Negotiation is a crucial component of any mediation process, whether it involves resolving a commercial dispute, a business transaction, or any other type of conflict. Mediation can be a powerful tool for finding common ground and reaching a resolution that satisfies all parties involved. However, successful mediation requires effective negotiation skills. In this article, we will explore some of the most important negotiation tips for mediation.
Tip 1 – Know your goals and priorities
Before entering into mediation, it’s essential to have a clear understanding of your goals and priorities.
What is it that you hope to achieve through the mediation process?
What are your non-negotiables?
What concessions are you willing to make?
Understanding your goals and priorities will help you stay focused during the mediation and avoid getting side-tracked by minor details.
Tip 2 – Focus on interests, not positions
One of the most important negotiation tips for mediation is to focus on interests, not positions. In other words, do not get bogged down in the specifics of what each party wants. Instead, try to identify the underlying interests and motivations that are driving each party’s position. By understanding the interests at play, you may be able to find creative solutions that meet everyone’s needs.
Tip 3 – Listen actively
Active listening is critical during any negotiation, and mediation is no exception. Make sure to listen carefully to what the other parties are saying and ask clarifying questions if needed. By actively listening, you can gain a better understanding of the other party’s interests and priorities and find common ground.
Tip 4 – Build rapport
Building rapport with the other parties can help create a positive and productive atmosphere for mediation. Be friendly and respectful and try to find common ground outside of the dispute at hand. Building rapport can help establish trust and encourage the other parties to be more open to negotiation.
Tip 5 – Use objective criteria
Using objective criteria, such as industry standards or legal precedents, can help remove the emotion from the negotiation and create a more rational basis for decision-making. When both parties agree on objective criteria, it can be easier to find common ground and reach a resolution that satisfies both parties.
Tip 6 – Explore alternatives
If negotiations reach a deadlock, it is essential to explore alternative solutions. Mediation offers an opportunity to be creative and think outside the box and to brainstorm alternative solutions that may not have been considered before mediation. It is important for the parties to be open to compromise.
Tip 7 – Keep an open mind
Finally, it’s essential to keep an open mind during mediation. Be willing to consider different perspectives and ideas and be open to changing your own position. The best way to achieve this is to become curious about the other perspectives shared in mediation, by asking open questions and seeking further explanations. By keeping an open mind, you can find unexpected solutions and reach a resolution that satisfies everyone.
Conclusion
In conclusion, mediation is a powerful tool for resolving conflicts, and requires effective negotiation skills. By keeping these negotiation tips in mind, you can increase your chances of a successful mediation and find a resolution that satisfies all parties involved.
How can you find out more?
At Norling Law, we are passionate about solving commercial disputes and legal issues.
We offer professional, independent, and impartial mediation services to users in a dispute. Norling Law supports mediation as an efficient way of solving legal issues. Especially if the parties to the dispute want a negotiated outcome that remains private and confidential and puts a prompt end to the costs of having the dispute ongoing.
As mediators and representatives, we assist the users to a mediation achieve their priorities throughout the mediation process and enable them to make informed decisions regarding the resolution of the disputes they are involved in.
At Norling Law, we receive a large number of commercial disputes. Commercial disputes can be extremely stressful and can often be suitable for mediation. The parties may have been negotiating directly to reach a solution that would meet the interests of both parties. However, the parties often find it difficult to reach agreement.
Using mediation is an option that could potentially resolve commercial problems quickly and efficiently. Mediation is a low-cost option to consider before deciding on whether to litigate. Traditional mediation is usually a more expensive process as it involves the users meeting physically and there are resulting costs involved with travel and booking a neutral meeting room (or rooms). Sometimes traditional mediation might not be available at all for urgent matters.
Wendy Alexander can effectively assist users of mediation with her extensive experience as a commercial mediator. Wendy completed training at Program on Negotiation at Harvard Law School, USA and the AMINZ. Wendy is also an Associate Member of AMINZ. This training complements the skills she already has in negotiation and dispute resolution.
If Wendy’s expertise can be of assistance, the first step is to send us the details of the situation here.
Any undertaking to perform construction work must come with a time for such work to be completed. This obligation could be expressly stated in the contract, or it can be implied. If the contractor fails to complete its work on time, the contractor may be in breach of contract and may become liable to the principal in damages, if the principal is able to prove it has suffered losses as a consequence of the contractor’s breach.
Most standard form contracts make provision for a set date by which the work is to be completed. If the contract is not properly completed to include a start and completion date, then the contractor’s obligation would be to complete the work within a reasonable time.
Express completion date
Where the completion date is expressed in the contract, the contractor is not entitled to seek as of right an extension unless there is an extension of time clause in the contract allowing the stated time to be altered. Commonly, these clauses provide that the contractor is entitled to an extension of time due to an event that occurs which causes delay and for which the contractor is not at fault.
Most contracts express what the contractor is entitled to claim an extension of time for. This could be additional works, variations that the contractor is required to perform, or an unforeseeable event such as COVID-19, or a force majeure event such as the recent flooding New Zealand experienced. For example, the NZIA SCC 2018 contract provides that the contractor is entitled to an extension of time under the following circumstances:
A delay in the issue of a consent or approval that the principal had to obtain.
Unforeseeable physical conditions on site which materially differ from the physical conditions which an experienced contractor should have reasonably seen at the time of tender. They do not include climatic conditions on the site.
The contract works are suspended in a way allowed under the contract.
The architect does not give a direction within a reasonable time after being asked by the contractor in writing to do so.
The principal does not supply materials, work or services on time.
A separate contractor’s act or omission.
In order to claim an extension of time, contractors must ensure that they follow the process set out in the contract in seeking to extend the deadline. This may include providing relevant information to the principal to support the claim.
It is common for contractors to make claims for an extension of time late and they are often poorly documented. Contemporary evidence of matters that give rise to a delay are the best source of evidence to support a claim for an extension of time. This could include, inter alia, instructions, communications between the parties, site notes, photographs, minutes of meetings, and timesheets. Any approval should be in writing to prevent disputes.
Other instances
Where there is no express contractual right to extend time, or where the clause does not apply in the claimed circumstances, a stated time for completion would be replaced by a reasonable time for completion, if:
The parties agree.
If the principal waives the obligation to complete by the stated date.
If the principal prevents completion within the stated time by some act or omission caused by the principal.
Prevention principle
The latter is also known as the prevention principle. It is based on a common law rule that creates an implied obligation on a contracting party to not impede another contracting party from achieving a condition that some contractual outcome or benefit depends on. In the context of construction contracts, where a party to a construction contract has been prevented from fulfilling its contractual obligations as a result of the conduct of the other party, the preventing party cannot insist upon strict contractual times for performance.
If the prevention principle applies, time in the contract becomes “at large” and is replaced by whatever is reasonable in the circumstances. What is reasonable depends on the circumstances of each case such as the nature of the work, the necessary time to do the work and the ability of a reasonable contractor to perform. The prevention principle does not prohibit the contractor from seeking damages against the principal.
Additionally, if time is “at large”, the principal cannot rely on its entitlement to liquidated damages. However, the principal is able to claim for actual damage suffered if the contractor fails to achieve practical completion within a reasonable time.
Peak Constructions (Liverpool) Limited v McKinney Foundation Limited
In Peak Constructions (Liverpool) Limited v McKinney Foundation Limited (1970) 1 BLR 111, Peak was contracted to build a 14-storey block of flats. The piling works were subcontracted to McKinney. The completion date was 17 February 1966. McKinney completed the piling work in July 1964. In October 1964, defective work was discovered due to a negligent work by McKinney. The principal delayed issuing instructions to proceed with the rectification work until August 1965. Once issued, McKinney commenced rectification works promptly. Six of the 58 weeks of delay were taken by McKinney for the rectification work.
The English Court of Appeal held that it was not reasonable to hold McKinney responsible in damages for the entire 58-week delay. Where acts of the principal have prevented completion, the only way to preserve the principal’s right to liquidated damages is for the contract itself to allow the date for completion to be extended for those very acts. As no extension of time had been granted for the principal’s delay, there was no date under the contract to measure McKinney’s liability to pay liquidated damages and therefore, none was payable.
Summary
The purpose of extension of time regime is to allocate risks and responsibility between the parties to the contract.
Generally, the causes of delay can be classified into one of the following categories:
Caused by the principal.
Caused by the contractor.
Caused by factors outside of the control of either party.
When negotiating the terms of a construction contract, it is important that the party best able to control the relevant risk should bear the time and cost consequences of delay. Failure to do so could result in unintended consequences.
Contact us if you have experienced delays in your construction project. Our lawyers at Norling Law can review your delay circumstances and discuss strategies on how to progress your project as part of our no obligation legal consultation. To book a free 30-minute consultation please click this link.
What is a contractor’s entitlement to payment for variations if there is a dispute as to whether consent for particular variations was given?
The starting position in contract law is that if a contractor provides services to another party, the other party is not obliged to pay for those services unless they have agreed to do so.
However, the law recognises that there are cases where a party benefiting from services should pay because of some factor that makes it unjust to assert that the services had no value to them. In these instances, contractors might be able to bring a claim in equity.
Quantum meruit
Quantum meruit means “what one has earned”. The doctrine of quantum meruit is based on the principle that a party should be entitled to restitutionary relief for the reasonable value of work or services provided to the other party which for some reason falls outside of their contractual relationship. Quantum meruit claims have historically been linked to unjust enrichment, though that is no longer a requirement.
To succeed in a quantum meruit claim, the claimant must establish the following elements:
That services were provided by the claimant to another party.
The claimant wanted payment in exchange for these services and made that reasonably apparent to the other party.
The other party freely accepted the services or at least acquiesced to their provision.
The recipient knew or ought to have known that the claimant expects to be paid for those services.
Typical scenarios where the doctrine could apply include:
Where no specified value has been fixed for work done under an agreement.
Where work is done at the request of the principal under the contract, but the contract is later found to be void or unenforceable.
Where additional work is carried out by a contractor at the request of the principal and the work does not fall within the scope contained in the contract.
Where work has been performed in the expectation that contract would be formed, but no contract is subsequently entered into.
Where the party requesting the works wrongly terminates the contact or performs such a fundamental or serious breach as to allow the party performing the works to terminate the contract.
Quantum meruit in the courts
In Cobbe v Yeoman’s Row Management Ltd, Yeoman was the owner of land with potential for residential development. It entered negotiations with Mr Cobbe for the sale of the land to him. They reached an oral “agreement in principle” on the core terms of the sale but no written contract, or even a draft contract for discussion, was produced. There remained some terms still to be agreed.
The structure of the agreement in principle was that Mr Cobbe, at his own expense, would make an application for residential development. If the desired planning permission was obtained, Yeoman would sell the land to Mr Cobbe for an agreed up-front price, £x.
Mr Cobbe would then, again at his own expense, develop the land in accordance with the planning permission, sell off the residential units, and when the gross proceeds of sale received equalled £2x, any further gross proceeds of sale would be divided equally between the parties.
Pursuant to this agreement in principle, Mr Cobbe applied for planning permission for the residential development. He was encouraged by Yeoman to do so and spent a considerable sum of money and time on this. The application was successful and planning permission was obtained.
However, Yeoman then sought to re-negotiate the core financial terms of the sale, asking, in particular, for a substantial increase in the sum of money that would represent £x. Mr Cobbe was unwilling to commit himself to the proposed new financial terms and Yeoman was unwilling to proceed on the basis of the originally agreed financial terms.
The House of Lords considered that the property increased in value by the grant of planning permission and Yeoman had been enriched by that as it had to pay nothing. However, the Court considered that the extent of the enrichment was not the difference in value of the land, but rather, the value of Mr Cobbe’s services as Yeoman did not have to pay for them, and Mr Cobbe did not intend to provide his services gratuitously. As a result, XX.
In Mega Project Holding Limited v Orewa Developments Limited, Mega and Orewa entered into an agreement to upgrade a road jointly with the cost of the works to be shared equally. The contract stated that Orewa shall not commence works until Mega gave written approval of the estimated costs and the contractor to be engaged. Orewa did not obtain Mega’s approval (or even sought approval) and engaged a contractor to perform the works on the basis that the costs would be shared equally.
The Court held that Orewa was entitled to recover half of the cost of the work as Mega:
Knew that Orewa was carrying out the work on the basis that the costs would be shared.
Knew that a contractor was engaged and did not raise an objection.
Was provided with detailed schedules showing work carried out and how charges are made up.
Did not challenge amounts claimed by the contractor.
Did not challenge the payment schedules produced by Orewa.
What will the Court award?
Whether quantum meruit applies will depend on the facts of each individual case.
If quantum meruit is established, there is no set rule on what the Court will award. The guiding principle is the justice of the situation. In some circumstances, the contractor may be awarded only its actual costs. However, the Court has also awarded a margin for profit and overhead in the past.
In making its decision, the Court will consider several factors, including:
The commercial rate for the work;
Site conditions;
Whether the contract refers to certain prices (or formulas);
Conduct of the parties; and
Quality of the work.
In the Australian case of Sopov v Kane Constructions Pty Ltd (No. 2) [2009] VSCA 141, the principal repudiated the contract by wrongly calling on the contractor’s bank guarantee.
In response, the contractor terminated the contract and claimed damages based on quantum meruit. In order to make out its claim, the contractor was required to prove the total costs incurred in carrying out the works, and that those amounts were fair and reasonable in the circumstances. In the circumstances, it did not matter that the work performed was outside of the contract’s scope. The Court granted the contractor’s costs and also allowed the contractor a 10% margin for overhead and profit.
In Electrix v Fletcher Constrution Co Limited, Electrix completed electrical work as a subcontractor on the Christchurch Justice Precinct prior to any formal contract being agreed between the parties. Electrix brought a quantum meruit claim against Fletcher after Fletcher refused to pay its invoices. The Court held that Electrix had established a claim in quantum meruit, all that was to be decided was the value of the award.
In calculating the award, Justice Palmer took the starting point from UK sources: Electrix was to prove market value for the work completed and Fletcher was to demonstrate that it did not value the benefit in the same way. Both parties presented expert evidence to support their position. Justice Palmer preferred the evidence of one of Electrix’s experts, who sourced her cost evidence from the actual cost incurred by Electrix, as recorded in its project management software, and awarded Electrix almost $7,500,000 plus GST and interest.
Alternative equitable remedies
There are alternative remedies available to parties to a construction contract where work has been completed under an unapproved variation:
Estoppel – an equitable remedy available to contractors in scenarios where they have acted to their detriment in reliance on statements or behaviour of the principal; and
Free acceptance – where a principal has had the opportunity to accept or reject the services of a contractor, has failed to reject the services, and knows that the contractor expected payment for the services, they may be considered to have freely accepted the benefit.
If a contractor can demonstrate that the principal did accept the services or work with the knowledge that it expected to be paid, they may be required to pay the contractor for the value of the work.
Conclusion
While the ideal starting point for any construction project is a watertight contract that accurately reflects all party’s rights and obligations and all parties closely following the process for variations prior to beginning any work, the reality is that works are sometimes completed outside the scope of a contract, and the value of the works can be disputed. If you find yourself in this situation, a claim in quantum meruit, estoppel, or free acceptance might be an available option.
Contact us if you are in the middle of a project and invoices have been disputed, or if you wish to dispute an invoice. Our lawyers at Norling Law can review your contract and provide preliminary advice on the strength of a claim as part of our no obligation legal consultation. To book a free 30-minute consultation please click this link .
Shareholder disputes can arise for a variety of reasons, but one common cause is someone feels entitled to be paid more than the other or more than previously agreed. Perhaps they feel like they get more work, or do more work or get more clients.
These disputes can have serious consequences if left unresolved, potentially leading to financial losses and damage to the company.
At Norling Law, we are experts in resolving shareholder disputes and are here to help. Here are 5 tips for resolving shareholder disputes in New Zealand.
1. Communicate openly and honestly with all parties involved. Clear and transparent communication can help to identify the root cause of the dispute and find a resolution that is acceptable to all parties.
2. Seek professional advice from a lawyer or mediator. Shareholder disputes can be complex and emotionally charged, so having a neutral third party to guide the process can be invaluable.
3. Identify and address any underlying issues. Shareholder disputes are often symptoms of deeper issues such as mismanagement or a lack of transparency. Addressing these underlying issues can help to prevent future disputes.
4. Explore all possible options for resolution. This can include negotiation, mediation, or legal action. Each option has its own advantages and disadvantages, and the right choice will depend on the specific circumstances of the dispute.
5. Be prepared to compromise. Resolving a shareholder dispute often requires compromise from all parties involved. By being willing to listen to the concerns and perspectives of others, a resolution that is acceptable to all can be found.
Shareholder disputes can be challenging to resolve, but with the right approach and the right team, a resolution can be found. At Norling Law, we have the experience and expertise to help you navigate the process and find a resolution that works for all parties involved. If you are having issues, we offer a free 30-minute consultation to discuss your options. Book your consultation here
Original tax debt can quickly get out of control with the accruing interest and penalty fees. This may result in the debtor becoming insolvent and facing bankruptcy (for individual debtors) or liquidation (for companies) proceedings commenced by the Inland Revenue Department (IRD).
At Norling Law, we have extensive experience negotiating settlements with the IRD. Settlement with the IRD could be in the form of a provisional payment plan and/or partial principal debt/interest/penalties write-off. When faced with a settlement proposal, the IRD has a set of requirements that they must consider. At Norling Law, we take these requirements into account when formulating a settlement proposal.
In the event the debtor is not in a position to settle the debt, we can provide advice on other alternatives to bankruptcy and liquidations. The sooner the issue with the outstanding debt is addressed, the more options could be available.
Below we set out a recent example of a negotiation conducted by us on behalf of a client, which resulted in a significant write-off of the client’s debt to the IRD.
Our client was in significant arrears with the IRD, amounting to approximately $558,000. This amount related to a company and its two individual shareholders. This particular client, due to unforeseen circumstances, failed to meet its tax obligations over a period of approximately 3 years.
Our client came to Norling Law for assistance when the sole director of the company had a serious accident leaving them unable to earn an income. They came to Norling Law to obtain specialist insolvency advice.
First, we explained the legal consequences of this situation and provided our client with a detailed memorandum of advice which explained their options going forward. Included in this advice was a practical pathway to voluntarily liquidating the company and explaining the possible risks associated with liquidation. We also provided an outline of various steps and timelines that would take place in the liquidation proceeding, which provided the necessary support and guidance to our client in this particularly stressful time of their life.
We also interviewed our clients and explored:
The personal and financial circumstances they were experiencing at the time of the tax arrears;
Analysed their current financial position; and importantly
The effect of the serious accident and the consequences for them currently; together with all
Other matters relevant for an application for financial hardship.
We then conducted negotiations with the IRD on behalf of the client focussing on these four areas. We assisted our client to apply for financial relief under Section 177C(1) of the Tax Administration Act 1994. The outcome was an astounding $558,000 reduction in the tax payable for the company and both shareholders personally. Due to the unique set of circumstances, our client was able to resolve the matter entirely with no payment due to IRD at all. This provided our client with enormous relief at a particularly stressful time of their life.
Our client could draw a line in the sand and move on with life free of the stress of having outstanding arrears with the IRD. They could move forward with a clean slate with IRD.
Whether a reduction of debt owed to the IRD can be achieved depends on various circumstances associated with the non-payment of tax, position of the debtor and etc.
If you would like further information in relation to negotiating a settlement of your outstanding tax debt with IRD, contact the team at Norling Law at info@norlinglaw.co.nz or you can book a consultation here: https://calendly.com/wendy-506/30min
Negotiating with the Inland Revenue Department (IRD) in New Zealand can be a daunting task, especially if you are not familiar with the tax laws and regulations in the country. However, with the right approach and knowledge, you can effectively negotiate with the IRD and potentially reach a favourable outcome.
The first step in negotiating with the IRD is to understand your rights and obligations under New Zealand tax laws. It is important to know what you are entitled to and what you are required to do in order to comply with the tax laws. This will enable you to make informed decisions and to communicate effectively with the IRD.
The next step is to gather all relevant documents and information that will be needed to support your case. This includes financial statements, receipts, invoices, and any other documents that will help to demonstrate your financial situation and support your claims. It is also important to keep accurate records of all communication with the IRD, including dates, times, and the names of the people you have spoken to.
When communicating with the IRD, it is important to be upfront about your situation. We have found that when presenting a proposal to IRD for consideration, it is critical that it is accompanied with supporting financial information that demonstrates that the proposal can be sustained (by the company or individual) and is unlikely to place current tax compliance at risk.
The IRD is more likely to work with you if they believe that you are being open and are willing to cooperate. Accordingly, we recommend explaining in detail the reason(s) the company or individual fell into debt with IRD in the first instance, and the steps that have been taken since then to ensure they do not fall into debt in the future again. It is beneficial to attach supporting documents, where such documents are available. It is also important to remember that the IRD is a government agency, and their primary goal is to ensure that all taxpayers are paying their fair share of taxes. Therefore, negotiation should be approached in a professional and respectful manner.
It is also important to be prepared to compromise. The IRD may not agree to all of your requests, and you may need to make some concessions in order to reach a resolution. However, the IRD is also under pressure to collect taxes and may be willing to make concessions in order to reach a resolution in appropriate circumstances.
If you are unable to reach a resolution with the IRD, you do have the right to review its decision using the disputes process at IRD, which includes independent experts at its Disputes Review Unit (DRU) to undertake a review of your case and make a decision about your dispute. If the DRU decides in IRD’s favour, you may decide to take your case to the Taxation Review Authority or the High Court.
In conclusion, negotiating with the IRD in New Zealand requires knowledge of the tax laws, specialist negotiation skills and a professional attitude. With the right approach, you could potentially reach a favourable outcome and avoid any unnecessary penalties or fines. It is important to remember that where possible, the IRD will try to help you, so do not be afraid to ask for assistance or guidance if you need it.
Whether a reduction of debt owed to the IRD can be achieved depends on various circumstances associated with the non-payment of tax, position of the debtor and other factors.
Our experts at Norling Law have extensive experience negotiating with the IRD. If you would like further information in relation to negotiating a settlement of your outstanding tax debt with the IRD or require specialist assistance with it, contact the team at Norling Law at info@norlinglaw.co.nz or you can book a consultation here: https://calendly.com/wendy-506/30min.
