On 29 January 2013, the Construction Contracts Amendment Bill (the "Bill") was introduced to Parliament. The Bill proposes changes to extend the application of the Construction Contracts Act (the "CCA") to residential construction contracts, and to widen the group of professionals covered by the CCA. It also proposes to amend the enforcement and adjudication processes and to allow more direct enforcement of determinations under the CCA.
The Bill will be referred to a select committee which will likely hear submissions before the Bill becomes law.
The Bill removes most of the distinctions between residential and commercial construction contracts.1 This will allow parties to residential contracts greater access to the adjudication process. It will also provide more options in relation to securing payments under the CCA.
The CCA provides that "progress payments" are payments, in the nature of an instalment, of the contract price paid under a contract, but does not include any deposit.2 The Bill extends the application of progress payment procedures to residential construction contracts. Payment procedures surrounding the rights, calculation of amounts and due dates for progress payments will now apply to residential construction contracts.3 Other amendments include widening the definition of "construction work" to include design, engineering and quantity survey work.4 This will broaden the CCA's application in the building industry as it opens up the adjudication process and recovery of non-payment for the benefit of both consumers and building practitioners.
Streamlines Adjudication Process
The Bill adds a new requirement for adjudicators to hold a pre-adjudication conference to answer procedural questions.5 This should make the process more efficient, as both parties will be informed about the nature of the adjudication.
Following a claimant's notice of intention to refer a dispute to adjudication, the adjudicator must give the respondent additional time to serve a written response, if this is necessary due to the complexity or size of the claim.6 This will allow the respondent to provide a thorough written response to ensure the adjudicator has access to all relevant information.
The Bill proposes to give building practitioners access to stronger enforcement measures. The Bill will allow them to suspend construction work, provided they have complied with the notice requirements, if a consumer fails to make payment under any type of construction contract.7 This remedy is currently restricted to work under commercial construction contracts.
While the Bill extends most of the remedies available to residential construction contracts, the issuing of charging orders in respect of construction sites is still restricted to commercial contracts under the Bill.8
The Bill also gives more teeth to an adjudicator's determination. Under the CCA, an adjudicator's determination about payment is enforceable. However, any determination regarding the parties' rights and / or obligations under the contract is currently not enforceable. The Bill amends the CCA so that this latter determination is also enforceable. As such, non-compliance with the adjudicator's determination regarding payment, and the parties' rights and / or obligations under the contract will be able to be enforced by having the determination entered as a judgment.9
The Bill also reduces the time a defendant has to oppose the plaintiff's application to have an adjudication determination entered as a judgment, from 15 to 5 working days. The defendant may also oppose the application if the time that the adjudicator has allowed for compliance has not elapsed.10 The time after which the Court must enter a judgment, if the defendant does not oppose the plaintiff's application, is also reduced from 15 to 5 working days.11
These amendments to the CCA are likely to come into force on 1 November 2013.12
1 Construction Contracts Amendment Bill (the "Bill"), clause 5.
2 See CCA, section 5 and Bill, clause 5.
3 Bill, clause 8; see CCA, ss 14 – 18.
4 Bill, clause 6.
5 Bill, clause 15, the parties can both consent to not have this conference.
6 Bill, clause 16.
7 Bill, clause 10.
8 Bill, clause 13.
9 Bill, clauses 20, 21 and 28.
10 Bill, clause 29.
11 Bill, clause 30.
12 Bill, clause 2.