Do the authorities have to be fair to you?
Tradesmen and consultants working in the construction industry are subject to the law of the land like everyone else. So they can be prosecuted by the Police, they can be sued by the general public, and they can be told what to do (or more often, what not to do) by various government departments or agencies, and by councils. Not surprisingly, in a first-world country such as ours there are safeguards built into our justice system to ensure the law is applied against us consistently, transparently, impartially, and fairly. By and large, the odds are loaded in the defendant’s favour.
There are safeguards built into our justice system to ensure the law is applied against us consistently, transparently, impartially, and fairly.
Sometimes, though, we encounter situations where someone other than the courts has the right to tell us what to do, and to penalise us if we disobey them. Two common examples are the Disputes Tribunals (our small claims courts) and the Weathertight Homes Tribunal (a specialist tribunal set up to resolve leaky building claims).
Then there are the bodies that regulate our profession or calling – such as the Institution of Professional Engineers New Zealand, the Association of Consulting Engineers New Zealand, the New Zealand Institute of Architects, the Plumbers, Gasfitters and Drainlayers Board, the Electrical Workers Registration Board, and the Building Practitioners Board. Finally, there are specialist dispute-resolution professionals such as arbitrators and adjudicators who are given power to make an award against you which is binding and has the force of law.
When you get down to that level, there aren’t the same legal safeguards as there are in the court system, so there is a risk that these people could abuse their power, and make a ruling out of spite, prejudice, self-interest, or laziness. What protections do you have against that?
Judicial Review and Natural Justice
There are two main protections. The first is that you can usually have their decisions second-guessed by the courts, under a procedure known as “judicial review”, if you think they have behaved unfairly or unreasonably. The second is that they are usually required to comply with a body of rules known as the “principles of natural justice”.
For example, if you are an arbitrator, and the arbitration is being held in New Zealand, then the Arbitration Act 1996 says that an arbitral award may be set aside by the High Court if a breach of the rules of natural justice occurred. Similarly, recognition or enforcement of an arbitral award, irrespective of the country in which it was made, may be refused on the same grounds. Under the Building Act 2004, if you are asking the Government to review a Council decision using the process known as Determination, then the Government must comply with the principles of natural justice.
There is a risk that people could abuse their power, and make a ruling out of spite, prejudice, self-interest, or laziness. What protections do you have against that?
Under the same Act, the Building Practitioners Board and the Registrar of Licensed Building Practitioners when they are looking at disciplining a licensed builder, must comply with those same principles. And finally, under the Construction Contracts Act 2002 when you are having a dispute resolved using the adjudication process, then the adjudicator must comply with them as well.
The New Zealand Bill of Rights Act 1990 goes even further. It says that every person has the right to the observance of the principles of natural justice by any tribunal or other public authority which has the power to make a determination in respect of that person's rights, obligations, or interests protected or recognised by law. And every person whose rights, obligations, or interests protected or recognised by law have been affected by a determination of any tribunal or other public authority has the right to apply, in accordance with law, for judicial review of that determination.
The judge or decision-maker must be disinterested in the outcome, and unbiased. In other words, he or she must be strictly neutral.
Natural Justice Defined
So what exactly are the principles of natural justice? There are only two of them. The first is that when you are being judged, you must be given adequate notice of the hearing and an adequate opportunity to present your case. This can be summarised as the right to a fair trial. The second is that the judge or decision-maker must be disinterested in the outcome, and unbiased. In other words, he or she must be strictly neutral.
You can’t complain simply because you didn’t win. There has to have been some unfairness in the process.
The right to a fair trial means that you must be given prior notice of all the allegations that are going to be made against you, a fair opportunity to answer those allegations, and the opportunity to present your case properly. You are not allowed to be ambushed or to have allegations or evidence sprung on you without a chance to prepare for them in advance. And you must be given an opportunity to answer every allegation, even if they seem to be a “no-brainer”.
The rule against bias, on the other hand, disqualifies the decision-maker from hearing the case in three distinct situations. The first is where you would automatically assume that he or she has a personal interest in the outcome (e.g. he or she is a major shareholder in one of the parties, and stands to benefit financially if they win). The second is if he or she is actually prejudiced against one of the parties or actually champions the other, right from the outset. The third is where it is reasonably obvious that the decision-maker is not impartial. For example, where their statements or conduct suggest they have predetermined views or personal hostility towards one of the parties or favouritism towards another.
There have been plenty of cases where decisions have been successfully set aside because of a breach of the principles of natural justice, whether those decisions were made by arbitrators, adjudicators under the Construction Contracts Act, or the Building Practitioners Board. Remember, however, that you can’t complain simply because you didn’t win. There has to have been some unfairness in the process by which that conclusion was arrived at, before you can challenge the decision on the basis of natural justice.
By Geoff Hardy
Auckland Commercial Lawyer