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CONSTRUCTION LAW
Introduction
Sr Juwita Radzi PQS, PMP
Master in Project Management – University of Malaya (2012)
Bachelor in Quantity Surveying – University of Malaya (2002)
Bachelor of Jurisprudence (External) – University of Malaya (2019)
Certificate in Adjudication – Asian International Arbitration Centre (2017)
Certificate in Project Management Professional – Project Management Institute (2014)
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What are we going to do?
• Understand what is construction law.
• Briefly look at the source of laws in New Zealand.
• Gain basic understanding on the doctrine of ‘judicial precedent’.
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Construction law
Definition
Areas of construction law
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Construction law – Definition
• There is no single universally accepted definition of construction law.
• Construction law = Combination of all law areas that apply to
construction work (architectural, engineering and construction, aka
AEC).
• Not only reflected in the regulations imposed by the ruling party, but
also in the terms that bind contracts, law of torts and many other
areas of laws.
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Construction law
Retrieved from: https://unsplash.com//photos/construction
Retrieved from: https://pixabay.com/images/search/construction%20works/
What are the areas of law you can think
of when you look at these photos?
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Areas of construction law
Contract law
This include main contracts, subcontracts,
NSCs, contracts with suppliers, consultancy
contracts, etc.
Tort
Relates to duty to take care and obligations
will be imposed on parties even when
there is no contract between them.
Workers compensation
Compensation for construction workers in
the event of accidents which results
injuries, permanent disabilities and death.
Land law
This include land acquisition, land zoning,
and matters related to land sale and
purchase.
Occupational safety and health
Compliance with the nations OSH
regulations. Fines and penalties may be
imposed for non-compliance.
Insurance law
Will apply with the types of insurance
purchased by companies to manage risks like
fire, act of god, workmen compensation, etc.
Planning and approvals
Dispute resolution
Process to resolve dispute between parties
in construction projects. Can be either
informal or formal.
Relates to governmental approval for
construction works to start and proceed.
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Sources of law
General sources of law
Hierarchy of courts
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Sources of law
SOURCES OF LAW
Unwritten law
Decisions
made by the
courts
Common
law
Written Law
Acts by the
Parliament
Regulations,
bylaws, subordinate
legislations
Equity
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Sources of law
Laws enacted by the Parliament:
• The statutes enacted by the Parliament will be applied in
automatically, based on the authority conferred by it and subject to
any limitation as set in the statute.
Decisions made by the court:
• A source of law where the court plays an interpretive role (and
sometimes creative role) when deciding cases.
• In common law countries such as New Zealand, the doctrine of
binding judicial precedent (stare decisis) will apply when an issue has
been previously brought to the court and a ruling already issued.
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Sources of law – Hierarchy of courts in New
Zealand
Superior
courts
Specialist
courts
Specialist
courts
Inferior
courts
Source: Retrieved from https://www.courtsofnz.govt.nz/about-the-judiciary/structureof-the-court-system/diagram
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Doctrine of judicial
precedent
What the doctrine is all about
Examples
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Doctrine of judicial precedent
• Doctrine of judicial precedent or doctrine of binding precedent (stare
decisis in Latin) simply means 'to stand by things decided'.
• In other words, it means the decision made in past will be binding in
future.
• Reason = To promote stability in court decisions, to ensure
consistency and to increase the predictability of the case outcomes/
decisions.
• Basic foundation = Cases with similar facts (F) to those in
the relevant binding precedential case (R) should have a similar
outcome (C)
F+R=C
Retrieved from:
https://giphy.com
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Doctrine of judicial precedent
• Ratio decidendi = The principle of
law on which a decision is based.
Ratio
decidendi
COURT
DECISION
Obiter
dictum
• Obiter dictum = The judge’s
expression of opinion uttered in
court or in written judgement.
• What binds?
 RATIO DECINDEDI
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Doctrine of judicial precedent
• This doctrine can operate both HORIZONTALLY and
VERTICALLY.
• An example of how this doctrine works VERTICALLY is
shown in the Example A (scenario 1 and scenario 2 on
deciding cases with vague terms).
• The VERTICAL OPERATION is MANDATORY, i.e. the lower
courts have no choice but to follow whatever had been
decided by the superior courts.
Retrieved from:
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https://giphy.com
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Doctrine of judicial precedent
• HORIZONTAL operation is less rigid.
• In HORIZONTAL operation, a court can opt to follow its own previous
decision or depart from its own previous decision.
• The keyword here is 'ITS OWN PREVIOUS DECISION‘, not decision
made by others. What does this mean?
• Refer to the example in the following page for more.
Retrieved from:
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https://giphy.com
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Doctrine of judicial precedent
Supreme
Court
Vertical
operation
(MANDATORY)
High
Court 1
Court of
Appeal
High
Court 2
High
Court 3
Horizontal operation (Discretionary)
High
Court 4
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Doctrine of judicial precedent:
EXAMPLE A
Scenario 1 (Supreme Court)
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A Supreme Court in case A held that a contract with a vague term was void.
Fact = Vague contract term
Relevant legal principle = Contract law and contract interpretation
Conclusion = A contract with a vague term was void
F+R=C
Scenario 2 (High Court)
• A High Court, when deciding a new case (case B) on contract with vague terms, will use the
decision made by the Supreme Court in scenario 1 above to guide their decision.
• Fact = Vague contract term
• Relevant legal principle = Contract law and contract interpretation, as deliberated in the
Supreme Court in scenario 1.
• Conclusion = Following the decision in the Supreme Court, the High Court held that a contract
with a vague term was void.
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Doctrine of judicial precedent
Important Note:
• The High Court in scenario 2 above CANNOT DEPART from
the Supreme Court's decision.
• In other words, the High Court MUST follow the decision
made by the Supreme Court on 'vague contract terms'.
• The High Court HAS NO CHOICE BUT TO FOLLOW the legal
ruling as decided by SUPERIOR COURTS.
Retrieved from:
https://giphy.com
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Doctrine of judicial precedent
• The HORIZONTAL operation may not happen all the time, because
horizontally, courts are likely to follow the decisions made by fellow
judges from the same court level OUT OF RESPECT.
• It is NOT WRONG for the court to depart from the decision made by
other courts of the SAME LEVEL.
• Refer to the example in the following page for more.
Retrieved from:
https://giphy.com
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Doctrine of judicial precedent:
EXAMPLE B
Scenario 1 (Auckland High Court)
• The Auckland High Court in case X held that loss of profit due to a contract breach by the defaulting party is
to be defined as a 'direct loss' and this gives rise to a right for the innocent party to claim damages.
• Fact = Damages for loss of profit.
• Relevant legal principle = Loss of profit related to the work is a ‘direct loss’
• Conclusion Loss of profit is a direct loss, hence the innocent party has a right to claim damages.
F+R=C
Scenario 2 (Wellington High Court)
• The Wellington High Court in case Y held that loss of profit due to a contract breach by the defaulting party
is to be defined as a 'direct loss' and this gives rise to a right for the innocent party to claim damages.
• Fact = Damages for loss of profit.
• Relevant legal principle = In this case, the Wellington High Court decided to follow Auckland High Court’s
ruling i.e. loss of profit related to the work is a ‘direct loss’. The Wellington High Court does not have to
follow, but they followed it nonetheless out of respect.
• Conclusion = Loss of profit is a direct loss, hence the innocent party has a right to claim damages.
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Doctrine of judicial precedent:
EXAMPLE C
Scenario 1 (Supreme Court)
• A Supreme Court in case X held that loss of profit due to a contract breach by the defaulting party is to
be defined as a 'direct loss' and this gives rise to a right for the innocent party to claim damages.
• Fact = Damages for loss of profit.
• Relevant legal principle = Loss of profit related to the work is a ‘direct loss’.
• Conclusion Loss of profit is a direct loss, hence the innocent party has a right to claim damages.
F+R=C
Scenario 2 (Supreme Court)
• A Supreme Court in case Z held that loss of profit due to a contract breach by the defaulting party is to
be defined as an 'indirect loss' and therefore the innocent party has no right to claim damages.
• Fact = Damages for loss of profit.
• Relevant legal principle = In this case, the Supreme Court decided NOT to follow its own previous
ruling. In this case, the Supreme Court brought in new legal principles and reasoning, and found
that loss of profit even though it is related to the work, is NOT a ‘direct loss’.
• Conclusion = Loss of profit is an indirect loss, hence the innocent party has NO right to claim damages.
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Doctrine of judicial precedent
Important Note:
• Take note that in both scenarios in Example C above, the decisions
were made by the same court, i.e. the SUPREME COURT.
• In the example, the Supreme Court can choose either to follow its
previous decision or create a new decision.
• As you can see, the Supreme Court made 2 different holdings on
cases with similar facts (damages for loss of profit).
• Can this be done? YES.
Retrieved from:
https://giphy.com
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Doctrine of judicial precedent
Effect of decisions made by the UK/ English
courts:
• Only persuasive authority.
• Not legally binding to New Zealand.
Effect of decisions made by the Australian
courts/ other Commonwealth countries’
courts:
• ???
• What do you think?
Source: Retrieved from http://insights.btoes.com/business-transformation-operationalexcellence/driving-your-employee-engagement.-what-do-you-think
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THE END
Introduction
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