fact, repudiatory, the principal will itself have committed wrongful termination.
In Mayhaven v DAB, DAB’s solicitors and the contract administrator knew the “outstanding” sums had been paid before DAB suspended works, but did not inform DAB of its mistake.
The suspension and ensuing dispute (and associated costs) could have been avoided had DAB been informed of its mistake.
When faced with a situation where a contractor has improperly suspended works, it would be wise for a principal to consider notifying the contractor of its mistake and allowing it a reasonable opportunity to recommence works.
If the contractor does not rectify its mistake after an authoritative exposition of its contractual obligations and rights, its conduct may well amount to repudiation.
The termination process under NZS 3910:2013 provides a further opportunity for the principal to set out the issue and for the contractor to ascertain whether it has made a mistake in suspending works.
So, contractors are advised to proceed cautiously when considering suspending works for non-payment.
If it is found the claimed amounts are not due or the notice provisions in the CCA have not been complied with, the suspension will be wrongful and may amount to repudiation of the construction contract.
But when a wrongful suspension amounts to repudiation is not always clear-cut, and the courts will consider all the circumstances of the case.
A principal should, likewise, be cautious when taking steps to terminate a contract on the basis of a contractor’s wrongful suspension.
It would be safer to notify the contractor of its error and allow it a reasonable time to rectify its mistake.
In our current climate, where both contractors and principals are under considerable time and cost pressure, legal and contractual compliance are not always front of mind.
We may see these issues tested in times to come.
about the author janine stewart partner - construction janine is a specialist construction, property and projects lawyer who acts on the full spectrum of construction projects and property disputes. minterellisionruddwatts