New Zealand is in the midst of one of the largest construction booms this country has seen in the last 40 years. Auckland’s construction activity is expected to grow by 68% by 2018, with the residential building sector making up a significant portion of that amount. Given that 87% of New Zealand’s construction businesses employ less than ten employees and many are run and operated by just one person, the likelihood of building disputes occurring is very high.
Obviously, the best way to ensure that a construction project runs smoothly is to have all of your documentation in order. Surprisingly, the majority of construction contracts are often poorly prepared and shockingly ambiguous, which leads to building disputes. Our experienced building surveyors at Kaizon have been expert witnesses in a wide variety of commercial property or construction disputes throughout New Zealand. We have comprised a comprehensive guide of steps to take if you are involved in a building dispute.
1. IS THERE A CONTRACT IN PLACE?
If there is any type of contract or agreement in place then it should have provisions for dispute resolutions that must be followed. The dispute resolution procedures in the contract may state that someone should be appointed to issue a formal decision, arbitrate, adjudicate, or mediate. If you feel that it would be in your best interest to go through the Courts instead, remember that this may not be possible unless the other party agrees to amend the provisions in the contract.
2. INFORMAL CONTRACTS
Unfortunately, many times these contracts and their terms are not specific or do not have the proper documentation. In this case, you will require legal and technical advice in order to settle the dispute. The Construction Contracts Act outlines the minimum mandatory conditions of a contract – which will apply if the current contract fails to live up to these standards.
3. CONSTRUCTION CONTRACT
The Construction Contracts Act applies to all NZ construction contracts and cannot be contracted out of. It is important to note that even if your construction contract does have dispute resolution provisions, you can follow the procedures outlined in the Construction Contracts Act instead of (or in addition to) the ones in the original contract.
4. EXPERT ADVICE
Seeking expert advice early on is the best and cheapest way to resolve any dispute before it becomes unnecessarily difficult. You can save yourself precious time and countless amounts of money by hiring professionals such as lawyers and building surveyors to present the facts to both sides in a reasonable and civil manner.
5. DISPUTE RESOLUTION PROCESS
Generally speaking, your options include mediation, negotiation, adjudication, arbitration and litigation.
6. SERVE NOTICE OF DISPUTE
This is the logical first step toward resolution. You must officially inform the other party that there is – in fact – a dispute.
If you are a builder who is in dispute over non-payment of an invoice, the provisions of the Construction Contracts Act specifies that you have to serve your Payment Claim in a certain way. You will need to make sure that all of your documentation is in order. This may mean that you will have to re-issue the invoice accordingly and that the appropriate amount of time has been given for payment.
The arbitration provisions of the contract do not apply unless you signed a document that specifically agrees to arbitration. Arbitration provisions in a contract are the most reasonable and productive way of resolving disputes. You cannot avoid being involved in adjudication if you have been served a notice that is in accordance with S28 of the Construction Contracts Act.
A qualified and independent adjudicator will look at the facts and make an unbiased decision about what should be done. Generally a decision is reached within 25 working days. Both parties are expected to pay the adjudicator’s costs – which can vary depending on the scale and complexity of the dispute. This will be in addition to your legal fees.
10. MEDIATION AND ARBITRATION
Unlike adjudication, both parties have to agree to use these options and will also have to agree on a mediator/arbitrator. A mediation can cost anywhere from $2000 to $4000 per day. While this is less costly than an arbitration, there is no guarantee that you’ll get a resolution.
11. DISPUTES TRIBUNAL
This is only an option for relatively minor disputes. The Disputes Tribunal can only hear claims up to $15,000 to $20,000 if both parties are in agreement.
12. WEATHERTIGHT HOMES TRIBUNAL
This tribunal can only deal with claims on buildings constructed or renovated within the previous ten years. Owners of leaky homes will benefit from hiring a lawyer. The Weathertight Homes Tribunal has a very restricted power to award costs, so the expert advisors fee will come out of the homeowner’s pocket.
13. COURT ACTION
This is the final resort and unfortunately, there are long waiting times for civil hearings. In fact, it can take up to a year before your case is heard in the High Court. In many cases, the cost involved in taking matters to court can be disproportionate to the scale of the actual dispute.
The best thing you can do is act quickly and seek professional advice early on. Kaizon regularly works with a number of Auckland’s leading barristers and law firms, dealing with a diverse range of commercial property, construction, and weather-tightness issues and ensuring that our clientele achieves an optimum settlement. Our Building Surveyors possess an in-depth knowledge of the New Zealand Building Code, New Zealand Standards and associated documents. We regularly act as expert witnesses for a wide variety of high-profile, corporate, and private clients. Contact us immediately and allow us to help you protect your investments.