UPDATED 2.02pm: More surety for sub contractors - and building suppliers - when it comes to doing business after a Supreme Court decision today.

It's overturned a 2013 Court of Appeal decision, which allowed liquidators to claw back payments to subcontractors, going back up to two years.

 

The latest ruling means subbies paid for work by companies that later go into liquidation can keep their cheques.

Until now liquidators have been able to reach back into their pockets for two years after a liquidation, if the payment was made after insolvency was declared.

Building Industry Federation chief Bruce Kohn says there will be celebrations today.

"That gives us also more certainty and less concern where there are doubts about the future of the company they're trading with."

One of the appellants of that ruling was Allied Concrete.

Managing director Scott O'Donnell is welcoming what he calls a sensible decision.

"How is a supplier supposed to know that their supplier is having some problems that week."

O'Donnell says subcontractors can now continue to provide trade credit as they always have.

Until now, liquidators have been able to reach back two years after being appointed - and void payments made by troubled companies to their subbies.

Three companies - Allied Concrete, Fences and Kerbs Ltd and Hiway Stabilisers New Zealand - took the case to the country's highest court after an earlier ruling that they were creditors and subject to Companies Act rules.

The Supreme Court's unanimously found that wasn't the intention of the legislation and sub contractors are entitled to keep money they're paid for work done.

The Court says while the key purpose of that is to protect an insolvent company’s creditors as a whole, there are risks to commercial confidence if, what appear to be normal, everyday commercial transactions, are re-opened long after the event.