International Construction Law Review
REFORM OF HGCRA: DOES THE NEW ZEALAND ACT PROVIDE ANY USEFUL PRECEDENTS?
THE HON ROBERT SMELLIE, CNZM, QC
It is important to understand the perspective from which I write. New Zealand is a country of a mere four million people. It is an isolated and miniscule economy compared with that of the UK. But it has enjoyed, and continues to enjoy, a buoyant economy. As a consequence, the construction industry, from motorways to gas-fired generating plants and inner-city apartments, has boomed over the last decade. Currently property values have been increasing between 12% and 15% per annum and there is a shortage of skilled labour.
The Construction Contracts Act 2002 which is the NZ equivalent of Part II of the United Kingdom’s Housing Grants Construction and Regeneration Act (HGCRA) came into force on 1 April 2003.1
As was the case in the UK, NZ has experienced a slow start. Only one nominating authority is operating so far and its appointments number about 20. The majority of which have been in the nature of value assessments. I am one of 51 adjudicators registered with the nominating authority and have not so far been called upon. The first case on the Act was decided in April 2004 and concerned not the enforcement of an adjudicator’s decision, but the liability of an owner who missed a deadline to oppose a claim by the head contractor for a progress payment. He tried unsuccessfully to argue his defences on an enforcement proceeding (see my note on the case in the previous issue2
). So although I proffer my view of the legislation based upon a substantial construction practice at the Bar and 17 years as a High Court judge, I am not able from direct experience to say how it is working. Anecdotal evidence, however, suggests that subcontractors are enjoying better cash flow than in the past.
Briefly where the legislation is comparable in both jurisdictions
As the NZ Act is based largely on the UK provisions the structure of the legislation and its essential objectives are the same. I suggest, however, that the NZ approach of having everything in one discrete Act, rather than part as a segment of a larger Act and part as a subsequent scheme, is a distinct advantage.
Thus there is no contracting out. Subject to limitation provisions adjudication can be commenced at any time. Pay when/if paid clauses are outlawed. Parties are free to agree the timing and quantum of progress
1 The full text of the Act may be obtained via: www.legislation.govt.nz/browse_vw.asp?content-et=pal_statutes
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[2004
The International Construction Law Review
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