The Department of Building and Housing is calling for submissions on how well the Construction Contracts Act 2002 (CCA) is working in practice.

In particular comments are sought as to whether:

  • the CCA should apply in its entirety to residential construction contracts?
  • there are better options for enforcing adjudication orders? 
  • adjudication orders should be able to be appealed?
  • adjudication orders should be made public?
  • related goods and services e.g. design and engineering should be subject to adjudication?

At present parts of the CCA only apply to commercial construction contracts.  Following the review of the Building Act 2004 concern has arisen as to whether consumers are properly protected and have effective remedies where new building work is being completed.  Similar concerns exist for builders employed by consumers, as oppose to those working in the commercial sphere, where the CCA is primarily focused.  The key issues here are (for builders) enforcing rights to payment and (for consumers) having work completed or remedied if defective. 

The changes to the Building Act 2004 mean that building contracts will be mandatory for residential building work over $20,000 in value.  The mandatory requirements for those building contracts will include a requirement for adjudication under the CCA, hence the focus on adjudication and whether it is working well.  In our experience, those in the residential sector are much less aware of the existence of the CCA and are relatively inexperienced in negotiating suitable provisions for their building contracts.  Adjudication is however a very good tool for dispute resolution and there are some very good quality adjudicators.  Better options for enforcement and making orders public (so as to create precedent) should be encouraged in our view.   

In other jurisdictions, others involved in construction projects, such as designers and engineers, are made subject to legislation similar to the CCA.  Most disputes that concern quality do necessitate the involvement of these professionals.  Having the ability to include these parties in an adjudication could be useful but could also make the process unnecessarily complex.  If the focus of the review is consumer protection it seems that these other parties are likely to be included within the CCA. 

Architects, engineers, quantity surveyors, project managers and residential house builders should consider making submissions if the suggestions coming out of the review are not what they wish for.  See www.dbh.govt.nz for more information.  Submissions close 16 December 2010.