Construction Contracts Act

The Construction Contracts Act 2002 – what’s changed and when?

The changes apply only to new or renewed construction contracts from the date at which the relevant provision comes into effect, although the parties to a construction contract can agree to apply the provisions to existing contracts.

From 1 December 2015

  • Removes the distinction between residential and commercial construction contracts
  • All payment claims must be accompanied by a new Form 1 notice which replaces the notice to residential occupier, or they will not be valid
  • All notices of adjudication must be accompanied by a new Form 2 notice
  • Payment claims must explicitly “state” (not just “indicate”) a claimed amount and the due date for payment
  • All payment schedules must now explicitly “state” (not just “indicate”) the scheduled amount
  • Determinations about parties’ rights and obligations will now be enforceable
  • Aspects of the adjudication procedure are changed, some designed to reduce the risk of claimant “ambush” and providing a right of reply and rejoinder and other procedural changes.
  • Adjudicators must use a new Form 2A notice of acceptance, and there are amendments to the Form 3 adjudicator’s determination.
  • Speeds up enforcement of adjudicators’ determinations

From 1 September 2016 – applies to “related services”

The Act applies to all new or renewed contracts under which engineers, designers and quantity surveyors provide those services professional in relation to construction work or intended construction work, called “related services”.

Industry professionals may now avail themselves of the payment and dispute resolution provisions of the Act, and their clients may use the adjudication process to hold them to account for the quality of their services.

From 31 March 2017 – a new retention regime

From 31 March 2017 all retention money on commercial construction contracts will be held on trust. The regime does not apply to contracts with homeowners.

Under the retention regime a payer who is entitled by a contract to withhold retention money holds that money on trust. it sets out the provisions for holding and releasing the money, and provides consequences for inappropriate management of retentions. Further regulations are expected to be issued before the regime comes into force.

The Regulatory Systems (Commercial Matters) Amendment Bill 2016, tabled in November 2016,  will clarify that the retention money provisions of the CCA are not retrospective, and will apply only to contracts that are entered into or renewed after 31 March 2017. Read more

MBIE retention regime update as at 3 February 2017

“The Construction Contracts Amendment Act 2015 (CCAA) creates a new trust obligation that will protect retention money and ensure a better allocation of risk in the building and construction sector. The Government has introduced an amendment to the CCAA clarifying that the trust obligation will apply only to contracts entered into or renewed on or after 31 March 2017. This amendment is contained in clause 138 of the Regulatory Systems (Commercial Matters) Amendment Bill. The Bill is currently being considered by Parliament’s Commerce Committee.

The Ministry of Business, Innovation and Employment (MBIE) is limited in what information it can provide while the matter is before the Commerce Committee. MBIE will communicate with the sector and provide more information once the Commerce Committee reports back to Parliament. MBIE is aware of the industry’s desire for clarification of requirements relating to retention money. During 2016, MBIE engaged with a wide range of industry stakeholders including contractors, subcontractors, banks, accounting firms, legal firms and insurers on issues relating to the CCAA. Also, industry representatives raised issues in submissions to the Commerce Committee.

In the meantime, here are links to existing information on MBIE’s website:

Information about the changes relating to retention money [PDF 188 KB]

Update clarifying that the retention provisions will not apply to existing contracts

Construction Contracts Act 2002

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