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Construction dispute management

Successful management of construction disputes calls for strategies that produce time-efficient and cost-effective outcomes. Kensington Swan boasts New Zealand’s largest and most experienced building and construction dispute team. We act for local and international parties, including government, statutory bodies and territorial authorities, principals, consultants, contractors, subcontractors, suppliers, and insurers. Our depth of experience in the construction industry gives us a good understanding of the key players, and just as importantly, their dispute resolution strategies.

When presented with a potential or actual dispute we will sit down with you and understand what your key ‘drivers’ are in resolving the dispute. We will explain the pros and cons of the various dispute resolution options available in New Zealand, with a view to developing and agreeing a coherent and successful strategy to achieve a time-efficient and cost-effective result.

The suite of construction dispute resolution options available in New Zealand include mediation and negotiation, expert determination, dispute resolution boards, early neutral evaluation, arbitration, and court.
 

Mediation and negotiation

Most construction disputes are ultimately resolved by negotiation or mediation (sometimes called ‘conciliation’). Often they form the ‘endgame’ of a broader dispute management strategy which sees some form of formal proceeding (whether arbitration or court) being instituted as a first step.

Mediation and negotiation are confidential dispute resolution methods that allow parties to reach sustainable, and often innovative, solutions that are accepted and owned by all parties.

Kensington Swan’s construction team has a tremendous depth of experience in the negotiation and mediation of every conceivable kind of building and construction dispute. These range from the modest private dwelling dispute to major project disputes involving tens and even hundreds of millions of dollars.

We can advise on the choice of mediator, a recommended mediation or negotiation format and on the preparation and presentation of materials and arguments at the mediation or negotiation itself.
 

Expert determination

Often a technical issue underlines many construction disputes (e.g. legal, geotechnical, survey, or engineering). Referring the technical element of a dispute to an independent expert for determination can substantially shorten the dispute process and help preserve relationships. Even where the expert’s opinion is agreed to be non-binding, parties will often use the expert’s determination as a springboard to resolve their dispute.

Our team has used this resolution method at various stages in a dispute, often prior to formal notice of a dispute being given. When dealing with discrete technical issues, an expert can usually be appointed quickly and issue a determination without delay. Our team can advise you on the suitability of expert determination as a way of resolving your dispute as well as identify an appropriate expert and the procedure that should be followed.
 

Dispute resolution boards (DRBs)

Dispute resolution boards (sometimes called ‘dispute adjudication boards’) are a project specific alternative to arbitration or court proceedings. While usually provided for in the contract itself and established at the start of the contract, there is no reason why a DRB cannot be put in place after a dispute has arisen.

The Kensington Swan team will assist you in the selection of board members, whether it is a panel of experts specific to the project type or made up of senior management not directly involved in the project or a combination of both. We can also advise on the board’s procedures and, of course, the preparation and presentation of materials to the board.
 

Early neutral evaluation

Early neutral evaluation is gaining traction in New Zealand as a worthwhile dispute resolution option. Its purpose is to provide an early, objective, and independent assessment of the respective positions taken by the parties to a dispute. Typically it takes place after formal dispute proceedings have commenced but well before the arbitration or court hearing. The neutral evaluator (who would normally be someone with experience in determining construction disputes) will consider each party’s case as presented in abbreviated written and/or oral form and then deliver an evaluation of each party’s likely prospects of success. A robust ‘reality check’ of this kind, pre-arbitration or pre-trial, will often lead parties to reflect on their respective positions and open the way for a negotiated settlement.

Our team has recommended this form of dispute resolution on many occasions with great success for our clients. At the very least, early neutral evaluations can assist in reducing the issues in dispute, and more often than not to reach a final settlement.
 

Adjudication

The Construction Contracts Act 2002 introduced into New Zealand a new and unique dispute resolution option tailor-made for the construction industry and known as ‘adjudication’.

Any dispute under a construction contract (i.e. not just payment disputes) may be referred to adjudication under the Act. The key attractions of adjudication are speed, cost-effectiveness, and ease of enforcement.

The point has now been reached where adjudication is now the construction industry’s preferred dispute resolution option.

Kensington Swan’s construction team has acted in numerous adjudications for both local and overseas entities, including New Zealand’s largest adjudication to date and several that have been the subject of subsequent review and appeal in the New Zealand courts.
 

Arbitration and court proceedings

When all else fails the ultimate dispute resolution option is arbitration (if you have agreed to arbitrate your dispute) or court (if you have not agreed to arbitrate).

Both can be time-consuming and costly so careful planning and preparation is essential to maximise the prospect of securing a time-efficient and cost-effective outcome.

In arbitration there are many critical strategic calls to be made—the precise form of arbitration (e.g. expedited or standard), the identity of the arbitrator(s), the procedure that is to apply, the experts to be called, and so on.

The Kensington Swan team has extensive experience of both international and New Zealand based arbitrations that have dealt with a wide range of construction disputes. They include the largest arbitration conducted in New Zealand to date which involved a dispute between the Crown and a private joint-venture contractor over the Clyde dam.

On the court front, our experience acting in professional negligence claims and our current involvement in many of the high profile ‘leaky building’ claims filed in various High Courts throughout New Zealand mean that our team can offer genuine experience and expertise in construction claims that are brought in the New Zealand courts.
 

Recent examples


Large government department

Our client was involved in a dispute with consultants over a residential justice facility constructed in a rural location in New Zealand. The dispute involved alleged failures to provide accurate and timely advice to the department on a significant aspect of the site development. The department wanted to negotiate directly with the consultants, and our lawyers reviewed communications between the parties and provided advice on resolution options. We also provided ongoing advice to departmental staff as they negotiated a successful resolution.


Downer Engineering Limited

We acted for Downer in arbitration proceedings relating to construction of the 9km Vector electricity tunnel under Auckland. We prepared the claim, and expert and factual evidence, and appeared as counsel at preliminary hearings. As a result, a successful outcome was achieved prior to the main arbitration hearing.


Whanganui District Council

A complex dispute arose over the lease for Whanganui Port, involving endowment lands and significant infrastructure assets. We prepared pleadings and appeared for the Council at preliminary conferences with arbitrator and at mediation. We achieved a successful outcome prior to the main arbitration hearing, allowing the Council to begin planning regeneration of an area of significant local interest.


Mainzeal Property and Construction Limited

We acted for Mainzeal in a claim for approximately $5.5 million for breach of contract and negligence against the structural engineer engaged for the design of Auckland’s Vector Arena. We prepared pleadings, engaged experts to prepare reports, and briefed factual evidence. We also appeared as counsel in preliminary conferences and on interlocutory applications relating to discovery and particulars, and appeared at mediation. A successful outcome was achieved prior to a trial.


International oil and gas exploration company

We acted for an oil and gas exploration and mining company in a dispute over the construction and installation of a wellhead platform for a New Zealand oilfield. Our client was claiming losses of $110 million as a result of alleged delays and defaults in installation. We briefed expert witnesses, prepared the claim, advised on alternative dispute resolution processes, and appeared as counsel in those processes. A successful settlement was achieved.


Australasian engineering firm

We acted for an Australasian mechanical and electronic engineering firm in a $100 million construction contract dispute. It involved the interpretation of contract terms and variations. We proposed a mediation that resulted in a favourable settlement and our client avoided a protracted and costly arbitration. The estimated cost of arbitration would have been many times the cost of mediation in this case. 


Overseas investors

Our client required advice on disputes arising from a property development in the Marlborough Sounds. We prepared pleadings and expert and factual evidence, and appeared before the arbitrator on a range of preliminary issues. We also acted as counsel in the High Court when the arbitrator’s mandate was challenged.

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