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FEATURESLEGALGetting your hands on your money (Part 3)Details on proposed changes to the Construction Contracts Act and how it could affect you and your businessIn the previous two editions ofUnder Construction, we lookedat the Construction ContractsAct 2002 (Act), focusing on:a) How the Act may prove useful inhelping you get paid.b) The options available to youunder the Act to enforce paymentsdue to you, including the suspensionof work.In this month’s edition we look atthe proposed changes to the Act, thereasons for them and what it mightmean for you in your business.BACKGROUNDWhen the Act originally came intoforce in April 2003, it reformed thelaw relating to construction contractsand changed the face of disputeresolution in the New Zealandconstruction industry. Following itsintroduction, the Act generally appliedto every construction contract enteredinto after 1 April 2003, whether ornot governed by NZ law and whetherthe construction contract was written,oral, or partly written and partly oral.The Act also introduced provisionsreforming the law relating to constructioncontracts. In particular, it aimed to:a) Facilitate regular and timelypayments between the parties toconstruction contracts.b) Provide for the speedy resolution ofdisputes arising under a constructioncontract.c) Provide remedies for the recoveryof payments under a constructioncontract.However, a number of practicalissues have since arisen with theAct and the way it operates, or isapplied, on a day-to-day basis.22In particular, there have beencomplaints around:a) The distinction drawn in the Actbetween residential and commercialwww.simpsongrierson.comwww.bcito.org.nzThe proposed changes to the Act would clarify and shorten the timeframes that will apply once the dispute resolutionprocess starts, meaning less time wastedconstruction contracts (The Act setsout different procedures dependingon whether the construction contractis a residential or a commercialconstruction contract).b) Difficulties in enforcing determinationsunder the Act due to time and costbarriers.c) The fact that the Act only applies tophysical construction work, therebypotentially excluding professionalservice providers, such as architectsand engineers, from its disputeresolution processes.CHANGES PROPOSEDThe Government is currently proposingto amend the Act (via the introductionof a Construction Contracts AmendmentBill) in order to:a) Improve the application of the Actto everyday situations.Publication delayedPublication of the revised NZS3910 Conditions of Contract forbuilding and engineering is nowexpected in mid-2013 due to alarge amount of public feedbackduring the comment period.Standards New Zealand issueda draft edition of the revised NZS3910 in September 2012, andinvited public comment for a periodof two months, during which morethan 1000 comments were received.Based on the feedback from thesector, three standards will bepublished in place of one. Separatestandards will relate to construction,design and construction and termmaintenance.More information is available atstandards.co.nzN
) Create a uniform regime betweenresidential and commercialconstruction contracts.c) Provide more cost-effective andefficient options for people withdisputes.In addition to a number of minorand technical changes proposed,the key changes proposed are:a) Removing the differentiationbetween residential and commercialconstruction contracts in mostcircumstances. This will mean thatall payment claims – and not justthose relating to residential contracts– will need to be accompanied bya notice, which outlines the processfor responding to the paymentclaim and an explanation of theconsequences of not respondingor not paying the claimed amounton time.b) Clarifying and shortening thetimeframes that will apply oncethe dispute resolution process starts.This will mean that, in an adjudicationprocess, once a party applies tohave a determination enforced,the responding party will only havefive working days to respond, insteadof the current 15 working days(unless the adjudication is particularlycomplex in which case the adjudicatormay allow additional time).c) Extending the application ofthe range of work covered by theAct to include design, engineeringand quantity surveying work.WHAT DOES IT MEAN FOR ME?The changes to the Act outlined aboveare only proposed changes at thisstage; there is still an opportunity tomake submissions, as it is anticipatedthey will not be passed into lawuntil later this year. If the changesare implemented in their current form,it will mean that:a) Contractors, who work solely ormostly on commercial contracts,will need to send a notice withevery payment claim outliningthe process for responding to thepayment claim and an explanationof the consequences of notresponding or not paying theclaimed amount on time. Unlessthis notice is sent, any paymentclaim will be considered invalid.b) Professionals carrying out design,engineering and quantity surveyingwork will fall within the ambit ofthe Act and will need to be familiarwith the requirements imposed bythe Act (in particular the paymentnotice requirement) along withthe disputes resolution process.c) If you are involved in a disputeresolution process under the Act,you will need to be aware of thechanges to the timeframes and keepon top of any applicable deadlines.This includes checking whetherthe respondent has been givenmore time.If you are involved in a dispute resolution processunder the Act, you will need to be aware ofthe changes to the timeframes and keep on topof any applicable deadlinesAbout Simpson GriersonThis article was prepared by Jo-Anne Knight, a Senior Associate ofSimpson Grierson. Jo-Anne specialises in the Construction Contracts Actand construction-related disputes. If you have any questions relating to thisarticle or the Construction Contracts Act, please contract Jo-Anne Knighton (09) 977 5340 or at jo-anne.knight@simpsongrierson.comThe information in this article is intended as a general guide only and isnot intended to be legal advice. Detailed advice should be obtained tocover a specific situation.WHAT’S THAT ALL ABOUT THEN?TEST YOUR KNOWLEDGE!25) a b c26) a b c27) a b cWhat is NOT a stated aim of amending How might the changes provideWhat would the range of work coveredthe Act?more cost-effective and efficient dispute by the Act extend to include?a) To improve the application of the Act resolution?a) Design, engineering and quantityto everyday situations.a) By clarifying and shortening timeframes. surveying.b) To provide more cost-effective andb) By following Queensbury rules.b) Range work.efficient options for people with disputes. c) By employing more mediators.c) Painting and interior decorating.c) To encourage more customers to takeup disputes with builders.B: The questions and answers in this section have been produced by the publisher and do not necessarily reflect views or opinions of the contributing organisation.NB: The questions and answers in this section have been produced by the publisher and do not necessarily reflect views or opinions of the contributing organisation.23
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Page 9 and 10: REPAIRING CRACKS INSLAB AND FOUNDAT
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Page 23: CHEMICALS AND NOISEChemicals, paint
Page 27 and 28: SPORT REPORTHurricanes get a kick f

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