Property problems: My property, his builder: Do I have to pay?

Q: I own a property in Parnell, which my brother leases from me. He runs his company from the commercial office space on the property. Years ago when he was starting up his company, I provided him with some capital and I was made a director of the company. Since then I've really had no involvement in the company. A few months ago I agreed that my brother could do some renovation work to the office space and I think he engaged a local builder to carry out the work. I know that my brother was not happy with the quality of the builder's work and has been disputing the builder's accounts. To my great surprise, though, I have been served with a document called a Notice of Adjudication. It says that the builder is taking me, and my brother's company, to an adjudication and seeking payment as well as a charging order over my property. I've had no involvement with this builder and I never agreed to pay him. Can he do this?

Wednesday, May 4th 2005, 7:36AM

by The Landlord

A: The simple is answer is yes. The Construction Contracts Act 2002 introduced a fast-track mechanism known as adjudication for disputes arising under a construction contract. From what you have said, your brother's company engaged the builder to carry out renovations to the property, which would be construction work, and so is likely to be a construction contract covered by the act. The builder is therefore entitled to bring his claims for payment via the adjudication process.

From your point of view, the significant part of the act is that it enables an adjudication to be brought not just against the party who contracted the builder (your brother's company) but against the land owner if the land owner is an "associate" of the contracting party. In your case you would meet the definition of "associate" under the act because you are a director of the company that engaged the builder. You are therefore an associate of your brother's company.

Read More - Opens in a new window

« Rising petrol prices not good for property

Trans Tasman Properties first half profit up 70% »

Special Offers