A Settled Dispute: 18 December 2023

A long post – description of a long dispute and how we eventually settled it.

Photo (for interest) of a view shaft from Larnach Castle in Dunedin.

Over the past several months, I have been involved with an unpleasant dispute related to the supply of a key item for one of my developments. My builder and I stayed the course. The full claim plus half of the legal costs were awarded. Below is a truncated summary of the background and approach.

I want to share the process that I used so that others might be motivated to push on with their disputes.

At times, it looked like the claim was not worth progressing and I was even advised to not push on — many do not bother and understandably so. Quality improvement requires feedback and accountability — I have been shocked at the slack attitude to quality processes.

1. A significant item was supplied to my development. My company had purchased it and it was sold under a supply contract. The item required extensive remedial work.

2. The supplier agreed that the item quality was not good and they visited the site and arranged for my builder to remediate. Emails were exchanged between the builder and my supplier, I had been excluded. The emails referred specifically to my builder doing the work and requesting that he invoice them when work was complete with a full and detailed record of the work. Payment would be made quickly. This exchange formed a contract under the Construction Contracts Act 2002 (CCA) formed between the supplier and the builder.

In May 2023, an invoice was emailed to the supplier with extensive photos and, as a whole, compliant with the CCA. The value was roughly $20,000. The tone then changed.

The supplier would not pay the builder (as previously stated they would) and offered me (who had a supply contract) merely 25% of the invoice’s value several weeks after submission. Naturally, I did not accept the payment as it belonged to my builder.

We then stepped up the approach as the contract had been disregarded:

1. A refreshed invoice was prepared strictly in accordance with the Construction Contracts Act 2002 (prepared by a member of Subdivision NZ). It was reviewed by an experienced accounting team and my experienced legal team.

2. The invoice was sent to the supplier with a cover letter from the lawyer stating the contract (again) as my letters pointing it out had made no impression.

3. The supplier responded with a non-compliant payment schedule a few days before the due date.

4. Just over one hour before payment was due, the supplier frustrated the process and issued a replacement payment schedule — again non-compliant. They also failed to make the payment (in any form) on time.

What occurred afterwards continued to frustrate and no cash payment was made (a trade account credit was made, I had done my best to reject it including an on-line request to terminate my account).

1. As I attempted to sort out the payment, the supplier’s legal advisor claimed that my builder I were ‘inextricably intertwined’. This was based on us both using the same public email domain (I use it when travelling). This made us the same company it seems!

2. A further request for the trade account closure went ignored.

My approach changed. I paid $185 to the disputes tribunal as the claim was under the $30,000 threshold. I prepared a four page summary where each ‘fact’ was reference evidenced to an email, photo, or claim (evidence was assembled in a supplementary document of 120 pages).

My builder made an application to the tribunal in September 2023 with the prepared materials. Just over a week following his application, the first cash payment was made via me from the supplier to forward on to my builder (his bank account details had been provided but they wouldn’t pay into it).

The supplier claimed they were showing they were being reasonable some five months later (it was coupled with an apology from their solicitor who seemingly was on holiday and not clearing emails hence hadn’t seen my requests).

Long story short, the Decision agreed with the Application.

1. A contract was present between supplier and builder.

2. The full invoiced costs were to be paid to the builder.

3. 50% of the legal costs were also awarded as they related to ‘debt recovery’. The costs were accrued well before the application to the disputes tribunal had been made.

Why do I think this eventually successful?

1. There was a clear contract between the supplier and the builder.

2. Invoicing was strictly compliant with the CCA and had been professionally reviewed.

3. I was well familiar with the CCA and was also very clear about the contract I had with the supplier.

4. I had the burn to spend multiple hours pulling together a cohesive evidenced argument.

The supplier would have got away with only paying 25% of the incurred costs if I had not been familiar with the CCA. They were confident in their position and my builder had had enough of dealing with the paperwork.

The total claim was for $25,000 including legal fees, the award was for $22,000 where 50% of the legal fees were awarded (on reading the Decision this seems reasonable to me).

Unclaimed costs (consequential) were multiple hours of my personal time, construction delays, and a completely destroyed relationship with a supplier.

The industry is very harsh.