Dispute resolution options
Disputes are not unusual in construction and property development, and they need to be resolved quickly, cost effectively, and fairly.
Parties involved in a dispute should attempt to resolve it themselves (known as self-resolution). Issues can often be resolved by talking the problem through and reaching an agreement or compromise.
Some of the benefits of self-resolution are:
- It can prevent the dispute escalating;
- It can preserve the relationship between the parties;
- It can prevent future disputes from occurring – or enable them to be resolved more quickly;
- It can be the quickest and cheapest means of resolving a dispute.
There are three simple steps to self-resolution of a dispute:
- Check your facts
- Record any agreement in writing.
Check your facts
Review the written contract. If the dispute is in regards to payment – are the provisions of the Construction Contracts Act 2002 (the CCA) being followed? I.e. should you be issuing a payment claim/payment schedule?
When it comes to discussing a problem with each other, these tips may help:
- Talk with the other party as soon as possible if you have a concern – ignoring a problem is not going to make it go away;
- Be available to each other and do not ignore attempts from the other party to contact you;
- Express your views clearly and listen with an open mind to what the other party has to say;
- Try to understand the other party’s point of view;
- Check that you and the other party both understand what the concern is;
- Come up with a range of options to resolve the matter including possible compromises;
- Set realistic goals for reaching an agreement;
- Keep talking and listening regardless of whether a mutual solution can be reached;
- It is always possible to set another time to continue negotiations if the issues are not resolved straight away;
- Stick to the issues and be respectful, especially when leaving voicemail, text messages, or sending emails. This will avoid creating unnecessary ill-feeling towards one another due to a hasty, poorly worded message.
Record any agreement in writing.
While most verbal or ‘hand-shake’ agreements are binding, it is important to ensure that key issues are accurately recorded in writing. Some advantages of doing this are:
- it provides a means of checking that the parties have agreed on the key issues;
- it provides a means of ensuring that details of what has been agreed to can be recalled at a later time;
- it prevent future disputes by clearly outlining what has been agreed to;
- it provides a means of confirming closure to a dispute;
- it makes enforcement easier if the agreement is not adhered to.
Adjudication is a unique dispute resolution process set out in the CCA. It applies to all construction contracts whether written or oral, even if there are no dispute resolution provisions in the contract terms.
Any dispute under a construction contract (i.e. not just payment disputes) may be referred to adjudication under the CCA.
The intention of the CCA is to facilitate regular and timely payments, to provide for speedy and cost-effective dispute resolution, and to provide remedies for recovery of payments.
Information on the adjudication process through your legal advisor or an authorised nominating authority approved by the Minister for Building and Construction under section 65 of the Construction Contracts Act 2002.
The Arbitrators’ and Mediators’ Institute of New Zealand Inc (AMINZ) is an authorised nominating authority under the CCA.
Formerly known as the Small Claims Tribunal, this may be an appropriate forum for minor non-technical disputes.