Building disputes are challenging

For the consumer and home owner the home is the castle and protection of the home for many is a primal driver.

If the viability of the home is under threat it impacts upon family security both financially and emotionally.

For the contractor construction is the business and there are a lot of moving parts, particularly in the post COVID world, a world of massive disruption with broken supply chains, labour and material inflation and the contractual incarceration of fixed prices. Hence the surge in builder insolvency in recent times.

There is also stress on many of the dispute resolution theatres with an under – resourcing of decision makers. Then add to the mix interest rate increases, the combination of headwinds is a perfect storm.

This is the ecology within which building disputes are domiciled, a very testing arena at the best of times, and these are not the best of times.

So what are some good practice tips on dispute resolution?

The usual factors in play that make for building disputes are:-

• Construction defects

• Time delays

• Cost blow outs that make it hard to deliver on budget and on time

• Delays in payment

• Seeking payment in advance of the due date or juncture

• Misunderstanding of contracts

• Wrongful termination of contract or suspension

• Carrying our works at odds with the building permit

• Compromised design

• Breach of copyright

Whenever this firm is contacted by a prospective client, very quickly we glean that the cause of the dispute has one or more of the above characterisations. In decades of practice very little has changed, there may be new acts of or amending acts of parliament but there is nothing new or novel about that which gives rise to a residential building dispute.

If the building dispute is residential then it will come within the jurisdiction of the Victorian Civil and Administrative Tribunal (VCAT) in Victoria or the NSW Civil and Administrative Tribunal (NCAT) in New South Wales.

In such jurisdictions there will be statutory warranties that dictate that the built product must be fit for purpose and in accordance with the, plans, building permit or construction permit and the National Construction Code (NCC).

If the work is at odds with the provision of the requirements laid down in the Domestic Building Contracts Act 1995 (Vic) and the Home Building Act 1989 (NSW) there will be a case to answer.

The need for construction law expertise

Construction law is a complex area that involves the interaction of:-

• Contract law

• Insurance law

• Statute

• Tort or negligence

• It can also involve the quasi criminal realm of practitioner misconduct

So it doesn’t suit the generalist. It is akin to the medical profession, the GP will refer a case that requires a bespoke set of skills to the specialist. So too construction lawyering it is highly specialist, so choose an expert.

The first meeting – getting on top of the facts and preliminary diagnosis

The construction lawyer will:-

• Get on top of the facts

• Need a copy of the contract, building permit and relevant documentation and will take instructions on the background that has culminated in the dispute

• Depending on the nature of the dispute the lawyer will ask that the client engage a building expert to:-

• Carry out an inspection of the property

• Identify defects

• Where they exist, quantify the value of defect rectification and work out the cause and determine which actor(s)  generated the defects

Once the initial forensics have been dealt with the lawyer will advise on the remedies and the merits, or lack of, in the case.

Sometimes the diagnosis will not be in keeping with client expectations if the case is considered weak or devoid of sufficient merit.

Best to find that out from the ‘get go’ for there is little point in initiating legal proceedings if the case is weak as building disputes cost a lot of money to litigate.

The letter of demand – first step

The construction lawyer will typically craft a letter of demand or if the client is a respondent will seek instructions on defences to same.

If the demands within said letter are not met within the time frame stipulated it is best to ‘up the anti’ and initiate legal proceedings in the appropriate jurisdiction with alacrity. Reason being, there are back logs in cases in many of the dispute resolution theatres, so the earlier one initiates the faster one finds one`s way into the line.

In some jurisdictions like Victoria there is compulsory state funded conciliation before one can issue proceedings in the VCAT, and resort to the VCAT can only occur if the conciliation fails.

Formal Initiation of legal proceedings

There will be a prescribed form and procedure for the formal initiation of legal proceedings along with payment of a prescribed fee. To reiterate In Victoria the VCAT is the responsible jurisdiction, in NSW the NCAT.

The solicitor on record is best positioned to prepare same as there can be ‘trips and traps’ even with what may appear to be the most elementary of steps. For instance it is critical to get the name of the respondent correct, which may be a:-

• Natural person (ie a human being)

• a corporation

• a partnership

• or co-defendants that combine some of the above.

A company search may be in order and careful regard will be had  to the party to the contract. It has always been the practice this firm of lawyers to do this at outset if the respondent is not a natural person.

The Directions Hearing

The first in person hearing is the directions hearing where the Tribunal member issues directions to the parties that provide a critical path of interlocutory steps that must be adhered to. Typically the path will include:-

• Statement of claim

• Statement of defence

• Reply to defence and counterclaim (if any)

• Provision of expert witness reports

• A date for mediation

• And a date by which a mediation case summary and relief sought synopsis will be filed and served.

• There is often a direction that enables the parties to seek further directions if necessary

The Mediation

The best opportunity to settle the case will be at the mediation.

In jurisdictions like the VCAT mediation is free as the Tribunal provides a mediator.

Court appointed mediators often require the parties to remunerate the  mediator on a 50/50 remunerative basis.

Mediations are without prejudice and confidential and in this law firm`s experience take up the better part of the day. So expect a long day as building disputes have their own long and bespoke history and each adversary will have their own point of view and expectations. Expectations don’t change in a few minutes.

The mediator will ordinarily:-

• Invite the applicant to present their case summary and relief sought

• The respondent(s) will be given a right of reply

• And often there will be submissions in reply to the reply

• Will then invite the parties to make their way into separate caucus rooms

• Interact with the parties and their legal representatives separately and confidentially

• And if compromise or concession is forthcoming the mediator will convey offers and counter offers

• Sometimes the mediator will reconvene inclusive sessions with the advocates and or the clients

If settlement is forthcoming, the terms of settlement will be carefully crafted, signed and the case will conclude. The devil is often in the detail.

If settlement is not concluded the matter will revert to a further directions hearing, where the member will make any other orders that are required to get the case trial ready

• such as discovery

• or amended pleadings

• the service and exchange of witness statements

• the setting down of a compulsory conference.

• A trial date and an allocation of days the will be based upon anticipated length of trial

The Hearing

If the case does not settle, the matter will end up going to trial. Depending upon the complexity and quantum in dispute trials can take weeks even months to conclude

The barrister will appear, assisted by an instructing solicitor. Expert witnesses and key witnesses will be called to give evidence and to cross examined. Expect to spend between 6,000 and 12,000 a day depending upon the level of seniority of your legal team.

Trials are very expensive and there is no guarantee of outcome and decisions tend to take many months before they are published. Generally costs are awarded against the loser but not always and moreover in jurisdictions like the VCAT they are not as of right.

Some key take-outs

• Understand that the dispute resolution process costs and takes time, more than one would like on both counts

• Ensuring that one`s opponent is solvent is critical particularly  if there is no insurance or warranty cover. Little point in running a case, winning and then being confronted with a man of straw.

• Choice of legal representative is paramount

• Choice of technical expert is paramount

• Equally paramount is to take the advocate`s advice.

• The best time to resolve the dispute is at mediation but it won`t settle if the party with a compromised case is not prepared to compromise.

• Try to keep emotions at all time in check, do the maths as it’s the clinical application of the law rather than perceptions of slight that is always in play.

 

Disclaimer

This article is not legal advice and discusses it’s topic in only general terms. Should you be in need of legal advice, please contact construction law firm. Lovegrove & Cotton Lawyers and our experienced lawyers will assist you based on the facts and circumstances of your case.

Lovegrove & Cotton Lawyers to the building industry

For thirty years, Lovegrove & Cotton have represented property owners, builders, building surveyors, and building practitioners in Melbourne, Canberra, Sydney and Queensland. Lovegrove & Cotton can help property owners and building practitioners resolve any type of building dispute. If you wish to engage the firm, feel free to contact us via our website, by emailing enquiries@lclawyers.com.au, or via phone at (03) 9600 4077.