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Alert Level 4 construction contract advice

19 Aug 2021


A number of members have sought guidance on how to address the present Alert Level 4 lockdown under their contracts. CCNZ has checked with Dentons Kensington Swan and set out some guidelines below.

Ultimately, what you can recover by way of a Variation or time extension comes down to what the provisions in your contract say. As a first step check these provisions, including any special conditions of contract and notice requirements.

Subject to amendment by the Special Conditions you should consider whether you can make claims as follows:

  1. For contracts entered into pre the first major lockdown – you may be able to claim a Variation under the Change of Law provisions (clause 5.11.10) and suspension provisions (clause 6.7.3). Time extensions can generally be sought under 10.3.1(a) (net effect of a Variation) and/or 10.3.1(f) (circumstances not foreseeable at the time of entering into the contract and not due to the Contractor’s default).

  2. For contracts entered into after the last lockdowns – check your special conditions. It is quite likely that specific COVID-19 or pandemic clauses have been drafted and will apply. If there is no specific COVID-19 or pandemic clause, then seek a Variation and/or time extension under the same grounds as at 1, but note that this may be more challenging. This doesn’t mean you don’t have a claim and the safest thing is to get a claim in so that the issue can be debated later.

Finally, and for completeness, we set out below a reminder of the meaning of essential services under Alert Level 4. 

  • At Level 4, building, construction, and maintenance services are considered essential if required for 1 or both of the following:
    - to address immediate risks to health and safety; or
    - nationally important infrastructure

During the last Level 4 lockdown, the Government issued guidance on how to identify whether building and construction work met the essential business definition and was therefore allowed to continue: 

a. Is the work required immediately to ensure the continuation of an essential service, or prevent the failure of an essential service?
b. Is the work required immediately to ensure health safety and wellbeing of people, or avoid significant environmental harm? 
c. Is the work you are performing the bare minimum required to meet the criteria above?

The full MBIE guidance is located here: https://www.building.govt.nz/covid-19/essential-business/#jumpto-essential-business-definition.

If you have any queries contact Paul Buetow or Stuart Robertson at Dentons. They can discuss your present situation and provide advice.

CCNZ members can access 15 minutes free legal advice from Dentons Kensington Swan as part of our Core Associate agreement. If you wish to access the 15 minutes free service, please contact CCNZ Membership & Events Manager Eve Cooper.

When contacting Eve please include the legal issue you wish to discuss with Dentons Kensington Swan so they can assign the applicable team member to your issue who will then make contact with you. Please ensure you have all your questions and documentation ready to make the most of your free helpline.

 

 

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