Changes to Construction Contracts Act – from 1 December 2015

As of 1 December 2015, a series of changes to the Construction Contracts Act 2002 have come into effect. These changes include:

1.    Expanding the remedies available to residential contractors;

2.    Clarifying the types of payment schemes available under the Act;

3.    Adding further administrative requirements within the adjudication process; and

4.    Broadening and expanding the review and enforcement provisions within the Act.

Residential Construction Contracts

Residential contractors now have full and equal access to the default payment provisions and adjudication processes under the Act.

Previously, the Construction Contracts Act differentiated between commercial construction contracts and residential construction contracts, and provided a broader range of remedies for commercial contractors. The new changes now remove the prior inconsistencies between the two types of contract.

The only exception to the expanded remedies available to residential contractors is that residential contractors are still unable to seek charging orders against any owner or family trust that are the residential occupiers of a construction site.

Types of Payment

The new changes now clarify that parties to a construction contract can agree to a single payment rather than several instalments of the contract price. This change provides contractors with more flexibility in terms of the payment options available to them.

Adjudication of Disputes

Contractors with disputes over amounts payable under a construction contract or alleged breaches of contract can refer the matter to adjudication.

In order to initiate adjudication, contractors must serve a written notice of adjudication on the other party to the construction contract. The new changes require contractors to also set out in a prescribed form a statement of the other party’s rights and obligations, and a brief explanation of the adjudication process. This requirement used to apply only to notices of adjudication served on residential occupiers.

After receiving the notice of adjudication, the other party can serve a written response to the adjudicator. The new changes now give contractors a right of reply to respond to that party within five working days. Adjudicators can choose to ignore any new issues or material raised in the reply, and can allow the other party an additional response.

Significantly, the Act also now clarifies that contractors have up to 10 years to refer a dispute to adjudication. This clarification brings the Act in line with the limitation period set out in the Building Act 2004.

Review and Enforcement of Adjudicator’s Determinations

Contractors can now enforce the rights and obligations under a construction contract in the District Court so long as the conditions imposed by the adjudicator have been met, and the date specified in the adjudicator’s determination for compliance has passed.

The changes have also reduced the time a party to a contract has to oppose the adjudication determination being entered as a judgment in the District Court from 15 to five working days, and has expanded the grounds for opposing the entry as a judgment.