BuildLaw, Issue 19: December 2013

Welcome to the December 2013 Issue 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 19.

Editorial Significant Changes Proposed for Security of Payment Legislation in NSW
John Green's comments on articles in this issue and developments in the industry since our last issue including:
  • The National Construction Pipeline report - prepared by Pacifecon (NZ) Ltd with the support of BRANZ for the Building and Construction Productivity Partnership (the Productivity Partnership) to forecast national construction demand for the next six years ending March 2019.
  • The Construction Contracts Amendment Bill that was introduced into the House In January 2013; the first reading was in June; public submissions closed on 25 July; the Select Committee hearings were held in August and the Select Committee reported back to the House on 11 December with its recommendations for amendments to the Bill. 
  • Standards New Zealand published the new NZS 3910:2013 Conditions of Contract for Building and Civil Engineering Construction on 1 October 2013. This revision of NZS 3910 was a ‘limited technical review’ which focused on feedback from the construction sector. It is the first revision in 10 years of the most commonly used form of contract for building and civil engineering construction contracts in New Zealand.
  • WorkSafe New Zealand started work to transform New Zealand-wide attitudes and performance in workplace health and safety.
  • Precedence clauses put in order - Parties often include a precedence clause in contracts to make sure that, in the case of discrepancies between the various documents which comprise the contract, the contract can be interpreted to resolve the discrepancy. In the recent case of RWE Npower Renewables Limited v JN Bentley Limited [2013] EWHC 978 Akenhead J looked at just such a clause in relation to an NEC3 Engineering and Construction Contract where the Contract Data Part One was said to take precedence over the Works Information.  

Pages 1-14
On 24 October 2013 the Building and Construction Industry Security of Payment Amendment Bill 2013 was introduced into the NSW parliament, proposing amendments to the Building and Construction Industry Security of Payment Act 1999 (Act).

The Bill, if passed by both houses of parliament, will effect significant changes to security of payment legislation in NSW in a bid by the government to provide greater protection for subcontractors and promote cash flow and transparency in the contracting chain. Charles Brannen and Joanne Perdriau of CBP Lawyers summarise the proposed changes in “Significant changes proposed for security of payment legislation in NSW”.

Pages 15-17
NZS3910:2013 - What has Changed? Settlement Agreements - The Real Deal
NZS3910 has been remodelled. Although billed "a limited technical review", it has in fact significantly changed. NZS3910:2013 was published on 1 October 2013, following a review that focussed primarily on feedback from the construction industry, which saw 1000 submissions and spanned a two year period. This review resulted in a new standard that is much more comprehensive and user-friendly than its predecessor.
What does it all mean for you?
Pages 18-24
In ‘Settlement Agreements – The Real Deal’, John Green discusses the need for clear, comprehensive and certain drafting of settlement agreements, the importance of making clear in any settlement agreement which rights are being compromised and which rights, if any, are being preserved and how disputes arising under the settlement agreement are to be determined.

Pages 25-34
Aviva Insurance UK Ltd v Hackney Empire Ltd ‘Expert Witnesses yet another Cautionary Tale'
David Bebb of Fenwick Elliot Solicitors discusses the Court of Appeal’s decision in Aviva Insurance UK Ltd v Hackney Empire Ltd [2012] EWCA Civ 1716.  The case is a useful reminder that parties should be careful when agreeing amendments to contracts backed by a bond. The majority of changes should be permitted under modern performance bonds but the wording of bonds does vary. As a result, employers should not make additional payments or change the contract terms without first checking the terms of the bond.

Pages 34-37
In ‘Expert witnesses yet another cautionary tale' Rupert Choat of CMS comments on the recent judgments of Akenhead J in National Museums and Galleries on Merseyside (Trustees of) v AEW Architects and Designers Ltd [2013] EWHC 2403 (TCC)  (1 July 2013 and 20 August 2013.
At the start of the trial on the defective new Museum of Liverpool against its architect and builder, Mr Justice Akenhead said he was "very surprised" that the case had not settled. After the trial ended the head of the Technology and Construction Court was “disappointed” at the continued lack of a settlement.  Having read the judgment, the architect and one of its expert witnesses, to name but two, may now feel the same way.

Pages 37-38
‘Adjudicating under Collateral Warranties’ BINGHAM'S CORNER
A recent decision of the Technology and Construction Court in Parkwood Leisure Ltd v Laing O’Rourke Wales and West Ltd [2013] EWHC 2665 (TCC) has confirmed that, in the right circumstances, a collateral warranty can be a ‘construction contract’ for the purposes of the Housing Grants, Construction and Regeneration Act 1996 (“HGCRA”) and be subject to the mandatory adjudication regime.

In ‘Adjudicating under collateral warranties’, Karen Sanderson from CMS discusses the case and the implications of this decision. Mr Justice Akenhead was careful to point out that not all collateral warranties will be construction contracts for the purposes of the HGCRA. As ever, the question will all depend on the circumstances and the precise wording of specific warranties.

Pages 39-41
Whatever the law says, Tony Bingham says construction folk should raise an almighty stink when buildings such as hotels are not maintained to the latest standards. Public safety may depend on it. He pleads with building surveyors, builders, architects and engineers who are responsible for maintenance of public buildings, or rather buildings that the public visit to please report, whistleblow wrongful construction, or dangerous circumstances. Go on, do it he says, I know your employer will hate you for it, but raise hell! Keep me, mine, my two scallywag, playful grandchildren, Archie and Luca, my 90-year-old mother-in-law and you and yours safe … be a watchman for us.


BIM is famously the magic formula that will get the industry working together in peace and harmony. Tony Bingham says you can talk big until you are blue in the face about working together and spirit of mutual co-operation. He says its a sham and it looks awfully like a way of shifting risk onto subcontractors…

Pages 42-45

We are delighted to announce that two of our pre-eminent panellists, Tómas Kennedy-Grant QC and Derek Firth have been invited to join the International Academy of Construction Lawyers as Founding Fellows.
The Academy has been established to create a forum for the exchange of information and  ideas among  preeminent  domestic  or international practitioners, scholars or jurists  focused  on  construction  law , to  provide  members  with the  opportunity  for  collaboration  and  to promote friendships among the foremost construction lawyers in the world.
Congratulations to Tómas and Derek - this is indeed a wonderful and justly deserved honour for these two highly respected colleagues!!!
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