An Interesting Disputes Tribunal Tale

I suppose it had to happen but a debtor we have been dealing with has lodged an appeal of a Disputes Tribunal finding with the district court.

Basicially our client did some electrical work to the value of $4164 on the debtors property in October 2009. We were asked to become involved in January 2010. After making several attempts to come to some resolution with the debtor we eventually lodged a claim with the Disputes Tribunal in August 2010. 

At the first hearing the referee could not reach a conclusion as the dispute was technical in nature and beyound his expertise. He decided to appoint an independant investigator to give a report on our client's work. This took some time to prepare and eventually a second hearing was held in June 2011.

The referees decision following this second hearing was in favour of our client but only for $2630. This is not unusal for the Disputes Tribunal as they go out of thier way in an attempt to be fair. Given that the diffrence was far less than the cost of taking action in the District Court our client was accepting of the decsion. Payment was to be amde on 27 June 2011.

Statutory Demand was served on the debtor on 15 July 2011 as no payment had been received.

The debtor then requested a rehearing which was held on 25 July 2011. This request was regected by the referee and his comments were damning I have read;

“the respondent is really wishing to re-litigate and, in colloquial terms, have a ‘second’ bite at the cherry with respect to issues (workmanship and hours) that have been very fully gone into. Whatever force there may be to the opinions of Mr F, the respondent’s ‘right’ to re-open this matter and present the opinions of the expert it has now found must give way to the larger interest in the finality of litigation.”

"The respondent has ascerted that the investigator was not 'neutral' or 'honest'. An attack on an appointed investigator in the forgoing terms is very serious. It is made by Mr R for the first time today. There is absolutely no evidence whatever to support any such aspersions on the investigator. The respondant was wa supplied with a copy of the investigator's report well in advance of the hearing of 13 June. It had ample opportunity to challenge the report, including, if so elected, the investigator's impartiality. I am not prepared to sustain assertions that the investigator was not 'honest'or 'neutral'made part way through the hearing of an application for rehearing"

On 28 July 2011 we received a request from the debtors solicitor to hold off the Statutory Demand as the debtor was going to lodge a application for an appeal with the District Court. We agreed as long as funds to pay the outstanding debt were held under a solicitors undertaking to pay out if the application proved unsuccessful.

The application  for appeal was eventually lodged some 18 days after the cut off point for lodging an appeal.

The District Court judge has now asked our client to comment on this out of time issue which we have responded to opposing the debtor request. We await an outcome.

All in all this case demonstrates how the legal system seems to work in it's own time bubble, but that you can normally rely on a fair hearing so long as you are properly prepared and are able to keep you temper during any hearings.

How to save yourself from the next Signature Homes debacle

As most tradesmen in the Hawkes Bay are aware Signature Homes Hawkes Bay Ltd went into liquidation recently owing a significant amount of money to unsecured creditors. This case is typical of a number I have come across with subbies being worst hit.

The worst thing is that the subbies could have reduced or even stopped their losses if they had had greater confidence that the rules are in their favour.

So what can be done?

Even though someone like Signature Homes gave the impression that they were solid, it was well known for some time that they were as solid as something flushed (thanks to my plumbing friend for that analogy!). Problem is that a lot of contracts still seemed to be done on a handshake.

This appears to be because people are scared of not securing the job, or future jobs.  Therefore they are willing to do business without presenting their own terms, reading the debtor’s terms, or taking advantage of the Construction Contracts Act 2002 (CCA).

The CCA is interesting in that a majority of subbies I talk to think the CCA is too complicated or has no teeth. There is plenty of case law now which gives good indications of how useful the CCA is. It was written to facilitate speedy payment after all. Sometimes even politicians get things right.

So if the CCA has teeth then just how complicated is it to use? As easy as falling off a log really.  All you need to do is ensure your invoices meet the requirements of the CCA. If you do nothing else put the words “This is a payment claim under the Construction Contracts Act 2002” on all your invoices. There are other issues to consider but I find most subbies do this as part of their normal invoicing.

If you aren’t paid on time do not hesitate to issue a 5 day notice to stop work. You don’t actually have to stop work but it sure makes the head contractor sit up and take your requests for payment on time seriously. If you do stop work no other trade can finish your job unless you approve.

The head contractor is required to either pay you in full on due date, or advise why they haven’t paid your invoice. If they don’t do this then the CCA requires that they pay your invoice in full and then claim back any variations from you.

The CCA takes away the head contractors infamous excuse of “I can’t pay you because I haven’t been paid”. Paid when paid clauses cannot be enforced.

Subbies have been given the Construction Contracts Act to use and just like keeping your tools in top condition (do builders still sharpen saws?) get used to knowing when and how to use it.