Think twice before demanding

A recent judgment by Associate Judge Christiansen serves as a reminder that statutory demand on a “payment claim no payment schedule” basis should only be made where there is a clear debt due.
In Lot 8 Investment Ltd v RPS Construction Ltd [2017] NZHC 1400, RPS Construction Limited had served a statutory demand on Lot 8 Investment Limited for sums due under two payment claims. The court had no difficulty in setting the demand aside:
  • The payment claims stated that payment was due within 20 days. However, the parties had not agreed upon this timeframe, so the default 20 working day deadline from the Construction Contracts Act 2002 applied.
  • Lot 8 had responded to the payment claims within 20 working days.
In an interesting twist, Lot 8’s first payment schedule encompassed both of RSP’s payment claims, as RSP’s second payment claim was served before Lot 8’s first schedule was due. A second payment schedule was also delivered, although it was not considered by the court, as the schedule did not make any further deductions. Associate Judge Christiansen held that the Act does not preclude a single payment schedule dealing with two payment claims, provided contractual or statutory deadlines for payment schedule service are adhered to.

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