Clark v Central Lakes Homes Limited­ – enforcing adjudicators’ determinations

A recent High Court decision, Clark v Central Lakes Homes Limited [2016] NZHC 1694  concerned an unsuccessful party to an adjudication appealing the entry of the decision as a summary judgment.

Central Lakes Homes Limited (Central Lakes) applied to have the adjudicator’s determination entered as a summary judgment in the District Court under the Construction Contracts Act 2002. Clark appealed on the grounds that:

  • the determination was classified under s 48(1)(b) which cannot be enforced by way of summary judgment; and
  • that there were significant factual disputes that required resolution, meaning it was not suitable for summary judgment.

The claim concerned the amount owed under two penalty clauses under the contract. Clark argued that Central Lakes’ claim related to damages, costs and expenses, or loss of profits, which were not a claim under the contract for completed building work. Clark argued they  relate to 48(1)(b)  which concerned a party’s rights and obligations.

The Judge found that the adjudicator had made determinations on rights and obligations which were unenforceable. However, the Judge ruled that this does not derogate from the adjudicator’s determination made in respect of the relief sought, which was that the preconditions under two penalty clauses were met giving rise to Clark’s liability to make payments to Central Lakes.

Further, in line with the core philosophies of the adjudication regime (to keep cash flowing by paying now and arguing later)  the presence of a significant factual dispute did not prevent the entry of the determination as a summary judgment and did not prevent Clark from contesting the payments which the adjudicator had determined were owed under the contract.

It is important to note that the prickly distinction between determinations on rights and obligations vs payments under a contract has been addressed in the recent amendments to the CCA which allow for rights and obligations determinations to be enforced by summary judgment.

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