industry and legal fraternity as they could be and consequently the benefits they offer are overlooked.
Primarily the CCAct and Regulations deal with the making of payments but they also provide a speedy process for the resolution of disputes through the Adjudication procedures of Part 3 of the Act. The CCAct cannot be contracted out of, and its purpose is to ‘keep the cash flowing’.
Keith has been undertaking CCAct adjudications since its inception and he is included on the Arbitrators’ and Mediators’ Institute of New Zealand Inc (AMINZ) Panel of Adjudicators able to be appointed under the CCAct.
Adjudication is best suited to disputes where the law is relatively simple but the facts are complicated or require an assessment that the work or materials are in compliance with the Specification. This is why adjudication is ideally suited for construction disputes where the quality of work is commonly at the root of the dispute. On the other hand Litigation is the reverse – speaking simplistically, the facts are reasonably clear but the applicable law is disputed often requiring a hearing before the Courts for a decision.
Some provisions and procedures of the original Act have been amended by the Construction Contracts Amendment Act 2015, especially in relation to Residential Contracts. Now there is virtually no distinction between residential and commercial contracts. Also the CCAct has been extended to apply to contracts for professional services for design, engineering and quantity surveying work as it relates to Construction Work. The new Retentions regime does not apply when the Payer is a residential occupier.
An important change for residential construction contracts is that under the 2002 CCAct the builder had no right to suspend the work when payment of a payment claim was overdue.
It is important when considering using the provision of the CCAct and its Regulations to ensure it is understood how the Act applies to the specific Contract between the Parties. What can appear to be, especially in a residential situation, a simple contract covering the entire work (with Variation and Progress Payments) might actually be a series of discrete isolated work for which there is an individual price which is not payable until that work is 100% complete. A common example of this is landscaping work where the total price is actually just the sum of the prices for each separate distinct contract segments.
While there are specific requirements in the CCAct some of these can be amended by agreement between the Parties but if not then the Act applies. Particular attention must be given to the various timeline requirements. The CCAct cannot be contracted out of.