BuildLaw Issue 30 December 2017 | Page 20

One example would be the use of tense in the contract. Despite the criticism of the NEC’s use of the present tense mentioned above, it is at least used consistently and therefore the intentions of the parties are understood by those adjudicating, arbitrating or otherwise deciding on its terms. What would happen, however, if Z clauses changed the tense? In the event that a new obligation was inserted to state “The Contractor shall in carrying out the works…” How would the NEC provision of “The Contractor Provides the Works…” (ECC Clause 20.1) be then interpreted? Would the latter obligation now be seen as simply an objective statement of fact rather than an obligation given the conflicting style of the earlier provision?

Incorrect Incorporation of Specification

Many practitioners will have seen parties seek to use a generic standard specification used on previous projects for different standard forms of contract on an NEC project without making the necessary changes to reflect the NEC form. The person drafting the contract simply sought to incorporate the specification by using a short cut statement of “all references to Specification shall mean Works Information”. Sometimes the shortcut states that the specification is intended to comprise “both the Works Information and Site Information”. This less than diligent drafting ignores, amongst many issues:

- the fact that the positions of Project Manager and Supervisor are likely to be different to Architect or Contract Administrator or Engineer within the specification;

- the roles and responsibilities of Client and Contractor may differ and the authority given to the NEC role of Project Manager will differ also; and

- the acceptance of a communication by a Project Manager under ECC Clause 14.1 will differ from an Engineer’s approval in other contract.

Conclusion

As the NEC is becoming more prevalent throughout the construction industry examples of bad practice in structuring and amending the contract should be less frequently seen. Whilst there are different ways to structure Works Information, Site Information documents and Z clauses consistency in form and structure are required to maximise the project management benefits of the contract and avoid embarrassing ambiguity.

About the Author

Sam studied Law at the Victoria University of Wellington and now is a solicitor at Kensington Swan specialising in construction law.

To contact Sam, visit the firm's website.

Facilitator of timely payments, or draconian regime? - CONT.

Sam Thyne

Solicitor

The judgment

The issue arises due to what Associate Judge Sargisson refers to as the “draconian ‘sudden death’” regime implemented by CCA. If the CCA was not engaged, in a case such as this, it would be easy to satisfy the court that there was a substantial dispute as to whether the debt is due and owing (on the back of the two expert determinations alone). However, under the CCA, failure to respond properly to a payment claim results in debt due. For the statutory demand to be set aside, the Court needed to be persuaded that the state of “sudden death” under the CCA has not actually arisen.

Fortunately for GPW, Associate Judge Sargisson was satisfied that GPW raised sufficient doubt as to the date of service.

GPW also satisfied the Court that the Payment Claim was not valid as it was served prematurely to “the end of the relevant period that is specified in… the contract” as required under s 20(1)(a) of the Construction Contract Act. His honour stated that “Dreamhome could not simply issue a payment claim for the same milestones at issue and further, ruled upon in the first Determination. GPW was entitled to rely on the two Determination to the effect that the milestones were still unreached, and therefore that no payment was owing pursuant to s 20(1)(a).”

It was also found the payment claim failed to meet the technical requirements of section 20(2).

The statutory demand was therefore set aside.

This case highlights a quirk of the Payment Claim regime, a manifestly apparent dispute as to payment can be defeated if the technical requirements of the CCA are met. The takeaway from this case is, of course, to ensure that complying Payment Schedules are issued on time.