Williams Andrew: Construction Contracts Amendment Bill — First ReadingText is incorporated into the Bound VolumeWilliams Andrew: Construction Contracts Amendment Bill — First Reading[Sitting date: 11 June 2013. Volume:691;Page:11011. Text is incorporated into the Bound Volume.]ANDREW WILLIAMS (NZ First):I take a call on behalf of New Zealand First on the Construction Contracts Amendment Bill. We will be supporting this through to the Commerce Committee. We do see merit in some aspects of the bill. However we do have some reservations in others.Certainly where the bill says that amendments will remove most of the distinctions between how the legislation applies to residential and to commercial construction contracts it is we believe sensible. There are some grey areas between the residential and commercial construction sectors and often there are loopholes there that could be closed up. The bill also widens the definition of “construction work” to include the design or engineering work and the quantity surveying work. Again often there are those other contract elements of any construction project that perhaps are not necessarily deemed to be part of the project. However they provide a vital component in a good outcome of the particular construction in question and therefore we do believe that that has merit too to include the design and quantity surveying.It also mentions here that it would be “reducing the amount of time a defendant has to oppose an application to have a determination entered as a judgment:”. I guess in some respects we have some reservations about that—whether reducing from 15 days to 5 days is a good thing—because it does perhaps limit the opportunity to have a proper defence and proper legal advice on the matter and to have the correct professionals able to have input into it. That will be something that I guess will be fleshed out at the select committee level and we will have an opportunity to see whether reducing that to 5 days is a practical workable solution.The requirement for adjudicators to convene a pre-adjudication conference is a good thing in many of these areas. If it can be worked through in pre-adjudication meetings and conferences before it gets into the thick of legal wranglings then that is very positive. Certainly in many areas and indeed with other Acts such as the Resource Management Act and other areas of the Local Government Act and various things if there can be pre-adjudication conferences often some of the problems can go away before it actually gets into the final negotiation.In this respect we also would like to see something considered in all this and perhaps we will be putting forward a Supplementary Order Paper in this regard at a later date. We believe that it is time that New Zealand had a proper construction bond system. Perhaps that would be one way of working through this. It does occur in many other jurisdictions around the world where there is a requirement for a performance bond.In terms of that a performance bond is a surety bond issued by either an insurance company or a bank to guarantee satisfactory completion of a project by a contractor. Perhaps that would be a good way through so that you do not have the situation as has occurred in the recent past where people register a company as say Joe Bloggs 2010 Ltd and as soon as the project is finished Joe Bloggs 2010 Ltd is wound up and they move on to Joe Bloggs 2011 Ltd and then nobody can actually find the original company in order to go after it. If there was a system that included performance bonds that are tied directly back to the directors and to those who have signed the bonds there might be more certainty in the market and we would not have some of the cowboy activity that has been seen in years gone by. That particularly relates to many instances with leaky buildings and leaky homes where now the last man standing often tends to be the local authority and council simply because the original builders can no longer be found or are no longer in business under the particular name they had when they built the building.I also note that in this Construction Contracts Amendment Bill clause 13 will insert a new section 31 which will also prohibit charging orders where a construction site is owned by a family trust and occupied by a beneficiary of the trust. That is an interestingone. I think in recent times it has been noted that the large mansion being built by the Hotchins on Paritai Drive in Auckland I understand is under some form of trust arrangement. Again there have been great difficulties in terms of many of the contractors and others completing the work there and completing payment because it has been done through other mechanisms and through other trust mechanisms and now the trustees themselves are trying to get money out of the trust to the tune of very significant amounts and are hiding behind that particular guise. Therefore if this bill does include making it more difficult for people to have some of these smoke-and-mirrors trusts to hide behind in terms of construction projects then that would also be a good thing.New Zealand First sees a great deal of merit in this bill. This tidies up aspects of the original 2002 Construction Contracts Act. It received quite a bit of input over the last year or so while the Government drew up this amendment bill. It has had significant input from all sorts of sources. There is some very good merit to many aspects of it. New Zealand First will support it through to the select committee stage and we hope that as a result we will get some good legislation coming out of this.