QUANTITY SURVEYING (QS) DISPUTES

The meaning of construction work in the Construction Contracts Act 2002 was extended by section 6 of the Construction Contracts Amendment Act 2015 to include quantity surveying work and design and engineering work in respect of all contracts entered into or renewed after 1 September 2016.

Design, engineering and quantity surveying consultants now have the benefit of the payment protections under the Act, including the right to suspend work for non-payment. They are also able to use the adjudication procedures under the Act to resolve payment disputes, but will also be subject to claims for breach of contract and breach of requirements of reasonable care and skill in relation to their work. These changes will have an impact on professional indemnity insurance policies and liability claim procedures, particularly in the context of the short timeframe for adjudication under the Act.

While only a few cases have been dealt with so far involving professional services, 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 services;
    • contract interpretation – what the parties actually agreed;
    • scope of work;
    • incomplete or deficient work;
    • 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;
    • repudiation/cancellation of the contract for quantity surveying work; and
    • claims for 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.