BUILDING DISPUTES

Building disputes generally arise out of poor contractual documentation and/or defective work and/or materials.

Each year 1000’s of construction contracts are undertaken, the industry is vast, a considerable amount of industry knowledge is empirically acquired, expectations are always high, often unrealistic and seldom well communicated, plans often lack critical detail and specifications are often general and not project specific, the costs are high relative to most other transactions, and contractors often undertake projects of great complexity and risk.

Quotations will often omit (deliberately or accidentally) items of work but not expressly state so on their face and may be presented in the form of an ‘estimate’ or contain estimates for items of work to be undertaken in the form of PC (Prime Cost) or Provisional Sums that are woefully inaccurate for the work/materials that are in fact required to be undertaken/supplied.

Owners will generally build to the very limit of their financing capacity with no contingency provision, and in many cases they will request changes to the scope of work and specification as work progresses without first obtaining a price or having any understanding of the cost and time consequences of their instructions.

On the other hand, mistakes and errors are a common feature of any building related work and some contractors lack the necessary skills and expertise for the work they undertake and/or fail to have adequate quality assurance processes in place to ensure they achieve the agreed/specified scope of work to the specified standard, and/or to complete their work by the due date for completion.

It is not difficult to understand why disputes are a common and natural consequence of such an environment.

Our experience over nearly 30 years informs us that there are five primary causes of disputes in relation to construction contracts:

  • Contract interpretation
  • Variations
  • Valuation
  • Delay
  • Defective Work

There are essentially two categories of building disputes that we regularly deal with:

  • technical (in the legal sense) disputes – ie disputes that arise out of non-compliance with the technical requirements for making and responding to payment claims under the Construction Contracts Act 2002 (the Act); and
  • merits based disputes – ie disputes about the merits of the parties’ arguments in terms of the construction contract that governs their relationship, or in the case of a contract with a residential occupier, the statutory warranties that are implied into every residential building contract under s362I of the Building Act regardless of whether there is a written building contract. Typical merits based plumbing disputes include disputes in relation to:
    • non-payment for work undertaken;
    • contract interpretation – what the parties actually agreed;
    • scope of work;
    • quality of work;
    • quality of materials;
    • time for completion;
    • payment – the value of the work undertaken in the absence of express agreement as to price;
    • estimates v actual cost;
    • variations – whether certain work is in fact a variation to the agreed scope of work and the value of that varied work;
    • defective work;
    • scope and cost of rectification work;
    • repudiation/cancellation of the contract; and
    • damages for breach of contract.
About Us

With 20 years experience in the avoidance, management, and resolution of building and construction disputes, the Building Disputes Tribunal is recognised and respected as the leading independent, nationwide provider of specialist dispute resolution services to the building and construction industry.

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