case in brief: New Zealand Fire Sprinkler Protection Limited v AFS Total Fire Protection Limited & Anor [2016] NZHC
This case serves as a timely reminder as to the procedural requirements to appoint an adjudicator under the Construction Contracts Act (2002).
Background
In May 2014, New Zealand Fire Sprinkler Protection Limited (NZFS), a fire sprinkler protection systems installer, entered into a contract with AFS Total Fire Protection Limited (AFS) to provide services in relation to a number of AFS’s projects.
The first payment claimed under the contract was duly paid. However, subsequent payments claimed between June and August 2014, totalling $144,527.40, went unpaid with AFS disputing NZFS’ entitlement to that sum.
The parties made a number of unsuccessful attempts to resolve the dispute that subsequently arose, following which NZFS engaged a debt collection agency to recover the outstanding debt and issued a statutory demand. Liquidation proceedings were ultimately filed in December 2014. After those proceedings were filed, a settlement was reached, with AFS agreeing to pay the full sum in four instalments. Those payments were made and the liquidation proceeding was discontinued.
However, that was not the end of the matter.
In March 2015, AFS purported to appoint an adjudicator (Mr Blind) under the Construction Contracts Act (2002) (the Act) in relation to a claim by AFS as against NZFS with respect to the same contract works. Notice was given to NZFS by email that Mr Blind had purportedly been unilaterally appointed by AFS.
Mr Blind issued his determination, dated 22 May 2015, ordering NZFS to pay AFS $107,314.00.
NZFS sought judicial review of Mr Blind’s determination relying on a number of procedural and substantive grounds, including as to the appointment process adopted by AFS.
The judicial review was successful (on a number of grounds) and Mr Blind’s determination was set aside. In the reasons given, Woodhouse J noted that section 33(1)(a) of the Act required AFS to seek the agreement of the parties on the appointment of the adjudicator, which was not done. Whilst it is clear that the outcome in this case was correct, the judgment unfortunately does not go far enough to clarify the appointment process under the Act.