Construction Contracts Amendment Act 2015

1: Title
This Act is the Construction Contracts Amendment Act 2015.
2: Commencement
1: Sections 6 11
2: Sections 4(3) 18
3: The rest of this Act comes into force on 1 December 2015.
3: Principal Act
This Act amends the Construction Contracts Act 2002 principal Act 2016-09-01 Construction Contracts Act 2002 Sections 6 and 11 only (see s 2(1)) 2017-03-31 Construction Contracts Act 2002 Sections 4(3) and 18 only (see s 2(2)) 2015-12-01 Construction Contracts Act 2002 Rest of the Act (see s 2(3))
1: Amendments to preliminary provisions
4: Section 4 amended (Overview)
1: In section 4(c) and (e) progress
2: Replace section 4(d)
d: default provisions relating to payments are set out in sections 15 to 18:
3: After section 4(d)
da: provisions relating to retentions are set out in sections 18A to 18I
4: Replace section 4(f) to (h)
f: provisions granting a party to a construction contract who is owed money a statutory right to suspend work until payment is made are set out in section 24A
g: provisions relating to the adjudication of disputes are set out in sections 25 to 71:
h: provisions enabling an adjudicator's determination to be reviewed or enforced are set out in sections 71A to 78:
5: Section 5 amended (Interpretation)
1: In section 5 residential construction contract
2: In section 5 construction contract
a: means a contract for carrying out construction work; and
3: In section 5 construction site construction site
a: the land on which the claimant has been carrying out construction work under the relevant construction contract:
b: in relation to related services, the land or premises that are the subject of the contract
4: In section 5 defendant defendant
a: against whom an adjudication determination is made; and
b: against whom enforcement of the determination is sought
5: In section 5 plaintiff progress payment plaintiff
a: in whose favour an adjudication determination is made; and
b: who seeks enforcement of the determination progress payment
a: means a payment for construction work carried out under a construction contract that is in the nature of an instalment (whether or not of equal value) of the contract price for the contract; and
b: includes any final payment under the contract; but
c: does not include an amount that is, or is in the nature of, a deposit under the contract
6: In section 5 working day
c: for the purposes of sections 18, 22, 24A, 33, 35 to 37A, 46, 47, 59, and 66, a day in the period commencing on 24 December in any year and ending with the close of 5 January in the following year; and
7: In section 5 working day 53 71B
8: In section 5 chief executive premises related services section 6(1A)
6: Section 6 amended (Meaning of construction work)
After section 6(1)
1A: Construction work
a: design or engineering work carried out in New Zealand in respect of work of the kind referred to in subsection (1)﻿(a) to (d) and (f):
b: quantity surveying work carried out in New Zealand in respect of work of the kind referred to in subsection (1)﻿(a) to (g).
7: Section 9 amended (When Act applies: general)
In section 9 10 and 11 11 and 11A
8: Section 10 repealed (When Act applies: residential construction contracts)
Repeal section 10
9: Section 11 amended (When Act does not apply)
1: In section 11(b)﻿(ii)﻿(C) contract ; or
2: After section 11(b)﻿(ii)
iii: provisions under which a party undertakes to carry out construction work as a condition of an agreement for the sale and purchase of second-hand chattels, fixtures, or fittings; or
iv: provisions under which a party undertakes to carry out services—
A: that are for the operation or management of any building or structure or any other part of any land; and
B: that are not, and do not relate to, construction work.
10: New section 11A inserted (Application of this Act: savings provisions relating to Construction Contracts Amendment Act 2015)
After section 11
11A: Application of this Act: savings provisions relating to Construction Contracts Amendment Act 2015
The amendments made to this Act on 1 December 2015 by the Construction Contracts Amendment Act 2015 do not apply to a construction contract that was entered into before 1 December 2015, unless—
a: the contract is renewed for a further term on or after 1 December 2015; or
b: the parties agree that the amendments will apply.
11: Section 11A amended (Application of this Act: savings provisions relating to Construction Contracts Amendment Act 2015)
In section 11A
2: Section 6(1A)
a: the contract is renewed for a further term on or after 1 September 2016 (in which case that section applies only in relation to those obligations that are incurred or undertaken on or after 1 September 2016); or
b: the parties agree that section 6(1A)
2: Amendments to principal provisions
Payments
12: Section 13 amended (Conditional payment provisions ineffective)
1: In section 13(1)﻿(b) progress
2: In section 13(2) conditional payment provision of a construction contract
ca: that is of a kind described in section 18I(1)﻿(a); or
13: Subpart 2 heading in Part 2 replaced
In Part 2, replace the subpart 2
2: Payment provisions
14: Cross-heading above section 14 amended
In the cross-heading above section 14 progress
15: Section 14 amended (Parties free to agree on progress payment provisions in construction contract)
1: In the heading to section 14 progress
2: In section 14(a) progress
3: In section 14
2: To avoid doubt, the parties to a construction contract may expressly agree to a single payment under subsection (1)﻿(a).
16: Cross-heading above section 15 amended
In the cross-heading above section 15 progress
17: Section 18 amended (Due date for payment)
In section 18 progress payment payment (as that term is defined in section 19)
18: New subpart 2A of Part 2 inserted
After section 18
2A: Retention money
18A: Interpretation
In this subpart, unless the context otherwise requires, retention money party A party B
18B: Application of this subpart
1: This subpart applies to commercial construction contracts where the amount of retention money is more than the de minimis amount.
2: Regulations may prescribe the de minimis amount for the purpose of subsection (1).
18C: Trust over retention money
1: All retention money must be held on trust by party A, as trustee, for the benefit of party B.
2: Retention money may be held in the form of cash or other liquid assets that are readily converted into cash.
3: A trust over retention money ends when—
a: the money is paid to party B; or
b: party B, in writing, agrees to give up any claim to the money; or
c: the money ceases to be payable to party B under the contract or otherwise by operation of law.
18D: Accounting
1: Party A must keep proper accounting records of all retention money held that—
a: correctly record all dealings and transactions in relation to the money; and
b: comply with generally accepted accounting principles; and
c: are readily and properly auditable.
2: Party A must make accounting records of retention money available for inspection by party B at all reasonable times and without charge.
3: Regulations may further prescribe methods of accounting for retention money.
18E: Use of retention money
1: Party A must not appropriate any retention money to a use other than to remedy defects in the performance of party B’s obligations under the contract.
2: Retention money held in trust by party A—
a: does not need to be paid into a separate trust account; and
b: may be commingled with other moneys.
18F: Investment of retention money
1: Retention money may be invested by party A in accordance with the Trustee Act 1956 in relation to investment of trust funds.
2: If, upon the realisation of any investment, the amount received is—
a: less than the amount invested, party A must make up the difference between the amount invested and the amount realised:
b: more than the amount invested, party A may retain the benefit of the amount that exceeds the amount invested.
3: Party A may retain the benefit of any interest earned on retention money on or before the date on which it is payable under the contract.
18G: Interest on late payment
1: Interest on retention money is payable to party B from the date on which it is payable under the contract until the date on which it is paid.
2: The interest referred to in subsection (1) is payable—
a: at the rate agreed under the contract; or
b: if the parties have not agreed a rate under the contract, at the rate or rates prescribed in regulations.
18H: Protection of retention money
Retention money—
a: is not available for the payment of debts of any creditor of party A (other than party B):
b: is not liable to be attached or taken in execution under the order or process of any court at the instance of any creditor of party A (other than party B). 2006 No 1 s 113(1)
18I: Prohibited provisions
1: Any term in a construction contract is void that purports to—
a: make the payment of retention money conditional on anything other than the performance of party B’s obligations under the contract; or
b: make the date on which payment of retention money is payable later than the date on which party B has performed all of its obligations under the contract to the standard agreed under the contract; or
c: require party B to pay any fees or costs for administering a trust under this subpart.
2: Any provision in a construction contract is void if the purpose, or one of the purposes, of the provision is to avoid the application of any of the provisions of this subpart.
19: Section 19 amended (Interpretation)
1: In section 19 claimed amount claimed amount
2: In section 19 payee progress
3: In section 19 payer payment
a: a progress payment for construction work carried out under a construction contract; or
b: another type of payment under a construction contract to which a party who has agreed to carry out construction work under the contract is entitled for, or in relation to, construction work carried out by that party under the contract
4: In section 19 scheduled amount progress a
20: Section 20 amended (Payment claims)
1: In section 20(1) each progress a
2: Replace section 20(1)﻿(b)
b: if the contract does not provide for the matter in the case of a progress payment, at the end of the relevant period referred to in section 17(2); or
c: if the contract does not provide for the matter in the case of a single payment expressly agreed under section 14(1)﻿(a)
3: In section 20(2)﻿(b) and (c) progress
4: In section 20(2)﻿(d) indicate state
5: In section 20(3) If a payment claim is served on a residential occupier, it A payment claim
21: Section 21 amended (Payment schedules)
In section 21(2)﻿(c) indicate state
22: Section 22 amended (Liability for paying claimed amount)
In section 22 progress
23: Section 23 amended (Consequences of not paying claimed amount where no payment schedule provided)
In section 23(1)﻿(b) progress
24: Section 24 amended (Consequences of not paying scheduled amount in manner indicated by payment schedule)
In section 24(1)﻿(d) progress
25: New subpart 4 of Part 2 inserted
After section 24
4: Suspension of work
24A: Suspension of construction work
1: A party who carries out construction work under a construction contract ( party A
a: any of the following circumstances applies:
i: a claimed amount is not paid in full by the due date for its payment, and no payment schedule has been provided by the party who it is claimed is liable for the payment ( party B
ii: a scheduled amount is not paid in full by the due date for its payment even though a payment schedule given by party B indicates a scheduled amount that party B proposes to pay to party A:
iii: party B has not complied with an adjudicator's determination that party B must pay an amount to party A by a particular date; and
b: party A has served on party B a notice under section 23(2)﻿(b), 24(2)﻿(b), or 59(2)﻿(b), as the case may be; and
c: the amount mentioned in paragraph (a)﻿(i) or (ii) is not paid, or the determination mentioned in paragraph (a)﻿(iii) is not complied with, within 5 working days after the date of that notice.
2: If party A exercises the right conferred by subsection (1), party A—
a: is not in breach of the construction contract; and
b: is not liable for any loss or damage suffered by party B, or by any person claiming through party B; and
c: is entitled to an extension of time to complete the contract, but is not entitled solely by reason of this Act to recover any costs incurred as a consequence of the extension of time; and
d: keeps party A's rights under the contract, including any right to terminate the contract; and
e: may at any time lift the suspension, even if the amount has not been paid or the determination has not been complied with.
3: To avoid doubt, subsection (2)﻿(c) does not affect party A's rights to recover (whether in an adjudication or otherwise) any costs incurred as a consequence of the extension of time that exist other than solely by reason of this Act, nor does it add anything to those rights.
4: If party A exercises the right conferred by subsection (1), the exercise of that right does not—
a: affect any rights that would otherwise have been available to party A under the Contractual Remedies Act 1979; or
b: enable party B to exercise any rights that may otherwise have been available to party B under that Act as a direct consequence of party A exercising the right conferred by subsection (1).
5: The right to suspend work under a construction contract ceases when party B pays the amount in full or complies with the adjudicator's determination. 2002 No 46 s 72 Adjudication of disputes
26: Section 25 amended (Right to refer disputes to adjudication)
Replace section 25(2)
2: An example of a dispute is a disagreement between the parties to a construction contract about—
a: whether an amount is payable under the contract (for example, a progress payment) or the reasons given for non-payment of that amount; or
b: whether there has been a breach of a term of the contract (including a term implied into the contract under the Building Act 2004 or any other enactment).
27: Section 26 amended (Relationship between Part and other dispute resolution procedures)
In section 26(3) However, an An
28: Section 27 amended (Effect of Part on civil proceedings)
In section 27(1) and section 61(2)
29: Section 28 amended (How to initiate adjudication)
After section 28(2)
3: A notice of adjudication must also set out prominently, in the prescribed form (if any),—
a: a statement of the respondent's rights and obligations in the adjudication; and
b: a brief explanation of the adjudication process.
30: Section 31 replaced (When claimant may not seek approval for issue of charging order)
Replace section 31
31: When claimant may not seek approval for issue of charging order
1: A claimant may not seek any of the matters referred to in section 29 or 30 against an owner who is—
a: an individual who is occupying, or intends to occupy, wholly or mainly as a dwellinghouse, the premises that are the subject of a construction contract:
b: a trustee of a family trust, where the premises that are the subject of a construction contract are—
i: owned by the trust; and
ii: occupied, or intended to be occupied, wholly or mainly as a dwellinghouse, by any beneficiary of the trust.
2: In this section, family trust
31A: Compliance with requirements of Act relating to supply of certain information
1: No notice of adjudication is invalid for any failure to comply strictly with the requirements of section 28(2)﻿(a) to (d) and (g) as long as—
a: the notice is in writing; and
b: the nature of the dispute and the names of the parties involved are stated in the notice; and
c: any non-compliance does not mislead or unjustly affect the interests of the recipient.
2: If a notice of adjudication fails, in accordance with section 28(2)﻿(e) or (f), to state whether a charging order is being sought, approval for the issue of a charging order may not be given.
3: A notice of adjudication that fails to comply with section 28(3)
a: this Part applies as if no notice of adjudication had been served; and
b: the claimant may serve on the respondent a new notice of adjudication that complies with section 28(3)
4: If a party to an adjudication wishes to provide another party or the adjudicator with copies of, or extracts from, the construction contract but is for any reason unable to do so (for example, in a case where the contract is oral), that party may provide the missing information in the form of a statutory declaration together with any supporting documents that are available. 2002 No 46 s 64
31: Section 32 amended (Owner who is not respondent is party to adjudication proceedings)
In section 32(2)﻿(a) 37, 37A,
32: Section 33 amended (Selection of adjudicator)
Replace section 33(2)﻿(b)
b: for the purposes of subsection (1)﻿(c), 5 working days after the notice of adjudication has been served or any further period that the parties may agree; and
c: for the purposes of subsection (1)﻿(d), 2 to 5 working days after the notice of adjudication has been served or any further period that the parties may agree.
33: Section 35 amended (Appointment of adjudicator)
1: In section 35(2) notice of acceptance (a notice of acceptance
2: Repeal section 35(4) and (5)
3: In section 35(6) that confirms the person meets the eligibility criteria for adjudicators under section 34 that complies with section 35A
34: New section 35A inserted (Notice of acceptance)
After section 35
35A: Notice of acceptance
1: A notice of acceptance must be in the form (if any) prescribed in regulations made under this Act.
2: A notice of acceptance that fails to confirm that the adjudicator meets the eligibility criteria for adjudicators under section 34 has no effect.
35: Section 37 amended (Response to adjudication claim)
1: Replace section 37(1)
1: A respondent may serve a written response to the adjudication claim on the adjudicator—
a: within 5 working days after receiving that claim or the adjudicator's notice of acceptance (whichever is the later); or
b: within any further time that the parties to the adjudication agree; or
c: within any further time that the adjudicator allows.
2: After section 37(3)
4: Subsection (5) applies if, before the end of the period referred to in subsection (1)﻿(a), the respondent requests additional time to serve a written response.
5: For the purpose of subsection (1)﻿(c), an adjudicator—
a: must allow the respondent additional time to serve a written response if the adjudicator considers it necessary—
i: having regard to the size or complexity of the claim; or
ii: because, in the adjudicator's opinion, the claim has been served with undue haste and, as a result, the respondent has had insufficient time to prepare his or her response:
b: may allow the respondent additional time to serve a written response if the adjudicator considers that additional time is reasonably required for any reason.
36: New section 37A inserted (Reply to response to adjudication claim)
After section 37
37A: Reply to response to adjudication claim
1: A claimant may serve on the adjudicator a written reply to the response under section 37(1)
2: The claimant's written reply must be served within 5 working days after a copy of the response is served on the claimant under section 37(3).
3: The claimant must serve a copy of the reply and any accompanying documents on the respondent and every other party to the adjudication either before or immediately after they are served on the adjudicator.
4: An adjudicator who receives a claimant's written reply under subsection (1) may—
a: refuse to consider any new material or issues raised in the reply:
b: allow the respondent up to 2 working days to serve a rejoinder to the claimant's reply.
37: New sections 38A and 38B inserted
After section 38
38A: Special provisions for adjudication if approval for charging order sought by claimant
An adjudication in which the claimant seeks approval for the issue of a charging order in respect of a construction site must be conducted by an adjudicator who—
a: is nominated for the purpose by an authorised nominating authority; and
b: has the specific additional qualifications, expertise, and experience that may be prescribed for the purposes of this section (if any). 2002 No 46 s 63
38B: Parties may be represented at adjudication proceedings
1: Any party to a dispute that has been referred to adjudication may be represented by the representatives (whether legally qualified or not) that the party considers appropriate.
2: Subsection (1) is subject to the adjudicator's power to direct that the number of representatives present at a conference of the parties is to be limited to allow for the efficient conduct of proceedings. 2002 No 46 s 67
38: Section 45 amended (Adjudicator’s determination: matters to be considered)
1: In section 45(c) 36 and the claimant’s written reply (if any) referred to in section 37A
2: In section 45(d) 37 and the respondent’s rejoinder (if any) referred to in section 37A(4)﻿(b)
39: Section 47 amended (Adjudicator's determination: form)
1: After section 47(1)﻿(b)﻿(i)
ia: must be dated; and
2: In section 47(1)﻿(b)﻿(iii) in a case where the adjudicator determines that a party to the adjudication is liable to make a payment,
40: Sections 52 to 55 repealed
Repeal sections 52 to 55
41: Section 58 amended (Enforceability of adjudicator's determination)
1: In section 58(2) is not enforceable is enforceable in accordance with section 59A
2: Repeal section 58(3)
42: New section 59A inserted (Consequence of not complying with adjudicator's determination under section 48(1)﻿(b) or (2))
After section 59
59A: Consequence of not complying with adjudicator's determination under section 48(1)﻿(b) or (2)
1: This section applies if a party against whom an adjudication determination is made fails to comply with the adjudicator's determination under section 48(1)﻿(b) or (2) in respect of rights and obligations under the contract.
2: The party in whose favour the determination was made may apply for the determination to be enforced by entry as a judgment in accordance with sections 73 to 78 (but only after such date, if any, specified in the adjudicator's determination for compliance).
43: Section 60 amended (Effect of review or other proceeding on adjudicator's determination under section 48(1)﻿(a))
In section 60 under section 48(1)﻿(a)
44: Section 61 repealed (Consequence of not complying with adjudicator's determination under section 48(1)﻿(b) or (2))
Repeal section 61
45: Sections 62 to 64 and 67 repealed
Repeal sections 62 to 64 67
46: Section 71 amended (Application of other enactments to adjudications)
1: In section 71(2)﻿(c) 1993 ; and
2: After section 71(2)﻿(c)
d: civil proceedings against a person for the purposes of section 393(2) of the Building Act 2004. Review and enforcement of adjudicator's determination
47: Part 4 heading replaced
Replace the Part 4
4: Review and enforcement of adjudicator's determination
48: New subpart 1AA of Part 4 inserted
After the Part 4
1AA: Review of adjudicator's determination
Review of adjudicator's determination in respect of owner who is not respondent
71A: Owner who is not respondent may apply to District Court for review of adjudicator's determination
1: An owner who is not a respondent may apply to a District Court for a review of—
a: an adjudicator's determination that the owner is jointly and severally liable with the respondent to make a payment to the claimant; and
b: an adjudicator's approval for the issue of a charging order in respect of the construction site.
2: A District Court has the jurisdiction to hear and determine an application for review under this section despite any limits imposed on District Courts in their ordinary civil jurisdiction by sections 29 to 34 of the District Courts Act 1947. 2002 No 46 s 52
71B: Procedure for seeking review
1: An application for review under section 71A
2: The notice must be filed—
a: within 20 working days after the date of the determination to which the application for review relates; or
b: within any further time that the District Court may allow on application made before or after the expiration of the period referred to in paragraph (a). 2002 No 46 s 53
71C: Powers of District Court on review
1: For the purpose of hearing the application for review, the District Court—
a: must conduct the review as a hearing de novo
b: has all the powers, duties, functions, and discretions of the adjudicator in making the determination to which the application for review relates; and
c: has all the powers vested in a District Court in its civil jurisdiction.
2: On hearing the application for review, the District Court may—
a: quash the determination, and substitute for it any other determination that the adjudicator could have made in respect of the original proceedings; or
b: refuse the application.
3: A District Court's determination under subsection (2)﻿(a)—
a: has effect as if it were a determination made by an adjudicator for the purposes of this Act; and
b: is not a final determination of the dispute between the claimant and respondent to the adjudication under review.
4: Subsection (3)﻿(b) does not prevent any proceedings between the claimant and respondent to the adjudication under review from being heard and determined at the same time as the application for review under this section. 2002 No 46 s 54
71D: Effect of review on adjudicator's determination
An application for review under section 71A 2002 No 46 s 55
49: Subpart 1 of Part 4 repealed
Repeal subpart 1
50: Section 73 amended (Enforcement of adjudicator's determination)
1: Repeal section 73(1)
2: Replace section 73(2)
2: A plaintiff may apply for an adjudicator's determination to be enforced by entry as a judgment in accordance with this subpart.
3: Replace section 73(5)
5: Despite subsection (2), a plaintiff in whose favour a determination has been made may only apply for that determination to be enforced by entry as a judgment—
a: if any conditions imposed by the adjudicator have been met; and
b: after the date (if any) specified in the adjudicator's determination for compliance.
51: Section 74 amended (Defendant may oppose entry as judgment)
1: In section 74(1) 15 5
2: After section 74(2)﻿(c)
d: that due to a change in circumstances, which was not caused in any part by the defendant, it is not possible to comply with the adjudicator's determination:
e: that the date (if any) specified in the adjudicator's determination for compliance has not (yet) passed.
3: After section 74(2)
2A: Subsection (2)﻿(d) applies only if the adjudicator’s determination is a determination under section 48(1)﻿(b) or (2).
52: Section 75 amended (Entry as judgment if defendant takes no steps)
In section 75 15 5
3: Amendments to miscellaneous provisions
53: Section 80 amended (Service of notices)
In section 80(d) in the prescribed manner (if any) in the manner (if any) prescribed in regulations made under this Act
54: Section 82 amended (Regulations)
In section 82
2: Regulations prescribing the form of a notice of acceptance may, for example, require that the notice—
a: state that the adjudicator has accepted appointment as adjudicator:
b: if the adjudicator has been appointed by a nominating body agreed between the parties, state that the nominating body has appointed the adjudicator because the parties could not or did not agree on an adjudicator:
c: if an authorised nominating authority has appointed the adjudicator, state that the authorised nominating authority has appointed the adjudicator because the parties could not or did not agree on an adjudicator:
d: confirm that the adjudicator meets the eligibility criteria for adjudicators under section 34:
e: set out all of the relevant time frames for the adjudication process:
f: identify which time frames have already commenced:
g: note which time frames the respondent can ask the adjudicator to extend:
h: indicate the likely costs of the adjudication:
i: identify alternative options which may be available to the parties to resolve their dispute (other than by continuing the adjudication process).
55: New section 83 inserted (Chief executive may require adjudication information)
After section 82
83: Chief executive may require adjudication information
1: The chief executive may, for statistical or research purposes, require adjudicators, nominating authorities, or nominating bodies to provide any information (in their possession or under their control) regarding adjudications, including, for example, the number, nature, or outcome of adjudications initiated under this Act.
2: A person must not disclose information under subsection (1) except—
a: with the consent of the relevant party to the dispute and any identifiable person to whom it relates; or
b: to the extent that the information is already in the public domain; or
c: in statistical or summary form arranged in a manner that prevents any information disclosed from being identified by any person as relating to any particular person; or
d: if the information is to be used for statistical or research purposes and will not be published in a form that could reasonably be expected to identify any particular person.