As the construction industry continues to boom in Queenstown, it is important that all parties are aware of their rights under the legislation that governs the industry.
The Construction Contracts Act 2002 (“Act”) sets out the process for making a “Payment Claim”, and we recommend that all invoices are issued in a format that complies with this process.
A “Payment Claim” must:
• be in writing;
• contain sufficient details to identify the construction contract to which the payment relates;
• identify the construction work and the relevant period to which the payment relates;
• state the claimed amount and the due date for payment;
• indicate the manner in which the payee calculated the claimed amount;
• state that it is made under this Act.
The Payment Claim must also be accompanied by:
• an outline of the process for responding to that claim; and
• an explanation of the consequences of not responding to a payment claim, not paying the claimed amount, or the scheduled amount, in full (whichever is applicable).
If the client disputes the Payment Claim, they must provide a “Payment Schedule” in response within the timeframe specified on the invoice. The Payment Schedule must:
• Be in writing;
• Identify the payment claim to which it relates;
• State the scheduled amount.
If the scheduled amount is less than the amount claimed, the Payment Schedule must indicate:
• The manner in which the scheduled amount was calculated;
• The reason(s) for the difference between the two amounts;
• The reasons for withholding payment.
A client will become immediately liable under the Act to pay the full amount specified in the Payment Claim if they do not respond within the timeframe specified, and the party that has issued the Payment Claim then has the right to:
• Issue court proceedings to recover the unpaid portion of the claimed amount, as well as reasonable costs for doing so;
• Suspend further work.
If the process is followed correctly, the provisions of the Act provide a robust avenue for contractors in the construction industry to recover money owed to them. However, if the process is not adhered to correctly the remedies will not apply.
This Article was prepared by Pip Roberts, Senior Solicitor at TODD & WALKER LAW. If you want to know more or need advice on how to correctly follow the process under the Construction Contracts Act 2002, contact Pip Roberts on [email protected]
If you want advice about when contracts go wrong and dispute resolution options, please contact Michael Walker on [email protected]
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