CCA Adjudication Cashflow, or fair dispute resolution, or both? Opportunities for Improvement in the Act and adjudication procedure Peter Degerholm AMINZ Conference Buzz Group Session 8 August 2009

Aspects of the Act and adjudication procedure Tension between statutory time limits and natural justice? ANA appointment time limits (s 33(2)(b)) Service rules and time limits for response Right of reply beyond the claim and response Applicability to residential construction contracts Part 4 not applicable Payment defaults not applicable

Why time limits?  Avoid appointment, jurisdictional and technical delays  Assumption that respondent (the bad guy) won’t cooperate, and will seek to delay the process?  But is it fair for the respondent if the good guy gets to strike first, by surprise, and gets another crack? The old always works…

Managing time limits  Adjudicators have wide discretion: s 37(1)(c) Extend time for response s 42(1) Power to conduct as thinks fit, request submissions, etc…. s 43 Proceed without respondent or party failure to comply s 44 Draw inferences, determine on available information, consider late information s 45(g) Consider other relevant matters s 46(2)(b) Extend time for determination by 10 days BUT  Must exercise discretion with due regard to s 41 duties Independent, impartial, timely, avoid expense, comply with natural justice  Must not consider “late” response (s 46(1)(b)) Does this override ss 37 & 44?  Not entitled to fees if determination late (s 57(6)) Does this end proceedings, make late determination invalid? Or just incentive for timeliness? A healthy tension for speed and cost effectiveness? Does adjudicator inconsistency create uncertainty for parties?

ANA appointment timing s33(2)  Law Commission Report clause 33: If adjudication is required the adjudicator would be a person agreed upon by the parties after the dispute had arisen. Where agreement cannot be reached, a person would be nominated by a nominating authority to be established by regulation…  CC Bill clause 27: ( As soon as practicable after the notice of adjudication has been served, the claimant must ) The claimant must, within the time required under subsection [2],—

ANA Adjudicator Selection (s 33)(d) (1) The claimant must, within the time required under subsection (2),—(2) (a) request the person (if any) chosen by agreement between the relevant parties to act as adjudicator; or ASAP (b) if the person referred to in paragraph (a) has already indicated that he or she is unwilling or unable to act, request any other person chosen by agreement between the relevant parties to act as adjudicator; or(a) ASAP (c) if no person is agreed on, request a nominating body chosen by agreement between the relevant parties to select a person to act as adjudicator; or within 5 working days (d) if the persons referred to in paragraphs (a) and (b) are unwilling or unable to act, and paragraph (c) does not apply, request an authorised nominating authority chosen by the claimant to select a person to act as adjudicator.(a)(b)(c) within 5 working days (2) The time required is,— (a) for the purposes of subsection (1)(a) and (b), as soon as practicable after the notice of adjudication has been served; and(1)(a)(b) (b) for the purposes of subsection (1)(c) and (d), 5 working days after the notice of adjudication has been served or any further period that the parties may agree.(1)(c)(d)5 When does the 5 working days start under or (d)?

“We will require compliance with timing from others in 2 respects: The request for a nomination must be received within 5 working days of service of the Notice of Adjudication. If it is received after this time the claimant will need to provide evidence that the respondent has agreed to extend the time for the request or we will require the claimant to serve the documents again. Nominees must be available to accept a nomination and adjudicate promptly.”

Have we got it right? Current interpretation is: (d) if the persons referred to in paragraphs (a) and (b) are unwilling or unable to act, and paragraph (c) does not apply, [the claimant must, within 5 working days] request an authorised nominating authority ….. to select a person to act as adjudicator.(a)(b)(c) …..but should it be (d) if [within 5 working days] the persons referred to in paragraphs (a) and (b) are unwilling or unable to act, and paragraph (c) does not apply, [the claimant must, after the expiry of that period] request an authorised nominating authority chosen by the claimant to select a person to act as adjudicator.(a)(b)(c)

Why is the distinction important?  An interval for agreement provides an opportunity for dialogue and settlement (like notice of intention to suspend work)  Concurrent service and application to ANA provides opportunity for ambush by claimant, may be exploited by claimants with inadvertent ANA support.  Consider natural justice issues arising out of ambush.  Does the time difference (if any) compromise cashflow? NoA, AptAdj ClaimResponseDetermination Dispute Adjudication ClaimResponse Determination NoA Apt Dispute

Ambush advantages to claimant  Unlimited time to prepare claim  May be no advance warning to respondent that dispute exists  Is time really of the essence if claimant defers service of notice of adjudication to maximise element of surprise?  May serve notice of adjudication where respondent unaware e.g. on registered office  First mover advantage – claimant often granted right of reply to response What is the upside for the respondent?  Does strict application of time limits against respondent only impact on natural justice? Is current s 33 interpretation appropriate?

Residential construction contracts 10 When Act applies: residential construction contracts To avoid doubt, this Act applies to residential construction contracts, except for the following provisions: (a) sections 15 to 18 (which set out default provisions that relate to progress payments); and15 to 18 (b) sections 23(2)(b), 24(2)(b), and 59(2)(b) (which relate to the serving of a notice to suspend the carrying out of construction work under a construction contract); and23(2)(b)24(2)(b)59(2)(b) (c) sections 29, 30, 32, and 49 to 55 (which relate to the issue of charging orders in respect of construction sites); and to 55 (d) Part 4 (which relates to other measures for securing payment under this Act).4

NOT applicable to residential 15 Application of sections 16 to 1816 to 18 If the parties to a construction contract fail to agree on a mechanism for determining any of the matters referred to in section 14 [number, interval, amount], the relevant provisions of sections 16 to 18 apply to the extent that those provisions relate to any matter for which a mechanism has not been agreed on between the parties.1416 to Right to progress payments 17 Amount of progress payment 18 Due date for payment Residential construction contract defaults  No default payment due date applies  Payment schedule due date is 20 working days s 22(b)(ii)

NOT applicable to residential Part 4 Other measures for securing payment under this Act Subpart 1—Suspension of work 72 Suspension of construction work Subpart 2—Enforcement of adjudicator's determination Enforcement of adjudicator's determination generally 73 Enforcement of adjudicator's determination 74 Defendant may oppose entry as judgment 75 Entry as judgment if defendant takes no steps Enforcement of adjudicator's determination involving charging order in respect of construction site 76 Enforcement of adjudicator's determination involving charging order in respect of construction site Miscellaneous 77 Effect of entry of judgment 78 Application of rules relating to charging orders

Food for thought….  Should s 33(2)(b) provide a 5 day notice of intention to refer dispute?  Should service rules define service as date of receipt by normal delivery, not (arguably) date of despatch  Should claimant have right of reply? (e.g. limited to new material in response, no opportunity to present new evidence or supplement claim)  Should Part 4 apply to residential?  Should ss defaults apply to residential?

Questions? Peter B Degerholm FAMINZ(Arb) Reg QS FNZIQS Calderglen Associates Limited PO Box , Lower Hutt 5040 E: AMINZ Conference Buzz Group Session 8 August 2009