BuildLaw Issue 27 March 2017 | Page 19

Comment

This decision provides some rare judicial comment on the popular New Zealand standard form Construction Contract NZS 3910. With adjudication provided under the Construction Contracts Act delivering a specialist forum for the resolution of construction disputes, the majority of construction disputes (including those under New Zealand standard form contracts) do not often come before the Courts.
The High Court’s decision could have far reaching consequences for defaulting parties to construction contracts. While the amount in default in this decision totalled $250,000, the High Court’s decision places no minimum requisite value of an unpaid amount due under a contract allowing a party to terminate if it remains unpaid. This means that a defaulting party could owe as little as $1, with any overdue unpaid sum amounting to a breach of an essential term triggering the right to terminate without need for suspension.
This broadening of termination rights has undoubtedly strengthened contractors’ positions under NZS 3910. Given the High Court’s approach to essential terms and termination rights under NZS 3910, the uptake of the decision remains to be seen along with whether it will have a broader impact on the interpretation of other Standard Form Contracts. However, given the rarity of construction cases advancing beyond adjudication and/or arbitration to come before the Court, the decision is likely to bind adjudicators and arbitrators considering construction disputes for some time.

by Sarah Redding, Solicitor