Zealanders are capable of conducting DIY (do-it-yourself) repairs, maintenance
and redecorating to their homes. However, it is important to be aware of the
restrictions, standards and possible penalties imposed by law.
Under the Building Act 2004 ('the Act'), all building works (whether
construction, alteration, demolition or maintenance of new and existing
buildings) must comply with the Building Code. Whether you intend to
do-it-yourself or engage a professional, all building work must comply with
the minimum level of standard imposed by the Building Code.
Before doing any alterations or renovations, it is crucial that you check with
your local council to see whether a building consent is required for what you
have in mind.
Under the Act, there are certain building works that may be carried out
without obtaining a building consent. Schedule One of the Act provides a
detailed list of exempted works. Popular examples include: building a patio or
deck at ground level or garden trellis less than two metres high, replacing
spouting or a piece of weatherboard, building a small garden shed, or
replacing a hot water cylinder.
It is important
to note that building works exempted under the Act may not be permitted if
that building work is in breach of any other act. For example, there is a
limited amount of electrical and plumbing work you may complete without a
qualified electrician or plumber and gas fitter.
If the intended building work is not exempt under the Act, then it is likely
that these works will be restricted building works and a building consent must
be obtained and the work carried out or supervised by a licensed building
practitioner. In those circumstances, it is recommended that you inform your
insurance provider of the proposed work.
Popular examples of restricted building works include: structural building
(additions, alterations, re-piling and demolition), plumbing and drainage
(except repair and maintenance of existing components), relocating a building,
installing a wood burner or air-conditioning system, building a retaining wall
higher than one and a half metres, fences or walls higher than two metres, all
swimming pools and their associated fences, and decks, platforms or bridges
more than one metre above ground level.
Inside this edition
Extended Warranties And The Consumer Guaranteed Act: Are You Throwing Your
Construction Contracts Amendment Bill
America's Cup: Battles Off The Water
Challenging The Terms Of a Will
Your Position As Supplier - Is Your Product At Risk?
circumstances, you are able to claim an exemption as an owner-builder to carry
out restricted building work on your own home when
you apply for a building consent. To be considered an owner-builder, you must
live in or be going to live in the home, carry out restricted building work to
your own home yourself, or with the help of unpaid friends and family members,
and have not carried out restricted building work to any other home within the
previous three years under the owner-builder exemption.
Failure to adhere to the Act could result in a fine of up to $100,000, plus up
to $10,000 for each day the offence continues. You could also be forced to
pull down or make changes to the home or building. Furthermore, the sale of
the home or building at a later date could be impacted at the owner's cost due
to the vendor's warranties provided under the current REINZ/ADLS Agreement for
Sale and Purchase of Real Estate.
You are buying a
shiny new top-of-the-range television with a two year warranty. The
salesperson asks if you would like an extended five year warranty for only
$249.95 extra. Sounds sensible, right?
WARRANTIES IMPLIED BY LAW
Many consumers do not realise the Consumer Guarantees Act 1993 ('the Act')
already provides most of the extra protection that they have been offered
under an extended warranty. If you purchase consumer goods or services for
personal, domestic or household use the Act imposes several warranties or
guarantees on the vendor. In particular, the vendor guarantees that the goods
sold match their description, are fit for their purpose, are of acceptable
quality and will last for a reasonable time having regard to the price.
Similarly, any services you purchase must be fit for their purpose, be
completed in a reasonable time, be provided with reasonable care and must be a
Consider your new television. Would the ordinary, reasonable consumer consider
that a shiny new top-of-the-range television would be free from defects or
suitably durable to last five years? Ten years? If so, it's possible that the
additional warranty you have been offered is not as valuable as it appears.
BREACH OF WARRANTY
As an example, let's say you bought a television and chose not to buy an
extended warranty. Three years later it stops working, and the vendor wants to
charge you to replace the failed LCD controller because the television is out
of warranty. What now?
You may need to demonstrate that it is reasonable for you to expect your
television to last more than three years (and that the failure was not caused
by you). It should then follow that the television could not reasonably be
considered durable enough - a breach of a warranty implied by the Act. You
should then be entitled to require the vendor to remedy the failure.
If it can be fixed the vendor must repair or replace the
product within a reasonable time, or provide a full refund. If a remedy is not
timely, if the failure is of a substantial nature or if the product is not fit
for its stated purpose (or not fit for the purpose you specifically discussed
with the salesperson) then you may be entitled to reject the product and
require a full refund, replacement, or obtain damages in compensation from the
If a vendor does not agree with you, you may need to present your case at the
Disputes Tribunal to enforce your rights under the Act.
While each case is decided on its particular facts, two examples are noted in
particular: in 2009 a fridge-freezer was ruled not to be of acceptable quality
when its compressor pump failed after seven years - a full refund was given.
In contrast, in 2010 a four year old motor scooter with a failed base gasket
was ruled to be of acceptable quality because the damage probably occurred
because the annual services were not completed in accordance with the
manufacturer’s specifications - screws on the base gasket should have been
checked and tightened.
Contracts Amendment Bill ('the Bill') proposes some significant changes to the
Construction Contracts Act 2002 ('the Act'). The Act's purpose was to reform
the law relating to construction contracts, particularly with regard to how
and when payments are made by a party to a contract, dispute resolution, and
remedies for recovery of payments under a construction contract. The Bill now
seeks to deal with new issues that have arisen since the Act was passed, and
three of the proposed changes are summarised in this article.
Removal of the distinction between residential and commercial construction
contracts - this change would mean contractors party to a residential
construction could also require progress payments, and suspend work where
payments are not made.
Removal of this distinction would give any successful party in an adjudication
relating to a residential construction contract the right to apply to have the
adjudication determination entered as a judgment in the District Court. Under
the current Act enforcement in this situation can be difficult.
When sending a payment claim, relating to a progress payment to any consumer,
a contractor would have to provide a notice outlining the process for
responding to a payment claim, and the effect of not doing so. At present this
is only required where the consumer is a residential occupier. Law Society
submissions on the Bill supported such an approach for payment claims, and
noted the general lack of knowledge within the construction industry about a
contractor's notice obligations.
Reduced timeframe for opposing adjudication determinations - at present, a
party to a construction contract has 15 working days to make an objection to
an adjudicator's determination being entered in the District Court as a
judgment. In order to improve cashflow efficiency in the construction
industry, the Bill proposes to reduce this time period to five working days,
to provide parties with faster access to enforcement and relief.
of the definition of "Construction Work" - the Bill proposes that the
definition of "construction work" be extended to include design,
architectural, engineering and quantity surveying work. In the past there have
been issues relating to some construction work falling outside of the scope of
the Act. Some submissions on the Bill have called for greater clarity around
this change, with suggestions that the Bill go further and define "design,
architectural, engineering and quantity surveying work". There has also been
concern as to whether the new definition would actually avoid the issues it is
looking to prevent.
It will be interesting to see the conclusions reached in the Select Committee
report on the Bill due on 11 December 2013, and what amendments are suggested
in light of submissions. In any case, it is apparent that contractors need to
be aware of their obligations, and consumers and contractors alike need to be
aware of their rights, as well as any restrictions on these, when it comes to
entering into a construction contract.
On 25 September
2013, Oracle Team USA completed a comeback against Emirates Team New Zealand,
from an 8-1 deficit, to clinch the 34th America's Cup in San Francisco.
Oracle won 11 races on the water in all, overcoming a
two point penalty imposed by the International Jury on 3 September 2013. In
the end the penalty didn't decide the winner; but it easily could have. When
Oracle became the first to win nine races it was speculated that had Team NZ
won at that point, Oracle would appeal the Jury decision
the Cup would once more become embroiled in the court
room battles it is now famous for.
It would not have been the first time New Zealand was involved in a legal
stoush over the Cup. In 1987, Michael Fay's challenge on behalf of the Mercury
Bay Boating Club ended up in the New York Supreme Court. Mercury Bay won the
right to challenge, but unfortunately did not win the race. The San Diego
Yacht Club (represented by Dennis Conner) was ordered by the Court to meet the
challenge on the water. However, as the parties had not agreed to any rules,
Dennis Conner entered a catamaran and easily won. Mercury Bay brought the case
back to the Court to disqualify the catamaran. Initially this proved
successful and it was awarded the Cup. However, on appeal the decision was
In reaching its decision the NY Court of Appeals strictly interpreted and
applied the terms of the Deed of Gift, the founding document that established
the competition after the race around the Isle of Wight in England in 1851.
The Deed sets out default rules for future races if the parties cannot agree.
In the Mercury Bay case however, the Court found that the Deed did not specify
the type of yacht and on this basis decided the catamaran was legal. On the
back of this decision in 2010, when Alinghi and Oracle could not agree on the
rules for the 33rd America's Cup, they also adopted multihulls.
In every other
America's Cup the parties have been able to agree on the rules, which are
known as the Protocol. In San Francisco the Protocol extended to establishing
the International Jury, as an arbitral body, to determine any disputes that
may arise. These rules provide that any decision of the Jury is final and
binding and that if a party refers a dispute to a court rather than the Jury,
it would be ineligible to compete.
These provisions effectively removed Oracle's ability to appeal the penalties
that had been imposed.
However, Oracle's concern was that members of the Jury that had investigated
the cheating allegations had also decided the case. This was arguably a breach
of due process and although the Jury was entitled to decide its own procedure,
as an arbitral body, the procedure could have been challenged if it breached
the applicable US law. While it was unlikely, if that had occurred, for the
Court to substitute its own decision for that of the Jury, it is possible the
Court could have referred the case back to the Jury to adopt a conforming
procedure and decide the matter again. If that had happened, it would have
left the Jury ultimately responsible for deciding the winner of the Cup.
The death of a loved one can be traumatic. Feelings of grief
can be compounded when the Will is read and someone who was close to the
deceased feels that they have been 'left out'.
In some circumstances the provisions of a Will can be challenged, although
there are strict timeframes that can only be extended in limited
circumstances. Consequently, it is important that you speak with your lawyer
as soon as possible if you have any concerns with the provisions of a Will.
While some people may feel uncomfortable with challenging a Will, it is
important to remember many people do not keep their Wills up to date. It is
not uncommon to find an older Will which has led to unintended consequences.
For example, an out of date Will might not properly provide for someone who
had recently become important in the Will-maker's life, or a gift in a Will
might fail because the property was sold not long after the Will was signed.
Some of the ways a Will can be challenged are summarised below.
CAPACITY AND UNDUE INFLUENCE
The Will-maker must have had sufficient mental capacity to make a Will and it
must reflect his or her wishes. If the Will-maker did not understand what they
were doing, did not have sufficient mental capacity to deal with their estate
or were pressured to enter into or change their Will, the court may be able to
set aside the Will.
FAMILY PROTECTION ACT
The Family Protection Act 1955 allows certain family members to make a claim
against the deceased's estate if they believe that there should have been
further provision made for them by virtue of their relationship with the
The Property (Relationships) Act 1976 allows the spouse or partner of the
deceased to make a choice - they can either take under the Will, or they can
choose to divide the estate in accordance with the Act.
Dividing the estate means the spouse or partner will renounce all benefits
they would otherwise have received under the Will, and instead, that part of
the estate that was relationship property will be divided in a similar way as
if the relationship had ended prior to death.
Claims under the Law Reform (Testamentary Promises) Act 1949 are less common.
If work or services were provided to the deceased, and the deceased in return
promised that they would reward that work or service with a gift in their
Will, and did not do so, this Act allows that promise to be enforced.
Challenging a Will is not necessarily about usurping what was intended. In
some circumstances it can be about giving effect to what the Will-maker would
have wanted, but did not provide.
This issue emphasises the importance of regularly reviewing your Will and
discussing it with your lawyer to ensure that at all times it accurately
reflects your wishes.
Position As Supplier - Is Your Product At Risk?
Some businesses supply their
product to shops on credit and are paid later; sometimes only once the product
Problems arise if the shop is then
unable to pay its debts, or worse, goes under having sold the products without
having paid the supplier. Without proper protection the supplier may be just
another unsecured creditor - unable to get the product back and unable to be
Properly drafted Terms of Trade help protect your position as supplier. They
can ensure you retain a security interest in, and ownership of your product
until it has been paid for.
A vitally important, and often overlooked step, is to then register your
security interest with the Personal Property Securities Register (PPSR), prior
to dealing with each shop. This elevates your security interest meaning you
are more likely to recover your stock or funds owed to you if a shop goes
Cancelling A Conditional Contract
Most house buyers enter into
conditional agreements. For example, the current REINZ/ADLS Agreement includes
(if selected) a Builder's Report condition, which allows the purchaser to
cancel, if on an objective assessment, they do not approve a Builder's Report.
However, a condition does not of itself grant a purchaser a right to cancel.
The Agreement specifically requires each party to do all things reasonably
necessary to satisfy a condition that is for their benefit.
the example of the Builder's Report condition, the purchaser must disclose the
specific reasons for cancellation and there can at times be disagreement as to
just what would be an objective assessment of the Builder's Report for the
purposes of cancellation.
It is important to note that you are not entitled to cancel a conditional
contract simply because you change your mind.
If you have any questions about the newsletter items,
please contact me, I am here to help.
Scannell & Co - 122
Queen Street East, Hastings
(06) 876 6699 Fax: (06) 876 4114 Email:
information in this newsletter is to the best of the authors' knowledge true
and accurate. No
liability is assumed by the authors, or publishers, for any losses suffered
by any person relying directly or indirectly upon this newsletter. It
is recommended that clients should consult S J Scannell & Co before
acting upon this information.
S J Scannell & Co
Would like to wish
you and your family a Merry Christmas and prosperous New Year
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