The Construction Contracts Act 2002:
The Construction Contracts Act 2002 is available on the New Zealand Legislation website. The Construction Contracts Amendment Act 2015 (the CCAA) contains new requirements for protecting retention money.
The Construction Contracts Amendment Act 2015 (CCAA) and the Regulatory Systems (commercial Matters) Amendment Act 2017 put in place new requirements for protecting retention money. From 31 March 2017, retention money withheld under commercial construction contracts must be held on trust in the form of cash or other liquid assets readily converted into cash, unless a financial instrument is purchased. These requirements apply only to contracts entered into, or renewed, on or after 31 March 2017.
Payers (eg, developers and head contractors) who choose to withhold retention money have two options:
There are strict requirements on the financial instruments to ensure repayment of retention money:
During 2016, the Ministry of Business, Innovation and Employment (MBIE) consulted the construction industry on what, if any, regulations should be made under the retention money provisions of the CCAA. The CCAA contains the power to make regulations setting a minimum amount of retention money that the provisions will apply to, and setting methods of accounting for retention money (additional to those set out in the CCAA).
No regulations are currently proposed. The retention money provisions will apply regardless of the amount of money involved to ensure payment for small subcontractors is protected. The methods of accounting for retention money and records of financial instruments are those set out in the CCAA. MBIE expects industry participants to develop reporting methods that best suit the accounting systems they have in place.
Read about retention money withheld under commercial construction contracts [PDF 330 KB].
Construction contracts on the MBIE Corporate website has further information.
The CCAA amended the provisions in the Act relating to payment and dispute resolution.
Key changes relating to payment and dispute resolution include:
Read the fact sheet about changes relating to adjudication and enforcement [PDF 414 KB].
If you have entered into a contract for construction work, your contract is covered by the Act.
Construction work includes work on:
Construction work includes constructing or installing, altering, maintaining and removing the building, fittings or infrastructure. It includes work integral to the construction work, such as excavation, scaffolding and prefabricating components. It also includes design, engineering and quantity surveying work.
This description of construction work is illustrative only. For the full meaning of ‘construction work’, see section 6 of the Construction Contracts Act 2002.
The Act provides you with default payment provisions and bans the use of ‘pay when paid’. The Act also provides fast-track adjudication of disputes about your contract, along with ways to enforce payment.
Payments
You can make payments in two ways under the Act:
You should make the payment obligations clear in your contract. If you don’t, default provisions of the Act will apply, which provide for monthly progress payments.
You can make a payment claim for any amount you believe is due under the contract. You must include a notice (Form 1) with all payment claims you make. The notice outlines:
If you entered into a construction contract on or after 1 December 2015, you will need to include a notice (Form 1) with any payment claims you make.
Form 1 - Information that must accompany all payment claims [PDF 334 KB]
Adjudication of disputes
The Act provides you with a fast-track adjudication process for disputes under your construction contract. This includes disputes about:
You should get advice from your lawyer before you begin an adjudication process. They will be able to give you more information about what the process will involve.
If you decide to refer your dispute for adjudication, you must serve a written notice on the other party. Your notice must include information (Form 2) which details:
Once the adjudicator has been chosen, they must confirm their role as adjudicator by giving a notice of acceptance.
The adjudicator will be able to make a timely decision about your dispute because all parties must operate within the tight timeframes set out in the Act. The adjudicator’s decision is binding and is enforceable in court. You must comply with the adjudicator’s decision, even if you are intending to contest that decision in court.
The Construction Contracts Act 2002:
The Construction Contracts Act 2002 is available on the New Zealand Legislation website. The Construction Contracts Amendment Act 2015 (the CCAA) contains new requirements for protecting retention money.
The Construction Contracts Amendment Act 2015 (CCAA) and the Regulatory Systems (commercial Matters) Amendment Act 2017 put in place new requirements for protecting retention money. From 31 March 2017, retention money withheld under commercial construction contracts must be held on trust in the form of cash or other liquid assets readily converted into cash, unless a financial instrument is purchased. These requirements apply only to contracts entered into, or renewed, on or after 31 March 2017.
Payers (eg, developers and head contractors) who choose to withhold retention money have two options:
There are strict requirements on the financial instruments to ensure repayment of retention money:
During 2016, the Ministry of Business, Innovation and Employment (MBIE) consulted the construction industry on what, if any, regulations should be made under the retention money provisions of the CCAA. The CCAA contains the power to make regulations setting a minimum amount of retention money that the provisions will apply to, and setting methods of accounting for retention money (additional to those set out in the CCAA).
No regulations are currently proposed. The retention money provisions will apply regardless of the amount of money involved to ensure payment for small subcontractors is protected. The methods of accounting for retention money and records of financial instruments are those set out in the CCAA. MBIE expects industry participants to develop reporting methods that best suit the accounting systems they have in place.
Read about retention money withheld under commercial construction contracts [PDF 330 KB].
Construction contracts on the MBIE Corporate website has further information.
The CCAA amended the provisions in the Act relating to payment and dispute resolution.
Key changes relating to payment and dispute resolution include:
Read the fact sheet about changes relating to adjudication and enforcement [PDF 414 KB].
If you have entered into a contract for construction work, your contract is covered by the Act.
Construction work includes work on:
Construction work includes constructing or installing, altering, maintaining and removing the building, fittings or infrastructure. It includes work integral to the construction work, such as excavation, scaffolding and prefabricating components. It also includes design, engineering and quantity surveying work.
This description of construction work is illustrative only. For the full meaning of ‘construction work’, see section 6 of the Construction Contracts Act 2002.
The Act provides you with default payment provisions and bans the use of ‘pay when paid’. The Act also provides fast-track adjudication of disputes about your contract, along with ways to enforce payment.
Payments
You can make payments in two ways under the Act:
You should make the payment obligations clear in your contract. If you don’t, default provisions of the Act will apply, which provide for monthly progress payments.
You can make a payment claim for any amount you believe is due under the contract. You must include a notice (Form 1) with all payment claims you make. The notice outlines:
If you entered into a construction contract on or after 1 December 2015, you will need to include a notice (Form 1) with any payment claims you make.
Form 1 - Information that must accompany all payment claims [PDF 334 KB]
Adjudication of disputes
The Act provides you with a fast-track adjudication process for disputes under your construction contract. This includes disputes about:
You should get advice from your lawyer before you begin an adjudication process. They will be able to give you more information about what the process will involve.
If you decide to refer your dispute for adjudication, you must serve a written notice on the other party. Your notice must include information (Form 2) which details:
Once the adjudicator has been chosen, they must confirm their role as adjudicator by giving a notice of acceptance.
The adjudicator will be able to make a timely decision about your dispute because all parties must operate within the tight timeframes set out in the Act. The adjudicator’s decision is binding and is enforceable in court. You must comply with the adjudicator’s decision, even if you are intending to contest that decision in court.