In considering whether the arbitrator had erred in finding that Plus had validly terminated the contract, the High Court considered whether suspension was a precondition for termination in accordance with the contract. The High Court agreed with the arbitrator’s determination that Plus was entitled to terminate the contract as a result of Custom’s failure to make payment within the 10 working day timeframe, and that the words “following such suspension” in clause 14.3.3 did not mean suspension was necessarily a precondition for termination. In considering clause 14.3.3 in the context of the CRA and Construction Contracts Act 2002 (“Construction Contracts Act”), the High Court found that clause 14.3.3 also did not exclude cancellation rights under section 7 of the CRA. Under the Construction Contracts Act, parties have a right to suspend work in various circumstances, including where a claimed amount is not paid in full by the due date. Further, the Construction Contracts Act provides that if a contractor exercises its right of suspension, it is not precluded from exercising any other remedies available under the CRA, including the right to cancel. Clause 14.3.3 modifies contractor’s statutory right of suspension following non-payment, deferring any further rights (such as to cancel) until the 10 working day notice has expired un-remedied. The High Court considered that while clause 14.3.3 modifies the contractor’s rights under the Construction Contracts Act, the NZS 3910 contract is still consistent with the position under the CRA that if the contractor chooses to suspend the works under the contract, this will not amount to an affirmation precluding cancellation in relation to the same breach. In practical terms, this meant that while clause 14.3.3 modified Plus’s rights they would otherwise have under the Construction Contracts Act, it did not limit Plus’s rights under the CRA, including the right to cancel for breach of an essential term (such as Custom’s breach for unpaid amounts due) or for a repudiatory breach. The High Court went on to discuss essential terms and held that under NZS 3910:2003, if a principal fails to remedy its breach prior to the expiry of the 10 working day notice period this would be a breach of an essential term that would normally entitle the contractor to cancel the contract under the CRA. The High Court considered it farcical to require Plus to arrange for the engineer to suspend the works before it could proceed to cancel the contract, concluding that clause 14.3.3 does not exclude an innocent contractor’s right under section 7 of the CRA to cancel the agreement in the event of the principal breaching an essential term. The High Court reached this conclusion despite the fact that NZS 3910 does not expressly state that payment of claimed amounts is an essential term of the contract.