BuildLaw Issue 39 April 2020 | Page 12

When the Commerce Committee reported back on the Construction Contracts Amendment Bill 2015, it recommended amending the requirements for enforcement of an adjudicator’s ‘judgment’ to remove the distinction between payment and other types of determination.7 This amendment was proposed as being in line with the Act’s purpose. Parliament accepted the recommendation and amended the Act to provide that all determinations made by an adjudicator, including those relating to payments under the contract and those relating to rights and obligations, are enforceable by entry as a judgment of the Court.

In addition to amending the enforcement provisions to make it clear that determinations as to rights and obligations are enforceable, the 2015 amendments went further. They expanded on the list of examples of disputes that can be referred to adjudication to include reference to a dispute as to whether there has been a breach of a term of that contract (including a term implied under another enactment).8 Further, a new definition of ‘payment’ was also inserted, defining ‘payment’ as a progress payment or any other type of payment for or relating to construction work for which a party is entitled to payment.9 The amendments clearly went some way to clarify the scope of an adjudicator’s jurisdiction, and clearly signalled that the disputes that might be the subject of an enforceable determination were to be wider than simply disputes as to what payments may be due under the contract.

On their face, the 2015 amendments might have been thought sufficient to make it clear that adjudicators were empowered to award damages for breach of contract as well as in respect of payments due under a contract, and that those awards are equally enforceable under section 59 of the Act.

However, the debate as to whether an adjudicator could make an enforceable award of damages for breach of the contract under section 48(1) persisted. While the scope of an adjudicator’s jurisdiction was clearly widened, there remained a school of thought that the amendments had not gone far enough to empower an adjudicator to do so.10 While proponents of this view accepted that the purpose of the amendments was, in part, to resolve the issue as to whether an adjudicator had jurisdiction to give an enforceable determination for payment of damages for breach of contract, it was argued that the issues raised in the High Court, in cases such as M Van Der Wal, had not been fully addressed by these amendments.11 It was suggested that a determination which finds that a party is obliged to pay damages for breach of contract is not a determination about the rights and obligations of the parties under the contract because, unless there is some special provision in that contract which requires damages to be paid for breach, the obligation to pay damages for breach of contract is not a primary obligation under the contract. 12

Haskell Construction Limited v Robert Francis Ashcroft

This debate has now been finally settled in Haskell. The judgment makes it clear that adjudicators do have the power to make enforceable determinations in respect of claims for damages as well as payment claims.

Haskell Construction Limited (Haskell) entered into a contract to construct a home for Alpine Prime Properties Limited (Alpine). Shortly after works commenced, complications arose which required further work. The further work became the subject of a variation, and added to the cost of the work significantly. A payment claim for the variation was disputed, and the contract was cancelled. This led to a number of adjudications. The third of those adjudications included, amongst other things, a claim for damages arising out of a breach of contract. Haskell sought a declaration from the High Court that the damages claim was outside the scope and jurisdiction of an adjudication under s38 and 48(1(a) and (b) of the Act.13

The High Court dismissed the application for judicial review on this point, finding: 14

The text of the legislation and the relevant purpose support the ability of an adjudicator to not only make rights and obligations determinations for breaches of the implied warranties but also to determine that a statutory remedy applies. Such remedies include the award of damages and compensation for any reduction in value of the product of the building work, below the price paid or payable for that work, and any loss or damage to the client resulting from the breach, that was reasonably foreseeable, as liable to result from that breach.

BuildLaw | Apr 2020

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www.buildingdisputestribunal.co.nz