June Construction News

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On 18 June 2020, our construction team partner Mark Crosbie joined Rick Herd, CEO of Naylor Love for the latest Property Council New Zealand's webinar ‘Building our way out of crisis’. The session explored the complexities of construction during and post COVID-19, and the importance of risk allocation.

On 24 June 2020, our construction team partner Janine Stewart and Peter Neven (industry expert) were invited by New Zealand Institute of Building to discuss the current state of COVID-19 contract issues and recalibration of the role of the engineer to the contract in the resolution of COVID-19 claims.

On 25 June 2020, our construction team senior associate Riaia Donald participated in the Legalwise webinar ‘Construction Contracts, Insolvency and Disputes', presenting a session on avoiding, managing and mitigating disputes on construction projects. She discussed conflict prevention mechanisms in three key stages of a construction project: project inception, project execution and dispute resolution during times of conflict.

Market activity

Mansons TCLM delays $500m project because of COVID-19 and changed commercial environment

New Zealand’s largest family owned commercial property developer, Mansons TCLM, was planning to develop a 12 level 30,000sqm office block on the ex-NZME site at 46 Albert Street. The project was expected to cost $500 million. However, Mansons has put the project on hold due to coronavirus and its economic effects. Mansons will only begin building after pre-leasing in this current environment. In the meantime, Mansons is currently completing multiple commercial projects in Auckland.

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Government delivers security for construction subcontractors – Salesa

The government is introducing changes to retention payments under the Construction Contracts Act 2002. These changes will provide greater certainty, more cashflow support and job security for subcontractors. The changes include new offence and penalties for companies and firms who do not comply with their responsibilities; strengthening how retention money is held to prevent it being used as working capital; and requiring holders of retention money to issue transparency statements stating how much is being held and where.

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Fletcher sued over foreign steel contracts

D&H Steel is suing Fletcher Construction for aiding and abetting Fair Trading Act breaches and breaking up a joint venture. D&H Steel had a joint venture with Culham Engineering to bid on upcoming New Zealand construction projects. D&H claims that unbeknownst to it, Fletcher introduced Culham to a foreign firm, Herrick Corporation, and they made bids on two construction projects, which Fletcher accepted. D&H alleges that Culham breached their joint venture agreement by partnering with Herrick and said its misleading and deceptive conduct was a breach of the Fair Trading Act.

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Streamlined consents to boost jobs and economic recovery

On 15 June 2020, the Government announced 11 infrastructure projects that will be fast-tracked under the new law [COVID-19 Recovery (Fast-track Consenting) Bill] to help rebuild the economy after the COVID-19 pandemic. The 11 projects range from roads to cycleways, rail upgrades, water storage and housing developments.

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Centuria renews bid for takeover of Augusta Capital

Australian property firm Centuria is lining up to make a full takeover offer for Auckland based developer Augusta Capital. Centuria initially made a takeover offer of $2 per share in January, which it ultimately withdrew due to global uncertainty regarding the COVID-19 pandemic. In May, Augusta undertook a significant equity raising, doubling the amount of stock on issue. This led to Centuria securing a 23.3% shareholding in Augusta at NZ$0.55 per share.

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Bring on the tiny house: No consents needed

Building and Construction Minister Jenny Salesa has announced that she will remove consent requirements for low-risk building work in order to free up the construction sector for higher value work. These exemptions are expected to commence at the end of August and will impact builders of portable cabins, sheds, outdoor fireplaces, verandas, small DIY projects, and even tiny houses.

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Christchurch’s metro sports facility delayed yet again, to 2022

Christchurch’s metro sports centre could be delayed by up to a year due to the effects of COVID-19. The $301 million centre will feature a 10-lane, 50 metre pool with 1000 seats for spectators, a 20m by 25m diving pool, five hydro-slides, and several indoor courts for various sports. Christchurch City Council will make a capped contribution of $148 million to the project and will own and operate the finished building.

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Auckland’s $1b Commercial Bay shopping precinct opened by PM

The $1 billion Commercial Bay Development in Auckland’s city centre opened on 11 June 2020. The retail precinct was due to open last September but was pushed back to June this year due to delays by the contractor Fletcher Construction and the COVID-19 alert level 4 lock down. The delay cost Fletcher Construction $52 million in liquidated damages. At its peak, as many as 2000 people, including subcontractors were working on the project.

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