Auckland leaky home owners in an 83 unit Mt Eden development failed in
their challenge to a multi-million dollar Construction Contracts Act ‘pay now argue
later’ adjudication in favour of construction company Naylor Love. Justice Brewer ruled adjudications cannot be
re-adjudicated.
Described
in court documents as Body Corporate 200012, the owners collectively challenged
the adjudication process for two separate adjudications where Naylor Love was
ruled entitled to a total of $3.8 million for delays, extra remedial work and
cost over runs. Extra work had pushed an
anticipated two and a half year contract out by about a further year.
The
Construction Contracts Act allows referral of building disputes to an
adjudicator. This provides a rough and
ready interim ruling on who owes who how much.
Any amount specified in this ruling has to be paid immediately: the ‘pay
now argue later’ principle. A refund can
be chased if a subsequent ruling by an arbitrator or court disagrees with the
adjudication.
Being
pressed by Naylor Love for $3.8 million, the Body Corporate asked the High
Court to review the arbitrators’ rulings.
Judicial review is an appeal about process; not about the merits of an
adjudicator’s decision.
Justice
Brewer ruled there was no evidence the two adjudicators exceeded their
jurisdiction or were in breach of natural justice. The owners’ complaint was about the
interpretation of the Naylor Love contract.
They cannot litigate the adjudicators’ interpretation. That is for later, when the warring parties
go to arbitration. The court was told an
arbitration is scheduled for mid-2018.
Upfront payment of the $3.8 million can be enforced.
Body Corporate 200012 v. Keene – High Court (30.11.17)
18.015