Making a construction contract progress payment claim after issuing a final completion certificate arguably takes the progress payment outside the Construction Contracts Act ‘pay now, argue later’ regime, the High Court ruled.
Rangitahi Ltd is developing a 550 section subdivision at Raglan. It disputes a $973,000 invoice submitted by Hamilton civil engineers: Pemberton Civil Ltd.
The High Court was told Pemberton issued a final completion certificate for its subdivision work in June 2021. Three days later, it sent Rangitahi a progress payment claim totalling some $973,000. There had been a history of arguments between Rangitahi and Pemberton over previous progress payment claims; some items had not been approved, others approved and later rejected, others rejected and then later approved. The Construction Contracts Act rules provide that failure to promptly challenge a progress payment claim means it must be paid; the ‘pay now, argue later’ regime. Rangitahi did not pay and did not challenge the $973,000 claim issued three days after Pemberton’s signing off on final completion. Rangitahi later said terms of the contract made it clear payment claims made after signing off could only be final ‘wash-up’ claims which can be disputed without having to first pay. Rangitahi challenged Pemberton’s attempts to wind up the company for non-payment of the $973,000 debt.
Pemberton did give formal notice to Rangitahi of its final wash-up claim one month after issuing its final completion certificate. This final claim explicitly stated that the amount did not include the previous $973,000 progress payment claim which it said was separate and remained outstanding.
Associate judge Andrew put on hold Pemberton’s attempt to wind up Rangitahi for non-payment. Further legal argument is required about terms of their construction contract. Rangitahi says any payment claims after the June 2021 completion certificate can only be final wash-up claims.
Rangitahi Ltd v. Pemberton Civil (Hamilton) Ltd – High Court (16.12.21)
22.020