As soon as you identify a bad debtor, it is important that you take immediate action to give yourself the best chance of getting your money in the bank, rather than falling to the bottom of any long list of creditors.

If you have identified that there is a dispute which is preventing you from being paid, the first step is to check your obligations as set out in your Terms of Trade.  If they require any dispute to be resolved via a certain dispute resolution process, (such as arbitration), this may limit your ability to consider other processes such as adjudication under the Construction Contracts Act. 

If you are unsure as to whether or not there is a dispute, you may wish to engage legal assistance.  A lawyer can, for example, prepare and send correspondence on your behalf demanding immediate payment of any amounts owing.  Depending on the client’s response, you will likely have a much better idea of what steps are required to get your money in your bank account.

Otherwise, there will usually be two main processes through which you can resolve the dispute.

The first is Adjudication.  The Construction Contracts Act provides an adjudication process that is intended to be more time and cost effective than formal court proceedings.

  • An adjudication process is initiated by serving notice of the intention to refer the dispute for adjudication on the other party or parties to the construction contract.  The notice must be in writing and contain a brief description of the dispute, what is sought in order to resolve it, and details of the construction contract to which the dispute relates. 
  • An adjudicator is appointed either by agreement between the parties or by an independent body.  The adjudicator is required to act independently, impartially, and in a timely manner, as well as ensuring unnecessary expense is not incurred.  The adjudicator must disclose any conflict of interest and must comply with the principles of natural justice (such as knowing the claim against you and giving you a genuine opportunity to prepare and present your case).  The adjudicator will usually have expert industry knowledge that will assist to resolve the dispute.
  • The adjudicator will determine whether or not any amounts claimed are to be paid and on what conditions, if any.  A party who is not happy with the determination of an adjudicator does have the power to appeal the decision to the District Court.  The District Court will then hear the matter entirely afresh – it can either uphold the adjudicator’s decision, or cancel the adjudicator’s decision and determine the matter differently.

The second main dispute resolution process is through the Courts.

  • Which court you apply to will depend on the value of the dispute – if it is less than $15,000 (and sometimes up to $20,000), then the claim can be made in the Disputes Tribunal.   If the dispute is less than $200,000, then the claim can be made in the District Court.  If the value of the dispute is more than $200,000 it must be made in the High Court. 
  • The Disputes Tribunal is a less formal process where lawyers are not allowed to appear, but can assist the parties to prepare for the hearing.  The referee will hear oral evidence from both sides, consider any written evidence, and make a decision. 
  • The District and High Court processes are started by filing a statement of claim and serving it on the other party.  The statement of claim sets out the facts on which you are making your claim.

Which dispute resolution process you follow will depend on the particular dispute.  Ensure you seek advice from a competent professional before you launch down any path so that you choose the best one for your dispute.