If things go wrong
You have a number of options if you are in dispute with your client. Some of the basic steps are set out in the standard checklist you provided before building work started.
Refer to your contract and talk to your client
If you have concerns, start by discussing them with the client directly (or with the main contractor if you are a subcontractor).
Many complaints and disputes result from misunderstandings, such as:
- Not understanding the terms agreed in the contract.
- Homeowners having unrealistic expectations about the level of quality they can expect for the amount of money they have agreed to pay (for example; if they get four quotes and choose the cheapest one, they may not have taken into account that the cheaper option may use lower quality materials).
- Homeowners not understanding the impact of asking for changes after the initial quote or contract was done.
- Homeowners not being sufficiently clear about the work they want you to do.
Follow the dispute resolution process in the contract
If you are still unhappy after talking things through, your next step is to check the contract to see what (if any) dispute resolution process you should use. If a dispute resolution process is stated in the contract, begin that process.
More steps to consider
You can try mediation (where both parties try to come to an agreement with the help of a mediator) if both you and the homeowner agree to this, even if your contract does not provide for it or if you have no written contract.
Any one of the following groups would be able to provide you with a list of suitable mediators or appoint a mediator if required:
- New Zealand Law Society
- LEADR (an Australasian association of dispute resolvers)
- AMINZ (Arbitrators’ and Mediators’ Institute of New Zealand Inc).
A number of private mediation services are also available.
If the issue remains unresolved, how you progress your complaint will depend on what it’s about. You should seek independent advice as to what option is best suited to your situation.
Approaching the Disputes Tribunal or District Court
You can take a dispute to the Disputes Tribunal if your claim is for up to $15,000 (or $20,000 if both parties agree). If your claim is for more than this or if you need to enforce the Disputes Tribunal’s decision, you can go to the District Court.
It’s worth getting some legal advice if you are considering taking the matter to the District Court.
Resolving payment disputes
The homeowner is legally liable for the amounts due under the contract as a debt. The most effective way to enforce payment is to use the payment claim process, under the Construction Contracts Act. The client can object to a payment claim under the Act, but must do this in a written payment schedule that indicates what they are prepared to pay (which could be nothing).
The amount the client is prepared to pay is called the scheduled amount.
The written payment schedule must show:
- how they calculated the scheduled amount
- their reason for the difference from your claimed amount
- if they are withholding payment on any basis, their reasons for this.
Seek legal advice on your options if you dispute the information or reasons in the client’s payment schedule, or the client either:
- doesn’t give you a written payment schedule and doesn’t pay, or
- gives you a written payment schedule but doesn’t pay the scheduled amount.
For example, you can apply for adjudication under the Act. You can also go to court to recover the debt, along with any costs.
Applying for adjudication
Under the Construction Contracts Act 2002, you can refer a dispute to adjudication. This involves an independent person making a decision on the dispute.
Adjudication is a relatively quick process, as decisions are usually made within 20 to 40 working days.
The adjudicator’s decision is binding, meaning that any payment ordered by the adjudicator will need to be paid. However, the same issues can also be revisited in court proceedings.
It is up to both parties either to select an adjudicator or to agree on the organisation they will ask to nominate one. If you can’t agree about this, the claimant can request that an “authorised nominating authority” selects an adjudicator.
There are a number of private organisations and individuals who provide adjudication services and who can help you choose an adjudicator.
- Arbitrators’ and Mediators’ Institute of New Zealand Inc. (AMINZ)
- Building Disputes Tribunal
- Adjudicators Association of New Zealand (AANZ)
- Royal Institute of Chartered Surveyors (RICS).