The New Zealand construction contracts amendment act 2015 – For better or worse?

Abstract

Adjudication has been statutorily introduced as an alternative dispute resolution method in 14 jurisdictions including New Zealand. Whilst adjudication under the New Zealand Construction Contracts Act 2002 has been hailed a success, further refinements were proposed in the Construction Contracts Amendment Bill first published in 2013. As part of the legislative process, 48 submissions were made to the Commerce Committee. There was general support for most of the amendments, but some parties expressed concerns on some of the changes. A documentary analysis of the Amendment Bills and submissions to the Commerce Committee was made to critically evaluate the changes proposed and establish if those changes were improvements. The findings show the major changes proposed include (i) removing most of the distinctions between the treatment of residential and commercial contracts under the Act, (ii) extending the scope of the Act to apply to contracts for certain professional services, (iii) removing the distinction between enforcement of payment determinations and of those relating to rights and obligations, and (iv) making the enforcement process more efficient. The findings also show that during a period of over two years from when the Bill was first introduced in January 2013, one other significant improvement-retentions are now to be held in trust-was made. A few proposals to further refine the Bill such as the suggestion to mandate retentions to be kept in a separate trust account were, however, not accepted. The Construction Contract Amendment Bill 97-3 was unanimously passed during the third and final reading in Parliament on 20 October 2015 with most of the amendments coming into force on 1 December 2015, those incorporating professional services on 1 September 2016, and the retention provisions on 31 March 2017. Royal Assent was given on 11 October 2015, leading to, on balance, a better Construction Contracts Amendment Act 2015.