DRAINAGE DISPUTES

Drainage disputes generally arise out of poor contractual documentation and/or defective work and/or materials.

Plans often lack critical detail and specifications are often general and not project specific. Roof, surface water, and waste water management systems are often inadequate and/or not practical to install as designed and changes are made to suit site conditions. Quotations will often omit (deliberately or accidentally) items of work but not expressly state so on their face and may contain estimates for the drainage work to be undertaken in the form of PC (Prime Cost) or Provisional Sums that are woefully inaccurate for the work that is in fact required to be undertaken. Ground conditions may vary across a site and may be more difficult to work in than expected (rock, buried rubbish, tree roots, other services etc) or unsuitable for the drainage system without considerable additional work being undertaken.

Head contractors/owners/engineers will often request changes to the scope of work and specification as work progresses, or changes to the pipe layout will be required to accommodate the as-built plumbing works and/or site conditions. Not all roof and surface water and/or waste water management systems will function as expected, some will be defective due to design error/oversight, and some will be improperly constructed or damaged during the construction process.

On the other hand, mistakes and errors are a feature of any building related work and some drainage contractors fail to have adequate quality assurance processes in place to ensure they achieve the agreed/specified scope of work to the specified standard, and/or to complete their work by the due date for completion.

In the circumstances, it is little wonder that drainage disputes arise from time to time. There are essentially two types of disputes that we deal with:

  • technical (in the legal sense) disputes – ie disputes that arise out of non-compliance with the technical requirements for making and responding to payment claims under the Construction Contracts Act 2002 (the Act); and
  • merits based disputes – ie disputes about the merits of the parties’ arguments 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 plumbing 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;
    • ground conditions;
    • 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.

What types of disputes arise in adjudications?

Default liability

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.