In light of recent publicity around building company collapses and the “plight” of subcontractors, it has become increasingly important for everyone working in the industry to refresh their understanding of the Construction Contracts Act 2002 (CCA).
The Act reformed the law relating to construction contracts. In particular, the Act:
facilitates regular and timely payments,
provides speedy resolution of disputes using adjudication, and
provides remedies to recover payments.
After the repeal of the Wages Protection and Contractors Liens Act, which allowed builders to put a lien on the land until debts were settled, builders were left to whatever common law remedies they could apply.
In 2002 when the CCA was passed, some of the old mechanisms were reinstated. The CCA was designed for “subbies” but also works well for builders as the head contractor.
Unfortunately, the CCA is still poorly understood by most parties to a contract and, therefore, when problems arise, the opportunities provided by the Act are not always able to be implemented.
This is a puzzle because the requirements of the Act are very simple and easily incorporated into everyday business practice.
Builders only need to alter their documentation and terminology slightly to take advantage of the CCA. For example, where in the past a builder submitted a progress claim, the Act refers to this as a payment claim, and the information needed to be shown on them is slightly different.
Likewise, a payment certificate issued by an owner or their agent is now called a payment schedule, and there are specific requirements for these too.
Documentation to ensure the Act’s requirements are met is available to registered master builders under the documents tab of the members’ section of the RMBF web site at www.masterbuilder.org.nz.
The Act is designed to enable builders to keep cashflow flowing, resolve disputes speedily and cost-effectively, and to recover debt simply. Its processes are easily integrated into any business.
There are a number of helpful resources available to “bone up” on the Act (see below). Also available to members of the RMBF is the Federation’s in-house counsel Leoni Carter who can assist with any queries. Her email address is email@example.com.
For a copy of the CCA go to www.legislation.govt.nz
The RMBF Best Practice Guide is available for sale ($39.95 + GST) through the members’ section at www.masterbuilder.org.nz
CCA forms and documentation are available on the members’ section at www.masterbuilder.org.nz
Managing Contractors’ Cashflow by Peter Degerholm is available for sale ($25 inc GST) through Rawlinsons Media Ltd at www.rawlinsons.co.nz
The New Zealand Building Subcontractors Federation at www.nzbfs.org.nz
DBH’s Consumerbuild web site at www.consumerbuild.org.nz.