International Construction Law Review
HGCRA: A NEW ZEALAND VERSION
I N DUNCAN WALLACE, QC
1. Demonstrating the assiduity and long arm of the construction industry’s lobbies following their success in securing the passing of the English Housing Grants, Construction and Regeneration Act (HGCRA) in the last months of the English Conservative administration in 1996, and in persuading its Labour successor to disregard criticism and bring the Act into force in May 1998,1
this was followed in 1999 in New South Wales by that state’s Building and Construction Industry Security of Payment Act. There the English Act was very closely followed, though with two hugely important qualifications. First, the NSW statutory adjudicator’s jurisdiction in interim payment matters does not seem to extend to claims for damages for breach of contract by the defendant but is limited to enforcing the contract or statutory provisions for periodic payment
,2
and, secondly, it is in any case expressly limited to ordering the provision of security
for sums found due by the adjudicator, with payment immediately enforceable only in the event of failure to provide the ordered security.
2. Disregarding the English Act’s simplistic invalidation of “pay when paid” provisions (in practice, of course, limited to subcontract settings), and the obviously unconsidered and potentially calamitous effect of expressly extending the jurisdiction of the statutory adjudicator to cover every or any
dispute (so enabling contractors to pre-empt the administration by the owner’s A/E of most contracts’ termination remedies for contractor default or insolvency as well as any liquidated damages machinery for delay) the English Act is open to two main objections in the customer/consumer/ public interest, namely:
- (a) Its principal policy of sidelining altogether the traditional administrative role of the owner’s A/E in ruling on matters of valuation and quality control for interim payment purposes.
- (b) Its procedural unfairness in payment disputes, where the Act and its subordinate Scheme impose no time-limit constraints of any kind on claimant contractors or subcontractors (who are free to prepare massive and detailed claims over whatever periods of time they may choose and launch them without warning) while requiring not only a response by way of a notice withholding payment given within an extraordinarily short period of days from receiving the
1 Despite King’s College London’s compendious “A Plea for Sanity” published in December 1997.2 See the valuable review of the Act by Philip Dawson at [2000] ICLR 611.
Pt 1]HGCRA: A New Zealand Version131