Construction contracts – delays can be costly Different strokes...

www.adls.org.nzISSUE 24 24 JULY 2015

Continued on page 2

LAWNEWS

THIS ISSUE:

Construction contracts – delays can be costlyMediating a nation’s future is all in a day’s work

Different strokes for different folks – Law firm hosts Malaysian lawyers

+ Construction law

CONCURRENCY AND THE COST OF DELAY

By Janine Stewart, Partner, and Rob Harris, Senior Solicitor, Minter Ellison Rudd Watts

Concurrent delay occurs where events attributable to both principal and contractor cause delay to a construction project over the same period of time.

Questions then arise as who is entitled to the benefit of the delay – and who should bear the cost.

It is a common issue in construction projects, causing difficulty in determining entitlement to both extensions of time (EOT) and liquidated/common law damages.

Concurrent delay has not been conclusively addressed in New Zealand and is debated in overseas jurisdictions. This article considers the direction New Zealand may take in light of the approaches adopted by courts in the United Kingdom and Australia.

Time is money

A construction project’s completion date is a common source of disputes. When a project runs overtime, liquidated damages may be triggered, or a non-liquidated claim can arise for the damages caused by the delayed completion.

The completion date is not fixed. It can either be pushed back (with contractual EOTs) or dispensed with altogether (where time is made “at large” – permitting the completion of the project in a “reasonable time”). “Time at large” also means that a principal is not entitled to damages (liquidated or at common law) for project delay beyond the original completion

The failure to explicitly provide for concurrent delay in some New Zealand construction contracts and the lack of New Zealand case law may mean we need to look overseas for guidance.

date but within a “reasonable time”.

This approach aligns with the prevention principle, which dictates that a party to a contract may not enforce a contractual obligation against the other party where it has prevented that party from performing that obligation. If the prevention principle operates, time is at large, thereby disabling any liquidated damages clause (see “The Prevention Principle: Pitfalls for Principals” by Janine Stewart and Amelie Fillion, Law News Issue 40, 14 November 2014).

Most construction contracts contain EOT clauses. The grant of an EOT will operate in place of the prevention principle (“time at large”) and protect the principal’s entitlement to liquidated damages under the contract.

What is concurrent delay?

Concurrent delay is a period of project overrun caused by two or more effective causes of delay which are of approximately equal causative potency (Adyard Abu Dhabi v SD Marine

ISSUE 24, 24 JULY 2015

Services [2011] EWHC 848 (Comm) at [276]). These events may occur at different times and have different effects, but are deemed concurrent if they impact on the progress and/or completion of the project over the same period of time.

A common example is where site access is delayed by the principal (a principal risk) and during that same period, the contractor does not have sufficient resources to progress the works (a contractor risk).

Each delay event must have an impact on the critical path to the original or extended completion date. Similarly, global claims of delay rarely succeed. Events that do not impact the completion date will not meet the threshold for a delay claim.

In addressing the concurrent delay situations, the key focus is who receives the benefit of time. In a practical sense, can the contractor avoid liquidated damages, or is the principal entitled to collect them?

When concurrent delay arises in a construction dispute, the terms of the construction contract must be closely analysed in the first instance. If there is an express clause dealing with concurrent delay, this will override any common law position.

However, New Zealand construction contracts seldom provide an explicit position on how concurrent delay is to be treated and there is scarce New Zealand case law to assess the common law position.

Because of this, it is necessary to examine New Zealand standard form clauses in the context of the common law approach to concurrent delay abroad.

On review of the UK and Australian law, there are three broad approaches:

• in cases where a principal risk event occurs, an EOT is granted to the contractor in accordance with the Malmaison approach;

• an alternative (but rare) approach is to hold culpable the party responsible for the dominant cause of the delay; and

• a further approach is to apportion the cost flowing from the delay between the parties (apportionment approach).

+ Construction law

CONCURRENCY AND THE COST OF DELAYContinued from page 1

Editor: Lisa Clark

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©COPYRIGHT. Material from this newsletter must not be reproduced in whole or part without permission. Law News is published by Auckland District Law Society Inc., 2 Chancery Street, Auckland.

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Which approach will New Zealand take?

England

The leading authorities in England favour the Malmaison approach, which ties into the prevention principle.

The courts have considered concurrent delay in the context of the UK standard form agreement JCT 1980, which permits the Architect (contract administrator) to extend the completion date in the case of principal risk events to a later date that is estimated to be “fair and reasonable” (Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd (1999) 70 Con LR 32).

Malmaison is widely regarded as the leading decision in this area, and states that if there are two concurrent causes of delay (one of which is a principal risk event and the other is not) then the contractor is entitled to an EOT for the full period of delay caused by the relevant principal risk event notwithstanding the concurrent effect of the other event (Hudson’s Building and Engineering Contracts, 12th ed, Sweet & Maxwell, London 2010 at 6-060).

The “dominant cause” approach has been unsuccessfully tested in England (H Fairweather & Co Ltd v London Borough of Wandsworth (1987) 39 BLR 106). The dominant cause test presupposes that parties intend that any delay should be attributed by the contract

Continued on page 10

When concurrent delay arises in a construction dispute, the terms of the construction contract must be closely analysed – if there is an express clause dealing with concurrent delay, this will override any common law position. However, New Zealand construction contracts seldom provide an explicit position on how concurrent delay is to be treated and there is scarce New Zealand case law to assess the common law position.

Janine Stewart Rob Harris


coach) – this is one of the interesting paradoxes in what we do. Recognising this ambiguity and uncertainty opens up all sorts of possibilities.

You work in a wide variety of sectors. How different/similar is it mediating, say, a sports-related conflict compared to a commercial dispute?

A money claim by a contractor for millions of dollars seems very different from an appeal about non-selection for an Olympic sport. But the similarities are much greater than the differences. They say that there are only four or five great themes in Hollywood films. I think the same may be true for all human interactions which lead to disputes and disagreements. The superficial symptoms may be different, and

+ Dispute resolution

Law News speaks with leading Scottish mediator Dr John Sturrock QCDr John Sturrock QC is recognised as the leading commercial mediator in Scotland (being named Scotland’s “Mediator of the Year” in 2009), with a practice extending throughout the UK, Europe and the Middle East. Since leaving active practice at the Scottish Bar in 2002, he has pursued a full-time career in mediation in commerce, industry, the professions, sport, the public sector, senior management and other sensitive and complex matters and has facilitated many high-level dialogues. In 2013, he joined Brick Court Chambers in London.

Dr Sturrock QC is currently visiting New Zealand as a speaker at AMINZ’s annual conference – for more please see www.aminz.org.nz. Law News had the opportunity to ask him some questions about what he does and his work in relation to the recent independence referendum in Scotland.

What prompted you to get into dispute resolution as a full-time career?

I first learned about “principled negotiation” in the summer of 1996 under the great Roger Fisher (author of Getting to Yes) at Harvard and a few weeks later trained as a mediator in Edinburgh. These experiences changed my view of what I was doing at the Bar – I realised that moving into mediation and using “interest-based negotiation” was more in alignment with my own philosophy of life and my real desire to help people, whoever they might be, to work better together. I learned that cooperation is key to our survival in business, in the workplace, even in politics.

What gets you excited about what you do?

A number of things! I am passionate about people being able to have conversations about difficult topics, whether that be a legal dispute, a business relationship gone wrong, a dysfunctional workplace, political differences, climate change strategy, theology and so on. The moment when a sense of humanity returns to a room and one person looks at another and says that they understand that other’s point of view is a deeply rewarding one. That moment is often accompanied by a remark along the lines of “why didn’t we have this conversation a year ago?” And it’s great to see the relief on the face of someone who realises that a difficult situation that has gone on for months (or longer), with all the anxiety that it brings, is now coming to an end and that a new chapter can be opened.

What is the greatest challenge presented by your role?

Staying calm, being in the moment, focussing on the person right in front of me and remembering “it’s not about me”. These are all the things you might expect to hear of course and can be rather glib. On the other hand, any effective mediator (or coach) needs to do each of these things and avoid being seduced by a sense of power or an urge to fix things. As soon as you direct your attention to finding a particular answer, you immediately reduce your power as a mediator (or

the facts and applicable law are often sharply contrasting. But, under the tip of the iceberg, the real concerns, needs, motivations, aspirations, hopes and fears are often very similar. Poor communication, lack of understanding, under-appreciation, loss of trust, emotional reaction to assumptions which are often wrong, falling into what we now call cognitive traps or biases – all of these are universal in my experience.

You were involved in negotiations prior to the recent independence referendum in Scotland. That must have been a fascinating and challenging process with which to be involved?

The Scottish referendum was one of the great experiences of my life, and of the lives of many people living in Scotland over the past two years. Our whole political framework changed. People who had never engaged in political discussion did so and perhaps forever changed our understanding of politics in this country. Scotland has become a sophisticated nation in the context of mass involvement in the issues of the day. Early in 2014, one of the real concerns was that the debate was becoming personalised and polarised. A number of us wanted to suggest something different. So we came up with the “Protocol for Respectful Dialogue”, got hundreds of signatures, took out full page adverts in the newspapers and held a series of dialogue events under the badging of “Collaborative Scotland”. I think we can say this contributed a little to the overall constructive way in which the referendum was conducted. I have also had other involvement, pre- and post-referendum, as a negotiation adviser, facilitator and trainer but that must remain confidential! In that role, I have often had to pinch myself in meetings … there is so much more that we mediators can offer.

In what ways do you see mediation as a useful tool to help build a better society?

I would say that the future of our human civilisation depends to a considerable extent on adopting the kind of approach to disagreement and difference which mediation represents. We can’t go on fighting over diminishing resources and relying on binary win/lose, black/white decisions to resolve difficult issues such as climate change, distribution of wealth, migration, over-population, water shortage, environmental degradation and territorial disputes. We can’t secure our futures by traditional power-based bargaining, where hierarchies and force are often used to achieve self-interested ends. We need to get more bangs for less bucks, recognise a multiplicity of needs, and work really hard to find intersections of interests and to live interdependently and sustainably, whether we like it or not. That is not easy but the skills and techniques of mediation are well-suited to helping us to change the mind-set at all levels.

“A money claim by a contractor for millions of dollars seems very different from an appeal about non-selection for an Olympic sport. But the similarities are much greater than the differences. They say that there are only four or five great themes in Hollywood films. I think the same may be true for all human interactions which lead to disputes and disagreements.”

Dr John Sturrock QC

Continued on page 11

Dr John Sturrock QC


Auckland law firm Gaze Burt recently played host to a group of overseas lawyers and judges – giving them an overview of our legal system and bringing them up to speed on recent trends in law and dispute resolution here. But what was perhaps a bit different about this occasion was that the group was part of the Malaysian Muslim Lawyers’ Association, and that the lawyers and judges in question practise or sit in the Syariah Court of the State of Terengannu, which exists in parallel to the civil courts as part of Malaysia’s dual legal system. The group was led by Dato’ Zainul Rijal Abu Bakar, President of the Association.

Syariah is the Malay spelling of “Sharia” – its courts deal exclusively with Islamic law and operate parallel to the civil, federalised courts. Syriah courts have limited jurisdiction over all Muslims in Malaysia, primarily in family law matters and religious observances, and can pass generally only limited sentences or fines.

The visiting delegation included ten judges, including the Terengannu State Syariah Court Chief Justice. Six women lawyers were amongst the lawyers in attendance, many of whom practise in both the Syariah and civil courts. Leading dispute resolution specialist from Australia, David Newton, has worked with the Association in Malaysia on a number of occasions. A former corporate lawyer, he holds a number of Australian Government-appointed advisory roles, including under the Franchising Code of Conduct, Oil Industry Code and Horticulture Code of Conduct, and has also worked as a mediator abroad.

Mr Newton had arranged for the Association to visit Australia on past occasions but this time around they were keen to come to New Zealand in order to learn more about how mediations are conducted in various contexts here. So he brought them to Gaze Burt in Auckland and thence around the country for an educational (and at times eye-opening) introduction to dispute resolution mechanisms in use in New Zealand.

Law News had the chance to speak with Mr Newton and Gaze Burt partner David Munn about what the visit meant – both for those visiting and for those hosting – and how, if only in a small way, a better cross-cultural understanding was achieved.

The group was keen to learn about New Zealand’s use of mediation in the context of family, employment and religious disputes. Malaysia has long used forms of mediation in its courts – with court mediation officers meeting with parties to a dispute before a matter goes before a judge – but changes have recently been made to how mediation is used in civil and Syariah courts. In the past, Mr Newton explains, court-ordered mediations had a rather prescriptive flavour (compared with the more facilitative-type processes with which we may be familiar), leading to complaints against the mediation officers. The new approach is focussed more on helping parties to a solution (which has

led to a reduction in complaint numbers), but the group was still keen to learn and improve.

“I think one of the most important things members of the Association took away from their time here was a focus on the recent development of collaborative law in New Zealand, particularly in the family context,” says Mr Munn.

“Gaze Burt’s family law Associate, Rebecca Roukema, gave a very good presentation on this topic and they asked her lots of questions! Relationship breakdowns can be very complicated in Malaysia and there can be a cross-over of the civil and Syariah jurisdictions if the parties to the marriage were of different faiths – i.e. Muslim and non-Muslim.”

The group was very interested in whether New Zealand courts or mediators have to deal with separations where more than one faith background is involved, and, in particular, how questions about in what faith a child should be raised going forward are resolved. In Malaysia, there can be a conflict of jurisdiction between the civil and Syariah systems in such cases. While the interests of the child are obviously the guiding principle in New Zealand family disputes, in Malaysia those of different faiths and backgrounds can have different views as to what is best for the child, and this generated much discussion.

Other areas of particular interest included cross-cultural relations in terms of land and dealing with racial and religious conflict.

“As their questions unfolded, you could see where their interest was,” says Mr Munn. “An overview presentation on New Zealand’s judicial structure (given by Nathan Tetzlaff of Gaze Burt) briefly touched on the Waitangi Tribunal but it sparked a number of questions about Māori land, which in turn led to discussions about the diverse ethnic population in Malaysia and rights including ‘positive discrimination’ rights as between the different groups represented there.”

The group also spent time in Wellington, where, among other visits, they learnt about the Government Centre for Dispute Resolution at the MBIE. The group was impressed by the Centre’s trial project to rationalise government-provided dispute resolution mechanisms, although apparently this kind of a task would be more difficult in federal Malaysia. For any readers who have a strong sense of Trans-Tasman rivalry, they will be pleased to hear Mr Newton also giving praise to this initiative and to New Zealand’s approach to mediation in our family courts and employment courts in general, calling it “impressively advanced”.

“New Zealand also does a very good job of protecting the integrity of the mediation process. In Australia, especially in commercial matters, a retired judge or senior barrister is often appointed as mediator and comes in to do some head-knocking. New Zealand seems to have a clearer understanding of what mediation truly is and is applying it with integrity in the family and employment areas,” he says.

Mr Munn found discussions with members of the Association “refreshing” and says that lawyers on both sides of the table had “a strong desire to gain more understanding”.

“We need more of that given what’s going on in the world today. Part of our culture as a firm is a focus on building relationships – we always try to keep that to the fore and this visit was a perfect example of that.”

“If you are more aware of where people of different cultural backgrounds are coming from, you can move through a multi-cultural environment, like New Zealand is today, more comfortably and with a better understanding of those around you.”

+ Law and cross-cultural relations, dispute resolution

Auckland firm does its bit to build bridges

LN

Australian mediation expert David Newton, Malaysian Muslim Lawyers’ Association President

Dato’ Zainul Rijal Bin Abu Bakar and Gaze Burt partner David Munn

“If you are more aware of where people of different cultural backgrounds are coming from, you can move through a multi-cultural environment, like New Zealand is today, more comfortably and with a better understanding of those around you.”

David Munn


+ Judicial appointments

Ten new acting District Court judgesTen acting District Court judges have recently been appointed by Attorney-General Christopher Finlayson, and will serve throughout the country, from Auckland to Nelson.

Solicitor-General of the Cook Islands Kim Saunders has been appointed to serve in the Hamilton District Court. Judge Saunders will be sworn in on 30 July 2015 in Manukau.

Auckland barrister Dianne Partridge (and ADLSI member) has been appointed with a Family Court warrant to serve in the North Shore District Court. Judge Partridge will be sworn in on 31 July 2015 in Manukau.

Auckland barrister and solicitor Warren Cathcart has been appointed with a jury warrant to serve in the Gisborne District Court. Judge Cathcart will be sworn in on 7 August 2015 in Auckland.

Auckland barrister Richard Earwaker (and member of ADLSI’s Criminal Law Committee) has been appointed with a jury warrant to serve in the Manukau District Court. Judge Earwaker will be sworn in on 12 August 2015 in Auckland.

Barrister Sharyn Otene of Auckland has been appointed with a Family Court warrant to serve in the Hamilton District Court. Judge Otene will be sworn in on 2 September 2015 in Manukau.

Auckland barrister Antony Mahon has been appointed with a Family Court warrant to serve in the Manukau District Court. Judge Mahon will be sworn in on 14 August 2015 in Auckland.

Nelson barrister Garry Barkle will serve in the New Plymouth District Court. Judge Barkle will

be sworn in on 6 August 2015 in Nelson.

Napier barrister Tony Snell will serve in the Rotorua District Court. Judge Snell will be sworn in on 18 August 2015 in Napier.

Dunedin barrister and solicitor Jim Large has been appointed with a jury warrant to serve in the Palmerston North District Court. Judge Large will be sworn in on 24 August 2015 in Dunedin.

Dunedin barrister Lynne Harrison has been appointed with a Family Court warrant, also serving in the New Plymouth District Court. Judge Harrison will be sworn in on 20 August 2015 in Dunedin.

Stewart Germann of Stewart Germann Law Office has been appointed as President of the Rotary Club of Auckland for the 2015/2016 year. The Auckland Rotary Club is the largest club in New Zealand with approximately 140 members and Mr Germann says, “It is an honour and privilege to be its President.”

+ Appointments

Auckland lawyers appointed to a variety of roles in the wider community

Stewart Germann

LN

Auckland barrister Anita Killeen has been appointed Deputy Chair of the Auckland Regional Amenities Funding Board. The Auckland Regional Amenities Funding Board is a Council-controlled Organisation (CCO) and was established with the introduction of the Auckland Regional Amenities Funding Act 2008. The Board distributes funding to specified amenities which deliver arts, culture, recreational, heritage and rescue services and other facilities to the wider population of the Auckland region.

Anita Killeen

The Attorney-General has also announced the appointment of a new Judge Advocate General of the Armed Forces.

Kevin Riordan ONZM has been Deputy Judge Advocate General and Deputy Chief Judge of the Court Martial since October 2013. He takes over from Christopher Hodson QC who is retiring.

The Judge Advocate General is responsible for ensuring the proper administration of armed

+ Judicial appointment

New Judge Advocate General and Chief Judge of the Court Martial appointed

forces law. Those responsibilities include investigating complaints by members of the armed forces, appointing judge advocates to sit in courts martial and considering and reporting on the proceedings of courts martial. With the appointment comes appointment as Chief Judge of the Court Martial.

Mr Riordan will take up his appointments on 4 August 2015. LN

Dates and times for swearing-in ceremonies of new Auckland-based District Court Judges:

Her Honour Judge Kim Saunders – Manukau, 3:30pm, 30 July 2015.

Her Honour Judge Dianne Partridge – Manukau, 3:30pm, 31 July 2015.

His Honour Judge Warren Cathcart – Auckland, 3:30pm, 7 August 2015.

His Honour Judge Richard Earwaker – Auckland, 3:30pm, 12 August 2015.

His Honour Judge Antony Mahon – Auckland, 3:30pm, 14 August 2015.

Her Honour Judge Sharyn Otene – Manukau, 3:30pm, 2 September 2015.


Law News has been advised of changes to pre-sentence reports in the High Court.

Readers’ attention is drawn to the following information from Paula Tesoriero, General Manager, Higher Courts.

Agreement was reached in June between the Department of Corrections and the Ministry of Justice, with the support of the High Court judiciary, on a new service standard for the provision of pre-sentence reports in the High Court.

On 7 July, the Ministry of Justice and Department of Corrections signed a Memorandum of Understanding (MOU) which reflects that agreement.

The changes are due to come into effect on 13 July 2015.

The key changes to pre-sentence reports in the High Court are:

• The High Court will use the same report template as used in the District Court. This will enable Corrections to file the report using the existing electronic interface between Corrections and the courts.

• The High Court will allow 15 working days for Corrections to complete the report. A copy of the report is to be provided by Corrections to the court, offender, Crown Law and counsel for the defence (as applicable) within that time period.

• The High Court will schedule a sentencing event for a case where a pre-sentence report has been directed in accordance with the new report timeframe and the 2014 Practice Note: Sentencing in the High and District Courts. This is expected to be 20 working days.

• Sentence recommendations are only needed in the report for cases where a judge is considering a non-custodial sentence.

These changes apply to all new directions for pre-sentence reports in the High Court from 13 July.

Any outstanding report directed prior to 13 July will be provided by Corrections using the current report template and filing process, even if they are to be filed after 13 July.

Shortening the timeframe for the delivery of pre-sentence reports provides an opportunity to reduce the time between conviction and sentencing for serious offending.

The new service standard is expected to remove 5-15 working days from the current sentencing timeframe.

There are considerable benefits to all parties in obtaining a resolution to these cases quickly after guilt has been established.

The Ministry of Justice and Department of Corrections have agreed that they will conduct a six-month review of whether a pre-sentence report can be filed 10 working days after conviction for murder and manslaughter charges.

They have also indicated that ADLSI will be advised of the outcome of that review.

+ News from the High Court

Changes to pre-sentence reports in the High Court

LN

The Minister of Justice has requested that the Law Commission commence two new references in the family violence area. They are:

• non-fatal strangulation as a separate crime; and

• victims of family violence who commit homicide.

These two new references will complement the current work of the Commission in improving the court experience of victims of sexual offending.

Non-fatal strangulation

The Family Violence Death Review Committee’s (FVDRC) fourth Annual Report noted that non-fatal strangulation is “an important lethality risk indicator” and a “red flag for future serious abuse and fatality”, and recommended the consideration of non-fatal strangulation being included as a separate crime under Part 8 of the Crimes Act 1961.

As part of this reference, the Commission will consider:

• the rationale for establishing such a crime, including looking at the experience of overseas jurisdictions;

• the appropriate elements of the offence and maximum penalty for such a crime; and

• whether such a crime should be created or whether there are other (legislative or operational) options.

Judge Peter Boshier, the lead Commissioner for the non-fatal strangulation reference, said, “The act of non-fatal strangulation is a well-known indicator of future serious family violence. A number of comparable countries have already implemented a specific crime of non-fatal strangulation. The Law Commission will review if a separate crime can be a tool to reduce future family violence.”

Victims of family violence who commit homicide

Since the 2009 repeal of section 169 of the Crimes Act (provocation as a partial defence to murder), the FVDRC has been gathering data on all family violence homicides in New Zealand, and considers that New Zealand is “out of step” in how the criminal justice system responds to victims of family violence in this area. The Commission has accordingly been asked to re-examine options for amending the defence of self-defence and introducing a targeted partial defence to murder.

As part of this reference, the Commission will consider:

• whether the test for self-defence in section 48 of the Crimes Act should be modified so that it is more readily accessible to defendants charged with murder who are victims of family violence;

• whether a partial defence for victims of family violence who are charged with murder is justified and if so in what particular circumstances; and

• whether current sentencing principles properly reflect the circumstances of victims of family violence who are convicted of murder.

Wayne Mapp, the lead Commissioner for victims of family violence who commit homicide reference, said, “There is a risk that New Zealand is out of step in how the criminal justice system deals with victims of family violence when they face charges of killing their abusive partners. The review will examine whether the New Zealand law requires modification.”

The Law Commission will establish an Experts Committee to assist in its work and will also consult with key groups. It will report to the Minister of Justice by 31 March 2016 on both references. LN

+ News from the Law Commission

Does our law need modifying to better serve victims of family violence?


Author: Lynda Harris

Pages: 287

This one-of-a-kind book highlights the tremendous cost of bad writing in business and government and offers practical solutions for change.

Rewrite offers valuable advice on harnessing the power of effective writing.

The book describes the challenges and triumphs faced by organisations pursuing this goal, and shares inspiring stories from the “plain English

+ New book

Rewrite: How to Overcome Daily Sabotage of Your Brand and Profit

Employment lawyers, judges, ERA members and mediators are invited to come together for the Annual ADLSI Employment Law dinner on Thursday 6 August 2015.

Pre-dinner drinks followed by dinner will give plenty of time and opportunity for you to relax and enjoy the company of your employment law friends and colleagues in the ambiance of Euro Restaurant on Princes Wharf.

Date & time: Thursday, 6 August 2015, 6.30pm

Venue: Euro Restaurant & Bar Shed 22, Princes Wharf, 147 Quay Street, Auckland

Tickets: $110 + GST ($126.50 incl. GST) for ADLSI members and the judiciary; $125 + GST ($143.75 incl. GST) for non-members.

Register before Wednesday 29 July 2015 to secure your space, subject to availability. To register and pay for this dinner online visit www.adls.org.nz; alternatively, contact [email protected] or 09 303 5287.

ADLSI’s standard cancellation policy applies for this event.

+ ADLSI event

Annual Employment Law dinner, 6 August 2015

LN

Recently admitted lawyers are invited to ADLSI’s annual “Meet the Judiciary” evening on Tuesday 11 August 2015.

Don’t miss this valuable opportunity to meet with members of New Zealand’s judiciary in a relaxed and social environment, over a few refreshments.

Over 20 judges will be present at the evening, including Chief Justice the Rt Hon Dame Sian Elias.

Space at this popular evening is limited, so register now to avoid missing out.

Time & date: 5.30pm, Tuesday 11 August 2015

Venue: Norman Shieff Room Level 6, Chancery Chambers 2 Chancery Street Auckland

To register for this event, please visit www.adls.org.nz or email [email protected] before Friday 7 August 2015, subject to availability.

+ ADLSI event

“Meet the Judiciary” evening for recently admitted lawyers

LN

coalface”.

Price: $46.95 plus GST ($54.00 incl. GST)*

Price for ADLSI Members: $42.26 plus GST ($48.60 incl. GST)*

(* + Postage and packaging)

To purchase this book, please visit www.adls.org.nz/adlsi-store or contact the ADLSI bookstore by phone: 09 306 5740, fax: 09 306 5741 or email: [email protected].

www.adls.org.nzISSUE 24 24 JULY 2015

Continued on page 2

LAWNEWS

THIS ISSUE:

Construction contracts – delays can be costlyMediating a nation’s future is all in a day’s work

Different strokes for different folks – Law firm hosts Malaysian lawyers

+ Construction law

CONCURRENCY AND THE COST OF DELAY

By Janine Stewart, Partner, and Rob Harris, Senior Solicitor, Minter Ellison Rudd Watts

Concurrent delay occurs where events attributable to both principal and contractor cause delay to a construction project over the same period of time.

Questions then arise as who is entitled to the benefit of the delay – and who should bear the cost.

It is a common issue in construction projects, causing difficulty in determining entitlement to both extensions of time (EOT) and liquidated/common law damages.

Concurrent delay has not been conclusively addressed in New Zealand and is debated in overseas jurisdictions. This article considers the direction New Zealand may take in light of the approaches adopted by courts in the United Kingdom and Australia.

Time is money

A construction project’s completion date is a common source of disputes. When a project runs overtime, liquidated damages may be triggered, or a non-liquidated claim can arise for the damages caused by the delayed completion.

The completion date is not fixed. It can either be pushed back (with contractual EOTs) or dispensed with altogether (where time is made “at large” – permitting the completion of the project in a “reasonable time”). “Time at large” also means that a principal is not entitled to damages (liquidated or at common law) for project delay beyond the original completion

The failure to explicitly provide for concurrent delay in some New Zealand construction contracts and the lack of New Zealand case law may mean we need to look overseas for guidance.

date but within a “reasonable time”.

This approach aligns with the prevention principle, which dictates that a party to a contract may not enforce a contractual obligation against the other party where it has prevented that party from performing that obligation. If the prevention principle operates, time is at large, thereby disabling any liquidated damages clause (see “The Prevention Principle: Pitfalls for Principals” by Janine Stewart and Amelie Fillion, Law News Issue 40, 14 November 2014).

Most construction contracts contain EOT clauses. The grant of an EOT will operate in place of the prevention principle (“time at large”) and protect the principal’s entitlement to liquidated damages under the contract.

What is concurrent delay?

Concurrent delay is a period of project overrun caused by two or more effective causes of delay which are of approximately equal causative potency (Adyard Abu Dhabi v SD Marine

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Simply email [email protected] and let us know you’d like to switch your weekly print subscription to online, and we’ll arrange to send you an email every Friday with a link to the latest issue of LAWNEWS.

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Selected CPD CPDTo view all ADLSI CPD & register: www.adls.org.nz/cpdEmail us: [email protected] Phone us: 09 303 5278

Featured CPD

Wednesday 12 August 2015 12pm – 1pm

1 CPD HOUR

Hot Topics in Commercial Leasing : Green Leases and Rent GuaranteesCommercial leases are subject to a number of external influences. For example, the emphasis on sustainability has seen a rise in the use of green leases. Being able to advise clients on the specific requirements of such leases, as well as the novel way in which operating expenses are dealt with in the context of them, is an important aspect of any commercial property lawyer’s practice. So too is the way in which rent guarantees have evolved recently with consequences for landlord and tenant. This webinar will look at both developments and provide insights into the particular opportunities and problems they present.

Learning Outcomes• Better understand the nature and form of green leases from the landlord’s and tenant’s perspectives, some of the issues that can arise during negotiation and methods of setting initiatives, benchmarks, targets, measurements and reporting structures.

• Learn more about how operating expenses for green leases impact on the relationship between landlord and tenant and how this relationship differs from those in other commercial leases.

• Gain insights into the way rent bonds and guarantees are now being dealt with and the advantages (and potential disadvantages) of the new approach for landlords and tenants.

Presenters: Nick Wilson, Partner, Burton & Co; Emma Tonkin Senior Associate, Kensington Swan

Tuesday 25 August 2015 4pm – 6:15pm

2 CPD HOURS

The Nuts and Bolts of Selling and Purchasing a Business For many lawyers, overseeing the sale and purchase of a business is a common occurrence. This interactive seminar will cover the legal, accounting and financial aspects of this type of transaction. It will also highlight those areas which require careful consideration and provide useful best practice tips.

Learning Outcomes• Gain insights into critical preliminary enquiries and strategic considerations when selling a business, including questions of value, potential acquirers, and what is actually being sold.

• Improve your knowledge of tax implications especially in relation to sales by shares or assets and the purchase price allocation.

• Develop a deeper understanding of relevant valuation considerations.

• Learn more about the contractual considerations of a sale and purchase transaction.

• Learn how to design more efficient and effective due diligence processes from both a legal and accounting perspective.

Presenters: Jeffrey Lai, Partner, Anderson Creagh Lai; Jai Basrur, Director, CGB Consulting Limited; Colin De Freyne, Principal, De Freyne & Associates Ltd Chair: Geoff Hardy, Principal, Madison Hardy

Thursday 30 July 2015 12pm – 1pm

1 CPD HOUR

Dispute Resolution Clauses: Uses and Analysis Recent Supreme Court judgments have highlighted the importance of having knowledge of dispute resolution clauses when including them in commercial contracts. All too often, dispute resolution clauses become part of such agreements with little thought to content or whether they are really needed in the first place. Learn how best to advise clients on what form, if any, dispute resolution clauses might take and gain insights into how best to tailor them to suit clients’ needs.

Learning Outcomes• Develop a better understanding of whether a dispute resolution clause is really necessary, what the different dispute resolution options are, and what form of dispute resolution might be the most suitable.

• Apply your analytical skills better in relation to the content of a dispute resolution clause and what the possible consequences of it may be.

• Learn how best to adapt dispute resolution clauses to suit your client’s needs.

Who should attend? All lawyers involved in drafting and interpreting contracts of all types.

Presenters: Paul Cogswell, Principal, Cogswell Law; Nick Gillies, Partner, Hesketh Henry

Wednesday 2 September 2015 12pm – 1pm

1 CPD HOUR

Immigration Law: Making Good Use of Useful International ConventionsInternational obligations, such as the UN Convention on the Rights of the Child, inform many decisions made under the Immigration Act. They are also a crucial advocacy tool for all immigration lawyers, whether their work is transactional or litigation focused. This webinar introduces the most useful conventions and shows you when and how to use them effectively.

Learning Outcomes• Become familiar with the most common international conventions and rights.

• Discover where to locate useful resources: useful cases and commentary.

• Recognise when to use international conventions.

• Learn how to use convention rights more effectively.

• Learn how to recognise a potential refugee or protection claim and what to do about it.

Who should attend?All immigration and criminal lawyers wanting to refresh their knowledge of international obligations. Presenter: Martin Treadwell, Deputy Chair, Immigration and Protection Tribunal

7. 10 hour 8. On demands6. Webcast5. Forum

1. Seminar 2. Webinar 3. Workshop 4. Conference

Webinar



Live stream



Seminar



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Webinar


Selected CPD CPDTo view all ADLSI CPD & register: www.adls.org.nz/cpdEmail us: [email protected] Phone us: 09 303 5278

Featured CPD

CPD in Brief

Courtroom Advocacy – The Essential Skills: Part 3 Tuesday 11 August 2015 | 4pm – 6.15pmThe next part in this well-received series will focus on procedure and objections. Attend this seminar to receive practical guidance with judicial insight on these important topics. (Attendance at the previous seminars in this series is not a prerequisite for this session.)

Presenters: David Bigio, Barrister, Shortland Chambers; Adam Ross, Barrister, Shortland Chambers Chair: Her Honour Judge Mathers

Equity Crowdfunding 101: Innovative Capital-Raising for your client Thursday 20 August 2015 | 12pm – 1pmGiven the extraordinary level of growth in funding through this channel in New Zealand, becoming updated in this area is something which should not be delayed. Suitable for commercial lawyers and general practitioners with SME, entrepreneurial and/or start-up business clients.

Presenters: Hayley Buckley, Partner, Wynn Williams; Josh Daniell, Co-Founder / Head of Platform, Snowball Effect

Funds Transfer Pricing and Debt Capitalisation & Remission Wednesday 26 August | 12pm – 1pmOver 50% of our foreign-owned companies are based in Australia and our other major trading partners. In an environment where particular government attention is being directed on base erosion profit shifting (BEPS), it is more important than ever to correctly price related party funding.Presenter: Paul Hale, Principal Advisor - Financial Arrangements, Inland Revenue

Privacy in the Digital Age: The Risks and Opportunities of New Technology Wednesday 5 August 2015 | 12-1pm This webinar will show how clients’ professional and personal privacy may be affected by technology and how to advise clients on avoiding breaches or protecting them from unwanted attention.

Presenters: Daimhin Warner, Customer Governance & Privacy Manager, Sovereign Insurance; Joe Edwards, Senior Associate, Russell McVeagh.

ADLSI LIVE STREAMINGBringing seminars to you,

wherever you are.Visit www.adls.org.nz/CPD

CPD On Demand

Research Skills for Lawyers II: Best Sources of Free Legal Information – Techniques & Tips for Using Them – 1 CPD HOUR The internet offers lawyers a wealth of free legal sites, a steady flow of news feeds and updates, and endless information relevant to client files of every description. However, the Internet can always expose the unwary researcher to a minefield of mis- and dis-information. This webinar will arm you with resources and disciplines to help you get the most out of the best free resources.

Presenters: Therese Duffin, National Information Services, Manager, Bell Gully; Amanda Wall, Research and Information Librarian, Bell Gully

The Financial Markets Conduct Regulations: Charting the Changes – 1 CPD HOURThe long-awaited FMC Regulations complete one of the most significant changes to financial dealings in New Zealand. This recorded webinar provides an essential update on the new Regulations and useful guidance on how to apply them in respect of the various financial product categories.

Presenters: Lloyd Kavanagh, Partner, Minter Ellison Rudd Watts; Ross Pennington, Partner, Chapman Tripp

The Reviewable Attorney – Enduring Power of Attorney Update – 1 CPD HOURThis practical session will enable practitioners to consider the “how to” of an application for review of the actions of an attorney acting under an EPA in light of recent case law, and will provide useful guidance on steps to take when drafting EPAs to reduce the possibility of review of attorney actions in future.

Presenter: Maria Kazmierow, Barrister and Mediator; Chair/Commentator: Tony Fortune, Partner, Fortune Manning

CPD Pricing

Delivery Method Member Pricing Non-Member Pricing

Webinar $75.00 + GST (= $86.25 incl. GST) $95.00 + GST (= $109.25 incl. GST)

Seminar (in person) $125.00 + GST (= $143.75 incl. GST) $180.00 + GST (= $207.00 incl. GST)

Seminar (live stream) $125.00 + GST (= $143.75 incl. GST) $180.00 + GST (= $207.00 incl. GST)

On Demand (1-hour recording) $85.00 + GST (= $97.75 incl. GST) $110.00 + GST (= $126.50 incl. GST)

On Demand (2-hour recording) $95.00 + GST (= $109.25 incl. GST) $130.00 + GST (= $149.50 incl. GST)

For group bookings for webinars & CPD On Demand, see the ADLSI website at: www.adls.org.nz/cpd/help-and-faqs/group-bookings/.











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Continued from page 2, “Concurrency and the cost of delay”

administrator to only one – dominant – delay.

This approach operates on an all or nothing basis and presents a very difficult task of assessment where you have overlapping concurrent delays. This can be capable of creating hardship on a party to a construction dispute.

Scotland

Interestingly, the Scottish case of City Inn Ltd v Shepherd Construction Ltd [2010] CSIH 68; 136 Con LR 5 held that the words “fair and reasonable” in the JCT 1980 clause could be interpreted so as to allow the concurrent delay to be apportioned between principal and contractor and that such apportionment will frequently be appropriate in concurrent delay issues.

In this context, apportionment means that both principal and contractor will suffer consequences (either EOT in favour of the contractor, or liquidated damages in favour of the principal) based on the degree of fault of each party.

However, the apportionment approach has been heavily criticised (see Hudson’s at 6-061 – 6-062). The English approach to concurrent delay appears to reflect a desire to preserve the operation of the prevention principle.

It maintains that assessing concurrent delay involves looking at the relevant event and the effect it has on the original or extended completion date. If the relevant event occurs (no matter when), then the fact that the works would have been delayed, in any event because of the contractor default (in the context of an EOT claim) is likely to be irrelevant. Where a contractor can show that the principal risk event was an operative cause of delay, it is entitled to an EOT because a principal cannot benefit from its breach (in accordance with the prevention principle).

Commentators have suggested that the words “fair and reasonable” are related to the exercise of fixing a new EOT date once causation is determined rather than addressing causation itself.

Australia

In Australia, there is no clear judicial guidance on how to approach the concurrent delay issue. The courts have taken conflicting approaches to the application of the prevention principle and it is difficult to extract a cogent common approach regarding the position on concurrent delay.

Two NSW Supreme Court cases indicated Australia was trending away from a strict application of the Malmaison approach, and that the apportionment “common sense” approach was more favourable.

In these cases, EOTs were not granted to contractors where the contractors had failed to comply with the contractual notice requirements of the construction contract (a condition precedent).

Consequently, liquidated damages were available to the principal even though the delays were caused by principal risk events (Turner Corporation Ltd (Receiver and Manager

Appointed) v Austel Pty Ltd (1997) 13 B.C.L. 378, 384 (Cole J), Turner Corporation Ltd (In provisional Liquidation) v Co-Ordinated Industries Pty Ltd and Others (1995) 11 B.C.L. 202).

A contrary decision of the Supreme Court of the Northern Territory held that liquidated damages are not recoverable by the principal in circumstances of principal risk delay where the contractor fails to comply with the notice requirements of the EOT clause.

This decision is consistent with the Malmaison approach and aligns with the prevention principle but has been either criticised or sought to be constrained to the particular facts of the case. See Multiplex Constructions (UK) Limited v Honeywell Control Systems Limited (No.2) [2007] EWHC 447, where Jackson J addressed the role of the EOT notification regime and said that “contractual terms requiring a contractor to give prompt notice of delay serve a valuable purpose”.

Australian commentators indicate that the apportionment “common sense” approach will be adopted when causation is an issue but appears to be on a case by case basis (see D McNair and B Linke, “Concurrent Delay”, ACLN 150, May/June 2013).

Ultimately, the approach to determining concurrent delay issues is uncertain in Australia in the absence of express terms in a construction contract.

New Zealand

New Zealand courts have yet to be called on to determine their approach to concurrent delay. If the issue arises in the future, it will likely be

in respect of the commonly used standard form contract NZS 3910:2013 (3910).

The clause of the UK’s standard form JCT 1980 considered in the leading UK cases is comparable to clause 10.3.1 of 3910 in that a fairness test applies as to whether an Engineer (contract administrator) decides to grant EOTs to a contractor:

“The Engineer shall grant an extension of the time for completion of the Contract Works or for any Separable Portion if the Contractor is fairly entitled to an extension …” [Emphasis added]

It would therefore be appropriate to assume that when it comes time to determining concurrent delay, the New Zealand courts would look to the UK for guidance, due to the similar wording “fairly entitled” between the 3910 standard EOT clause and the JCT 1980 clause.

Arguably, New Zealand courts would follow the Malmaison approach on the basis that there is an inherent unfairness in reducing an otherwise entitled EOT.

However, the New Zealand courts may also find an apportionment approach attractive in a case where a contractor’s behaviour warrants it. If a contractor is otherwise entitled to an EOT, but because of its own conduct a full EOT is not seen to be fair, the Court may grant a partial EOT on the basis that it accurately reflects fault.

Such an argument seems at least tenable under 3910, but the weight of English authority (and the authors of Hudson’s) would favour adoption of the Malmaison approach and the allowance of the full EOT. LN

+ Book

It Was All Legal

Author: Graham Wear

It Was All Legal: The Auckland District Law Society and its members 1879-2009 is a fascinating story of Auckland’s colourful lawyers and the District Law Society to which they all belonged.

Set against the history of Auckland and New Zealand as a whole, it spans from the mid-19th century to the first decade of the 21st century.

The Auckland District Law Society was replaced in 2009 by an incorporated society, which has published this book as a record of an eventful 130 years.

Price: $43.43 plus GST ($49.95 incl. GST)*

Price for ADLSI Members: $34.73 plus GST ($39.95 incl. GST)*

(* + Postage and packaging)

To purchase this book, please visit www.adls.org.nz or contact the ADLSI bookstore by phone: 09 306 5740, fax: 09 306 5741 or email: [email protected].


WILL INQUIRIES LAW NEWSThe no-hassle way to source missing wills for

$80.50 (GST Included)Email to: [email protected]

Post to: Auckland District Law Society Inc.,PO Box 58, Shortland Street, DX CP24001, Auckland 1140

Fax to: 09 309 3726 For enquiries phone: 09 303 5270

+ Wills

Please refer to deeds clerk. Please check your records and advise ADLSI if you hold a will or testamentary disposition for any of the following persons. If you do not reply within three weeks it will be assumed that you do not hold or have never held such a document.

Andrew CROMBIE, late of Goodward Park Gated Community, 209 Riverhead Road, RD 5, Kumeu, Beneficiary, Aged 55 (Died 02’04’2015)

Allan Rix FERGUSSON, late of 38 Allenby Road, Papatoetoe, Auckland, Aged 91 (Died 03’07’2015)

Elaine Jeanette LEACH, late of 303 Kaipara Coast Highway, RD 1, Kaipara, Kaukapakapa, Rest-home Caregiver, Aged 60 (Died 22’06’2015)

Charlotte-Jane McLAUGHLIN, late of 246 Parish Line Road, Clevedon, Auckland, Shop Assistant, Aged 41 (Died 14’06’2015)

Benjamin Andrew Robert RILEY, late of 3/63 Marina Boulevard, Larrakeyah, NT 0820, Australia, Welder/Labourer, Aged 29 (Died 08’12’2014)

Junlu SUN, late of 916 New North Road, Mount Albert, Auckland, Aged 50 (Died 08’06’2015)

Minnie TEPANA (also known as Minnie TE PANA, Mihi TEPANA and Mihi TE PANA), late of 39 West Coast Road, Te Kopuru, Dargaville, Widow, Aged 68 (Died 01’02’2012)

What do you think makes a good mediator?

A genuine interest in people. Real curiosity about what’s going on. Authenticity, humility, courage, an ability to take responsibility even when it’s not your fault. A lot of patience. Lightness of touch. What we often describe as a “non-anxious presence”. Compassion, detachment and engagement. Hope. Rigorous attention to specifics where necessary. Flexible intelligence. Sound commercial awareness and deep understanding of the human condition. A willingness to ask the really tough questions and to make them appear genuinely non-threatening. Gravitas, so that, at the moment when it really matters, the mediator can bring to the mediation what the parties really need.

Not all lawyers are specially trained mediators, however, are there techniques we could all utilise to manage conflict in their daily practice?

Being properly prepared is key in all things, not just legal and factual analysis but being aware of commercial, reputational, strategic, monetary, emotional and other elements in any problem-solving matrix. Be clear on your and/or the client’s real objectives. Separate people from the problem – always show respect and courtesy whatever you may think of the others, and be rigorous about the issues. Ask lots of questions rather than asserting – “judge someone by the quality of their questions not by their answers”. Challenge your assumptions; they are often wrong. View matters from the other side’s perspective – get into their shoes. Keep looking for new options. Steer away from the zero-sum, win/lose paradigm. Try to create added value. Be aware of what are called cognitive biases – the most interesting area in our work is, I believe, neuro-science, which has so much to teach us about conflict, why it arises and how we might deal with it. Try to understand this stuff as much as you can!

Of what achievement are you most proud?

Professionally, while I am enormously proud to have helped to bring commercial mediation to Scotland, I think I am proudest of my work at the Scottish Bar where we built a really strong advocacy skills programme in the ’nineties. That was wholly new for us then and transformed the Bar’s thinking about continuing training. And one of the sources for us was the work being done in New Zealand at that time! I well remember dining with Sir Bruce Robertson and your former President of the Court of Appeal, Sir Ivor Richardson, in 1993, when I journeyed round the globe to explore advocacy training.

Do you have a favourite legal or political-themed movie/book/TV series of all time?

I have really enjoyed “House of Cards”. While Kevin Spacey plays his role with real skill, I think Robin Wright is fantastic as his wife. “Yes Minister” and “Yes Prime Minister” hilariously captured what (apparently) goes on in the back rooms of politics, and may not have changed that much even over 30 or 40 years. Lessons in Life: Mandela’s Way, by Mandela’s biographer Richard Stengel, is a fabulous collection of ideas about leadership with arguably all that we ever need to know as mediators or coaches or leaders. And two movies about Mandela’s life, the autobiographical “Long Walk to Freedom”, and “Invictus”, about his crucial role in South Africa winning the 1996 Rugby World Cup, capture the essence of a great man.

Continued from page 3, “Law News speaks with leading Scottish mediator Dr John Sturrock QC”

LN

+ ADLSI Council

Contact details for ADLSI CouncilHere are the contact details for your ADLSI Council. They welcome your queries and suggestions.Brian Keene QC (President) Ph. 09 366 0306 E. [email protected] Pidgeon (Vice-President) Ph. 09 337 0826 E. [email protected] Brandts-Giesen Ph. 03 313 4010 E. [email protected]

Vikki Brannagan E. [email protected] Hagen Ph. 09 309 1689 or 021 452 326 E. [email protected] Nicolson Ph. 09 309 2500 E. [email protected]

David Roughan Ph. 09 435 2261 E. [email protected] Anne Shanahan Ph. 09 827 6106 or 09 827 2783 E. [email protected] Spring Ph. 09 486 1609 E. [email protected]


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Residential Capped Conveyancing Insurance

Offices Available at Chancery Chambers

Two large offices have recently become available in the centrally located ADLSI Chancery Chambers. These

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Please contact Monique on [email protected] or 09 303 5277 for more details.

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The roof garden at Chancery Chambers offers a stunning setting for events, including weddings, Christmas parties, product launches, and cocktail evenings.

Discounted rates for ADLSI members.

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Construction contracts – delays can be costly Different strokes...

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