THE New Zealand Herald AND DAILY SOUTHERN CROSS THURSDAY, JULY 16, 1914. CONTRACTS AND LIENS.

New Zealand Herald, Volume LI, Issue 15662, 16 July 1914, Page 6

THE New Zealand Herald AND DAILY SOUTHERN CROSS THURSDAY, JULY 16, 1914. CONTRACTS AND LIENS.

This is an era of great building activity and extensive contracts. Auckland is practically being rebuilt and the same may be said of all progressive New Zealand centres. Large, sums are involved, great interests arc at stake and industrial harmony is exceedingly desirable. Yet as the law stands a serious risk is unconsciously but actually taken by enterprising firms'who dwell in a "fool's paradise" when they imagine that they can safely complete contract payments at the expiration of the usual period after receiving a certificate of completion of work from a qualified architect. Among the Acts upon our Statute Book there are few that arc more in need of careful revision than Part 111. of " The Wages Protection and Contractors' Lien Act, 1908." This part of the Act was passed in 1892 under the name of " The Contractors and Workmen's Lien Act," and has given rise to a very large amount of litigation, not because the principle is wrong but because its application is defective. Indeed, so much does the effect of the Act depend upon its interpretation by decided cases that he is a bold manbe he employer, contractor or subcontractor—who seeks to establish his statutory rights or protect himself from responsibility without first obtaining expert legal advice.

When the layman comes to inquire into the meaning of the Act as elucidated by Supreme Court decisions he is likely to meet with some,' surprises. An employer, for example, reads in his copy of the statute that he "shall retain in his hands one-fourth part of the money payable under the contract to the contractor until the expiration of 31 days after the completion of the work." That, he thinks, is simple enough, so he puts the 25 per cent, aside until he receives a certificate from his architect that the contractor has finished. He then waits another 31 days, after which he pays over to the contractor the 25 per cent, or such part as has not been charged by sub-contractors and workers. That at any rate is what is understood to be done in three building contracts out of four in Auckland. But, as we understand the position, the employer is taking very great risks in paying out the 25 per cent, so soon. He has probably omitted to consider the effect of the ninety days' maintenance clause which is almost invariably found in the conditions, of contract. " The completion of the work," ,it has been decided in the Supreme Court, is not such completion as the architect ordinarily certifies to, but the completion of everything a contractor can be called upon to do under the contract, including maintenance for such period as the contract provides. If, therefore, a building is finished, subject only to maintenance work, on the first of June, and possession is given on that day to the owner, yet if on the

25th of August tho plumber is called in under a ninety days' maintenance clause to repair leaking pipes, it is from the 25th of August, not from the Ist of June, that the 31 days starts to run. In effect, thorefore, the owner to protect himself must hold back 25 per cent, of tho contract price for 121 days from the day when tho contract, apart from maintenance, is finished. This is a very serious matter indeed for the contractors and sub-contractors and, in turn, for the public. For it is obvious that if the contractors and sub-contractors are to havo a large proportion of their capital locked up in this way they must allow for it as an extra expense when making up their tenders.

This is only one of many points in which the statute requires amending. In an Act which, though in spirit it is similar jbo American and Canadian statutes, is substantially the production of our own Legislature, there were almost bound to be ambiguities and, anomalies which only the test of litigation would reveal. Queensland, with the advantage of our experience before her, passed, in 1908, an Act modelled on ours but shorn of some of its defects. Now, in 1914, with tho assistance of tho decided cases and with the

Queensland Act for purposes of comparison our Legislature should bo able to produce an enactment which, if not perfect, will at any rate not deserve the criticism of that member who, when the Bill was before the House in 1892, said, with prophetic vision, that it should be called not "The Contractors and Workmen's Lien Act" but " The Lawyers' Lien Act." That workmen and snb-contractors should be effectively secured against non-payment goes without saying, but this can easily be secured by an.Act devoid of any ambiguity and without any harassing restrictions upon straightforward business enterprise. The Government has admittedly very little time to spare during the present session, but a measure so desirable and so clearly non-partisan and necessary ought to bo promptly drafted and submitted to Parliament, v