BuildLaw in Brief
Statutory adjudication under the Construction Contracts Act (the Act) is the most commonly used dispute resolution process in New Zealand for resolving building and construction disputes, offering a unique, fast, and relatively straightforward statutory process for resolving disputes that arise under construction contracts.
Adjudication is quick and cost effective. Most disputes are resolved in less than six weeks from the time the process is initiated. The Act applies with very few exceptions to every construction contract that relates to the carrying out of construction work in New Zealand. Any party who has a dispute or difference with any other party to that contract can refer that dispute to adjudication.
A claimant (the party referring a dispute to adjudication) may secure the appointment of a Building Disputes Tribunal adjudicator within 24 hours of making an application. A claimant does not require the agreement of the respondent to apply to the Tribunal for the appointment of an adjudicator. The respondent cannot delay, avoid, or avert the adjudication process and will be bound by the outcome whether or not the respondent participates in the process.
The Building Disputes Tribunal is an independent, nationwide specialist dispute resolution service provider to the building and construction industry in New Zealand, has had over 25 years’ experience delivering fully administered end-to-end dispute resolution services including appointing adjudicators and administering adjudication proceedings in more than 1,000 adjudications under the Act
What types of disputes arise in adjudications?
The Construction Contracts Act 2002 provides for a regime under which a payee (the contractor who is seeking payment) can issue its invoice in the form of a payment claim which requires the payer (the person or company who has engaged the contractor to provide services) to respond with either payment in full or a payment schedule which meets the requirements of the Act.
If the payer fails to pay or issue a valid payment schedule, the payee is entitled to initiate an adjudication claim for payment in full on the basis of default liability. If the payee can establish that it has issued a valid payment claim and no valid payment schedule has been provided in response, an adjudicator must determine the matter in the payee's favour and payment must be made within two working days of receipt of the adjudicator's determination.
A default liability claim can only be brought by the payee not a payer.
Claim on the Merits
A claim on the merits may be brought as an alternative to a default liability claim or on a standalone basis.
If you are a respondent to a default liability claim, you may also wish to consider initiating your own adjudication on the merits.
Disputes on the merits are adjudication claims which consider the substantive rights and obligations of the parties in terms of the construction contract that governs their relationship, or in the case of a contract with a residential occupier, the statutory warranties that are implied into every residential building contract under s362I of the Building Act regardless of whether there is a written building contract. Typical merits based painting disputes include disputes in relation to:
- non-payment for work undertaken;
- contract interpretation – what the parties actually agreed;
- scope of work;
- quality of work;
- quality of materials;
- time for completion;
- payment – the value of the work undertaken in the absence of express agreement as to price;
- estimates v actual cost;
- variations – whether certain work is in fact a variation to the agreed scope of work and the value of that varied work;
- defective work;
- scope and cost of rectification work;
- repudiation/cancellation of the contract; and
- damages for breach of contract.
Why use the Building Disputes Tribunal for adjudication?
Building Disputes Tribunal has unrivalled experience in administering adjudication services in New Zealand
The Tribunal has been delivering specialist fully administered end-to-end dispute resolution services to the building and construction industry since 1990. The Tribunal has appointed adjudicators and administered adjudication proceedings in more than 900 adjudication cases under the Construction Contracts Act 2002 and our adjudicators have adjudicated approximately 85% of all building disputes referred to adjudication each year in New Zealand since 2008.