International Construction Law Review
NEW ZEALAND: CONSTRUCTION CONTRACTS ACT 2002: THE FIRST CASE
THE HON ROBERT SMELLIE
CNZM, QC, Auckland, New Zealand
Just as the first judgment pursuant to the provisions of the New Zealand Act was being handed down (TUF Panel Construction Ltd
v. Capon
1
)the latest decision in the English Court of Appeal—on substantially the same point—was being published in the Building Law Reports
: Rupert Morgan Building Services
v. Jervis
.2
In both cases the contractor had made a progress claim in the appropriate form on the owner. Neither owner responded to the claim as required by the relevant legislation.
As is now generally known, our Act is based in large measure on the English provisions and that is particularly the case in the circumstances just outlined. The lead judgment in the English case was delivered by Jacob LJ. Having set out these facts and the competing arguments, his Lordship said3
:
“In the absence of a withholding notice, section 111(1) [our sections 22(b) and 23(1)(2)] operates to prevent the client withholding the sum due. The contractor is entitled to the money right away. The fundamental thing to understand is that section 111(1) is a provision about cashflow. It is not a provision which seeks to make any certificate, interim or final, conclusive.”
Judge Wilson took the same view, citing with approval a passage from Progress Payments and Adjudication
4
where it was said:
“The Construction Contracts Act 2002 is as much about prompt payment of progress claims as it is about a rapid form of interim resolution (adjudication) when the payments claimed are in dispute. The essence of those provisions is that there must be a more or less immediate response to a claim (20 working days) in default of which the amount is recoverable as a debt due, together with the actual cost of getting judgment.”
The end result in both cases was that the owners were ordered to pay the claimed amounts, despite the fact that both sought to argue on disparate grounds that the sums claimed were not owing either in whole or in part. So far, so good, and Judge Wilson is to be commended for grasping and robustly applying the philosophy of the Construction Contracts Act. His decision sends a clear message that no owner or head contractor can afford to ignore a
1 CIV 2003/044/2801, Judge Wilson QC, North Shore District Court, 15 March 2004.
2 [2004] BLR 18 (Schiemann, Sedley and Jacob LJJ).
3 At page 21 (bottom left-hand column, top right).
4 Lexisnexis 2003.
[2004
The International Construction Law Review
364