By Stuart Robertson, partner, and Henry Morley-Hall, solicitor, at Dentons Kensington Swan
If a payment claim under the Construction Contracts Act 2002 (’CCA’) is served correctly, and the payee fails to respond in time, the whole of the claimed amount becomes a statutory debt due. For this reason the courts are careful to ensure strict compliance with the CCA.
The High Court decision in Dempsey Wood Civil v Concrete Structures (NZ) provides an insight into how the courts determine if and when a CCA payment claim has been served, when sent via email. Associate Judge Sussock considered the question of whether or not a subcontractor’s (CSNZ’s) payment claim had been properly served on a head contractor (DWC) when it was sent by email to the project manager (Mr P) and not to the accounts department. This became important as Mr P only discovered the email some months later and well beyond the due date for responding to the payment claim, and CSNZ issued a statutory demand for the full claimed amount.
The Court considered the CCA and the Construction Contracts Regulations 2003 (‘CCR’) in determining that the payment claim sent from CSNZ to Mr P did not amount to service or receipt of the claim. As a result, the claimed amount was arguably not a debt due, so the statutory demand failed.
Under regulation 10 of the CCR, a notice (including a payment claim) may only be served by email if the recipient consents to it being given in that form. Despite CSNZ having regular correspondence with Mr P, including copying him into the emails containing previous payment claims, the Court could not establish that consent was given by Mr P to be the sole receiver of the notice. This was due largely to the fact that DWC had requested from all their subcontractors that all invoices and statements be sent to its accounts department. The Court found that even if Mr P’s consent to receiving the claims could be inferred, this would be subject to the payment claims also being sent to the accounts department.
There are two key takeaways from this decision:
- Clearly stipulate in your contract who is authorised to receive payment claims, including an email address.
- Even if someone is the regular point of contact for email correspondence, they may not be the correct person to whom a payment claim should be sent – check your contract.
Disclaimer: This article is not a substitute for specific professional advice on any matter. No warrant or guarantee whatsoever is given as to the accuracy of any information contained in the article, nor is any liability accepted for any actions taken based on this information.
Dentons Kensington Swan has New Zealand’s largest team of construction lawyers and we have worked on many of New Zealand’s largest construction projects. We are experts in both front end and back end construction matters.
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