Before having an enforceable construction contract ‘pay now’ claim, contractors must comply strictly with rules for submitting progress payment claims, the High Court ruled in a dispute over Concrete Structures (NZ) Ltd claim to $1.8 million for work on Auckland’s Whau bridge.
In 2020, civil engineers Dempsey Wood sub-contracted part of the Whau bridge construction in New Lynn to Concrete Structures. All sub-contractors were subsequently required to submit progress payment claims to a given Dempsey Wood email address in PDF format. This enabled progress payments to be easily processed through its finance system. The High Court was told Concrete Structures had been already following this requirement but in addition had been forwarding an email copy to Dempsey Wood’s project engineer Dale Pickard.
In dispute was a $1.8 million progress claim sent only to Mr Pickard’s email address in late January 2021. Unlike other previous progress payment claims, no copy was sent to the nominated Dempsey Wood email account. Mr Pickard did not become aware of the email until early April. In late January, he was busy working on a large KiwiRail project. He was getting over one hundred work emails a day and went on leave days later. On discovering the Pickard email, Dempsey Wood responded immediately to the $1.8 million claim, reducing the amount to what it assessed was due: $135,600. It paid this amount and disputed payment of the balance.
Concrete Structures sued. It said under the Constructions Contracts Act ‘pay now, argue later’ regime Dempsey Wood had to front up with full payment. Dempsey Wood alleged Concrete Structures was gaming the strict ‘pay now, argue later’ rules by deliberately sending the email to Mr Pickard alone, predicting it would be overlooked. Concrete Structures said failing to also email Dempsey Wood’s nominated account was just a mistake.
Associate judge Sussock ruled Dempsey Wood did not have to ‘pay now;’ it had grounds to delay full payment and to argue its case. The $1.8 million payment claim was not ‘received’ until delivered into the nominated company email account, Dempsey Wood argued. And the progress payment claim sent to Mr Pickard’s email account was not ‘received’ until Mr Pickard actually opened the email in April, it further argued.
The Construction Contracts Regulations set out rules as to when emailed documents are deemed to have been received. Failure to respond promptly to a progress payment claim means the full amount claimed is immediately enforceable as a debt due.
Dempsey Wood Civil Ltd v. Concrete Structures (NZ) Ltd – High Court (17.02.22)
22.036