Recovering Money During Lockdown in the Construction Industry

Recovering Money During Lockdown in the Construction Industry

Many in the construction industry will be feeling frustrated at the latest lockdown slowing down projects and progress. Fortunately, not everything has to be put on pause. The Construction Contracts Act 2002 ("CCA") provides ways to recover money during lockdown.

As many of you will be aware, the CCA was enacted to ensure the "quick and dirty" flow of money to keep the construction industry moving.

Adjudication

Where a dispute is simple enough and documentary evidence of the debt is available, adjudication under the CCA is a great option. It is done completely on the papers and so can progress despite any level of lockdown, particularly as it can in some circumstances be done completely by email.

Adjudication is also a fast process, with very strict timeframes for responding to claims and limited scope for extending those timeframes. Once the claims and responses are put to the adjudicator, a decision must be issued within 20 working days. This generally means the whole process is over in two to three months.  

Payment Claims

The CCA also provides for the speedy enforcement of payment claims, in order to keep money moving, while the underlying dispute is resolved. If an invoice is a valid payment claim under the CCA, it is very easy to recover payment, with no need to delve into the substance of the dispute.

The beauty of recovering sums claimed under valid payment claims is that the CCA allows for the full recovery of all actual and reasonable costs incurred in doing so – that is, all legal fees for seeking these sums can be recovered.

The best options for recovery of a valid payment claim are:

1. A claim through the Court system.

2. Adjudication.

The advantage of going through the Court system is that all legal fees can be recovered by the losing party. While the Court rules allow for electronic filing in the High Court, there is no such amendment in the District Court Rules, although the District Courts have stated that they will follow the High Court's approach.

As mentioned above, adjudication can be done electronically. Generally, you cannot recover your legal fees for adjudication. There is however, an exception if a defence clearly lacks merit. It is possible therefore, that in a simple payment claim adjudication, if defended, could result in recovering your legal fees.

If you want to talk about your options for recovering unpaid invoices and to discuss you best options, please direct any enquires to:

Craig Andrews (candrews@mcveaghfleming.co.nz) (09) 306 6745

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© McVeagh Fleming 2021

This article is published for general information purposes only.  Legal content in this article is necessarily of a general nature and should not be relied upon as legal advice.  If you require specific legal advice in respect of any legal issue, you should always engage a lawyer to provide that advice.