Pre-eminent construction lawyer decodes key contract changes

Leading construction lawyer Michael Weatherall dives into the latest updates to the NZS 3910:2023 contract standard, and more

Pre-eminent construction lawyer decodes key contract changes

Simpson Grierson partner Michael Weatherall is one of New Zealand’s pre-eminent figures in construction law, and he’s made it his mission to help clients simplify what is often an overly complex area of law.

Weatherall also co-authors New Zealand’s definitive online publication in this space – Kennedy-Grant and Weatherall on Construction Law in New Zealand, published by LexisNexis New Zealand – and his expertise is frequently sought to navigate the nation's constantly evolving legal standards in construction law. In one of the most significant updates to date, 2023 saw the release of the updated NZS 3910:2023 standard form construction contract. For those navigating this change, Weatherall has released his latest updates and practical commentary in the online publication, which is available by subscription to all construction law practitioners.

Weatherall became a co-author of the publication in 2015, and he says it’s a “privilege” to be involved alongside Tómas Kennedy-Grant KC. The online commentary is regularly updated as the law around construction evolves, and Weatherall notes that the pace of change can be very fast.

“From a legal perspective, all aspects of construction law are changing month to month, let alone year to year,” Weatherall tells NZ Lawyer.  “Standard form contracts are continuously being updated, and there’s constant legislative change – and of course, the underlying law that feeds into construction law develops too.

“I don’t think the online publication can be up to date for more than a few months after release, and we always endeavour to update it as frequently as we can to keep up with the key changes.”

Developing NZS 3910:2023

Weatherall has been on the drafting committee for Standards New Zealand since 2003, and has seen the main standard form of contract undergo a number of revisions. However, he notes that 2023 saw NZS 3910 – conditions of contract for building and civil engineering construction – undergo its most substantial revision yet.

“There were some really fundamental changes this time around,” Weatherall notes.

“Since time immemorial there’s always been an engineer to the contract, and that person has always had a slightly ambiguous dual role, partly acting as a fair and impartial decision maker and partly acting as the expert adviser to and representative of the principal.

“The industry had become concerned that the distinction between these two roles was not being effectively carried out.”

One of the key decisions made by the committee was to divide all the functions of the engineer to the contract into expressly distinguished functions. In order to reinforce this distinction they elected to change the nomenclature from ‘engineer’ to two distinct roles – ‘contract administrator’ when you’re acting as the representative of the principal, and ‘independent certifier’ when you’re performing fairly and impartially.

“I think it’s something that’ll hopefully have a positive effect on the industry,” Weatherall says.

Other changes to NZS 3910 included updates to the nature of pricing, the nature of obligations between the contractor and the principal, and updates to dispute and review processes. Weatherall says that overall, the industry is well prepared – particularly as most of the changes came out of consultation as being required by the industry.

When it comes to his role as a co-author, he says contributing to Kennedy-Grant and Weatherall on Construction Law in New Zealand has given him a great vantage point as a practitioner in construction.

“Although it’s a lot of work to keep the publication and commentary up to date with industry developments, it a really great position to be in,” he explains.

“Because I was fortunate to be on the Standards New Zealand drafting committee for that standard, that enabled me to get some advance warning as to what was changing so I could update the online publication as quickly as possible.”

“The construction team here at Simpson Grierson is also reading and absorbing information on changes to the industry on a daily basis, and it’s really great to be able to pinpoint what’s significant. It’s a real highlight to be able to translate something that you’re doing in professional practice into something that has a broader benefit.”

Bringing construction law into the modern age

While the revisions to NZS 3910 mark a significant step forward, they also highlight a broader challenge for the construction law sector – the urgent need to modernise outdated legal frameworks, and embrace technological advancements.

Weatherall notes that construction contracts are currently “stuck in the old ages,” relying mostly on Word documents or pdfs, and sometimes even hand-annotated photocopies. With rapid digitisation happening across all industries and areas of law, he says construction law needs to keep up – particularly as we see an increase of tools tailored specifically to the legal sector.

“What’s happening now is the digitisation and automation of construction procurement processes, requests for proposals, requests for tender and all construction contracts,” Weatherall explains.

“The way we use Word documents is one of the worst things in construction contract preparation. Someone will just cut and paste from a previous project, and that contract will have lots of irrelevant conditions. It could be 50 pages of special conditions, less than half of which you actually need.”

Weatherall says that contract automation in the construction sector is going to have a “huge impact,” and will allow contract and procurement documents to be prepared quickly and accurately. Lawyers will also be able to easily select the special conditions which are relevant to the project at hand, eliminating chunks of unnecessary and irrelevant text.

He notes that the flow-through of documents to other parties in a project will also be impacted. If you have 100 subcontractors on a project, you’ll be able to have a contract that’s automatically populated with all the relevant information and easily tailored to each individual.

“It’s going to revolutionise the process for everyone, whether you’re a principal, contractor, subcontractor or consultant” Weatherall says.

Ultimately, Weatherall highlights that simplicity is key for all construction lawyers – old and new. He notes that clients are looking for solutions, not overly dense contracts with irrelevant conditions, and lawyers need to be prepared to give the industry what it wants and needs.

“Construction is a great industry to be involved in, it’s a fascinating and multi-layered industry,” Weatherall says.

“You’re getting involved in an industry that’s worth hundreds of billions of dollars in New Zealand alone.  My advice would be to remember that you’re part of a solution focussed construction sector that’s looking for lawyers to deliver solutions as well. Make yourself a specialist in doing that, rather than delivering long-winded legal advice or bloated contracts. Embrace it, but also embrace what the industry wants.”

Customers subscribed to “Kennedy-Grant and Weatherall on Construction Law” can gain access to practical commentary on the new NZS 3910:2023 contract standard, as well as the latest legislative and case law developments, written by two of New Zealand’s pre-eminent construction lawyers Tómas Kennedy-Grant KC and Michael Weatherall.

Download the Free Checklist to verify you’re up-to-date with the new edition of New Zealand’s most used standard form construction contract: NZS 3910:2023 Conditions of contract for building and civil engineering construction.

If you’re a lawyer specialising in construction law, this checklist will help you verify that you're fully informed about the changes in the new contract standard, enabling you to provide your clients with the most current advice.

For construction industry professionals, the checklist outlines the most significant changes from the previous version, assisting you in staying current with industry requirements and maintaining excellence in your profession.

Download the NZS 3910:2023 FREE Checklist by clicking HERE and submitting the form.

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