One
party to a construction dispute can unilaterally force Construction Act
adjudication under a commonly used standard-form subcontract the High Court
ruled in a $2.5 million dispute between Hawkins Construction and Eltek, an
Australian power train supplier.
Hawkins allege the
Eltek power train intended to provide back-up emergency power for a data centre
in South Auckland was defective. It is
looking to recover losses in excess of its insurance recovery for downtime at
the Takanini data centre plus the cost of replacement parts. Eltek claims Hawkins is to blame by not
providing filtered air leading to contamination by dust, moisture and salt.
Eltek’s equipment was
provided under a standard-form subcontract agreement in common use throughout
New Zealand which states: Disputes may be dealt with by adjudication as
provided for in the Construction Contracts Act. These statutory adjudications create
a relatively quick and cheap way of settling disputes. It does not preclude court action. Adjudication can be used as a “dummy run”
before heading to court.
Hawkins opted for
adjudication. Eltek said it couldn’t be
forced into adjudication. Justice Wylie
ruled Hawkins alone could force adjudication.
By signing up to the standard-form subcontract, Eltek had agreed either
party “may” demand adjudication.
Eltek
Australia v. Firth – High Court (16.03.17)
17.024