The NBR has recently published two articles on two cases
currently before the courts (Decmil NZ and Downey Construction)
relating to the retention regime under the Construction Contracts
Act 2002 (Act).
The retentions regime under the Act continues to be a fraught
area, with industry players complying with the regime to varying
degrees (in some cases not at all).
The theory of the regime is simple: money withheld as retentions
should be held as liquid assets (or other permitted alternatives)
and proper accounting records should be kept to track of which
parties are owed retentions and how much those parties are owed.
The aim is to ring fence the retentions for the benefit of the
retention creditors in the event of insolvency.
