Changes to the Construction Contracts Act are in the pipeline, and are expected to come into force in stages starting at the end of 2015.  Some key changes proposed are:

  • Broadening the definition of “construction work” to include design, engineering and quantity surveying work.
  • Removing many distinctions between “residential” and “commercial” construction contracts – such as allowing contractors to suspend work on residential contracts for non-payment.
  • Introducing a money retention regime for commercial construction contracts.  Retention monies will be deemed to be held on trust – although there will be no obligation to hold retention monies in a separate account.  Retention money may be invested by the holder, but penalty interest will accrue on any retention money repaid late.
  • Altering the adjudication process (including extending and reducing different timeframes, and expanding and clarifying the steps in the process) and enabling the enforcement of a wider range of adjudicator determinations (such as determinations as to parties’ rights and obligations).

The Act applies to all construction work in New Zealand and cannot be contracted out of, so it will be important to keep your business up to date with the changes as they come into force.