BuildLaw, Issue 20: March 2014

Welcome to Issue 20 of BuildLaw. In this issue we bring you a wide range of contributions written by leading construction lawyers, academics and prominent dispute resolution professionals from various jurisdictions around the world.

See below an outline of the articles in this latest edition and click here to download BuildLaw, Issue 20.

 
Editorial THE NEW NZS 3917:2013 -THE THIRD IN THE TRILOGY
John Green's comments on articles in this issue and developments in the industry since our last issue including:
 
  • Topics covered include:Industry Statistics this quarter
  • Progress on the Construction Contracts Amendment Bill 2013
  • Security for retentions (here and the position in Australia)
  • Price fixing - Construction sector particularly susceptible to cartel or price-fixing conduct
  • Recovery of adjudication costs as damages
  • The interaction of winding up proceedings and determination enforcement
  • Being statute barred from seeking repayment of a determination payment in the UK
  • China’s New Development for Auckland’s skyline

Read the full editorial on pages 1-15
 
Sherwyn Williams of Kensington Swan guides us through the benefits of the new NZS 3917 standard and the potential benefits for the industry in ‘The new NZS 3917: 2013: the third in the trilogy’.  The standard applies to fixed term projects, removing the need to rely on Appendix C of the old NZS 3910 that was inadequate.
 
A notable difference in NZS 3917 is that while the contractor has occupancy of the site from commencement to expiry date, the contractor does not have exclusive possession of the site. The programme requirements differ from what is required under NZS 3910 and delay will be the only opportunity where time-related costs can be claimed due to the fixed term nature of the contract.
 
Additionally, a certificate of expiry is required that lists obligations still to be performed, rather than a certificate of practical completion. If the listed obligations are not performed, the contractor can be charged the expense for someone else to complete them.

Read More on pages 16-20
 
The REINZ/ADLS agreement ‘Leaky Vendor Warranties’ NEW ZEALAND: RESIDENTIAL BUILDING CONTRACTS - IMPLIED WARRANTIES
There have been numerous cases concerning vendor liability for faults in properties that have been sold to the purchaser prior to the fault being discovered. The disputes centre on the definition of [6.2] of the REINZ/ADLS agreement; particularly the 7th, 8th and 9th editions, the majority of these cases being from the Weathertight Homes Tribunal. In ‘Leaky Vendor Warranties’, Gareth Lewis of Grimshaw & Co canvasses some of the case law dealing with interpretation of vendor warranties and provides insightful comments as to the principles to be taken from them.

Read More on pages 20-28
 
In ‘New Zealand: Residential Building Contracts - implied warranties’ Karen Overend from Duncan Cotterill overviews the new changes to the Building Amendment Act 2013 by Bill (No. 4) passed under urgency on 20 November 2013 and discusses the expansion of implied warranties for residential building work.
 
The new warranties are mandatory for residential building contractors, house-building companies, developers offering house-and-land packages and sellers who, for the purpose of on-sale personally build or arrange for building, or buy a dwelling from someone who built or arranged for the dwelling to be built. 

Read More on pages 28-30
 
Dangerous and earthquake-prone buildings:
Recent changes and possible changes ahead
BUILDERS DUTY OF CARE TO SUBSEQUENT OWNERS – RE-OPENING THE DOOR
Policy change for earthquake-prone buildings
 
The Building (Earthquake-prone Buildings) Amendment Bill (Bill) was introduced into Parliament in December 2013. Although only having completed its first reading, the Bill instigates changes for building owners and councils that should be noted.
 
Heather Ash, Duncan Laing and Ann Maddox of Simpson Grierson provide a review of the proposed changes in their article, ‘Dangerous and earthquake-prone buildings: Recent changes and possible changes ahead.’ The article also covers changes to the Building Act 2004 by the amendments in November 2013.
 
The changes to the Building Act 2004 now mean that councils’ powers in regard to dangerous buildings extend to “affected buildings” which are defined as a building adjacent to, adjoining, or nearby a dangerous building (as defined in the Act).
 
Read More on pages 31-34
 
Non-contractual duty of care upheld between builder and body corporate

In “Australia: Builders’ duty of care to subsequent owners – re-opening the door”, Stephen Pyman and Joshua Kemp of Holding Redlich discuss the watershed case of Owners Corporation Strata Plan 61288 v Brookfield Multiplex [2012] NSWSC 1219 ('Brookfield No. 2').
 
In that case, the NSW Court of Appeal found a duty of care was owed by a builder to a body corporate of commercial premises. There was no contractual relationship between the parties but the builder was held liable in negligence for defects posing a risk to health and safety. The case is groundbreaking as the body corporate was not in existence at the time of construction.

Read More on pages 34-39
 
COURT BACKS TAXPAYER ON DEDUCTIBILITY OF RESOURCE CONSENT COSTS HEALTH AND SAFETY REFORM BILL UNDER THE MICROSCOPE
The expense of a resource consent – deductible expense or an asset?
 
In the case of TrustPower Ltd v Commissioner of Revenue CIV 2011-404-007140 [2013] NZHC 2970 the court found that the $17.7 million TrustPower spent over a period of three years applying for and securing resource consents for four potential power sites was deductible. Chapman Tripp provides an in depth overview of the legal points in the article: ‘Court backs taxpayer on deductibility of resource consent costs’.
 
The main point at issue in the case was whether the resource consents were assets. If they were not assets, expenses from acquiring the consents are then part of the adjudication of feasibility of a project and are deductible. Andrews J did not deem the consents to be assets due to their uncertain value when regarded separately from the projects they related to.
 
Read More on pages 40-44
 
Another legislative change to take note of is the new Health and Safety at Work Bill. The Bill is modelled on the Australian Model Work Health and Safety Act and will replace the Health and Safety in Employment Act 1992.
 
In the article: ‘Health and  Safety Reform Bill under the microscope’ Marie Wisker and Vonda Hodgson of Chapman Tripp  discuss the major changes and effects that the Bill will have.
 
Of quick note, the Bill:
  • creates a new legal duty holder, the PCBU;
  • replaces the ‘all practicable steps’ test with a test for compliance ‘so far as reasonably practicable’, which presumes in favour of safety when balancing against costs; and
  • imposes a directorial due diligence obligation.

Read More on pages 45-47

 
BINGHAM'S CORNER
Put a stop to it!
 
Bullying, threatening and representatives getting ‘shirty’ with adjudicators are actions that Tony Bingham is fed up with. He tells complainers in his latest article to go mouth off at a High Court judge instead or otherwise wait for adjudicator’s to simply prick them until they bleed...
 
Construction 2025 – Government Waffle
 
The UK Government report titled ‘Government and Industry in Partnership: Construction’ is spotlighted by Tony in this article. Needless to say, Tony finds the ‘aspirations’ of the report largely misguided, and that it implies the construction industry is “duff, inept, too expensive and idle.”
 
Read More on pages 48-52
 

An Authorised Nominating Authority
under section 65 of the Construction Contracts Act 2002