Technical deficiencies in ‘pay now argue later’ Construction Contracts Act payment claims do not invalidate payment demands, but gross overstatements of what is due will.
Attempts by Neil Clark’s Energy Saving Company Ltd to force customer Moorhouse Panel & Spray into liquidation on an unpaid invoice failed; the amount claimed was forty per cent higher than what was due and no time was given in which to make payment before suing.
The Construction Contracts Act gives suppliers leverage on unpaid bills. Failure to respond to a statutory ‘payment claim’ gives an immediate right to sue. The debtor is forced to pay up, leaving any dispute about performance of the contract to be sorted out later.
The High Court was told of a run-in between Christchurch-based electrical contractor Energy Saving and Moorhouse Panel & Spray after a fan motor failed in Moorhouse’s spray booth. Old age, said Energy Saving; faulty workmanship, said Moorhouse. Moorhouse made part-payment, refusing to pay the balance of Energy’s bill. Energy issued a ‘payment claim’ as a precursor to putting legal pressure on Moorhouse. Associate judge Lester said the ‘payment claim’ was invalid for two reasons: it claimed the full account was due and owing with no credit for the significant amount already paid; it threatened legal action if not paid but gave no time for payment, saying the debt was already due. Action to put Moorhouse into liquidation was dismissed.
Moorhouse Panel & Spray Ltd v. The Energy Saving Co Ltd – High Court (30.07.19)
19.139