Construction disputes come in all shapes and sizes. From the smallest building to the most complex feat of engineering, unfortunately, any construction project can give rise to claims, both before completion and often a considerable period of time after. Whilst none of us like to imagine that the parties will end up in dispute, it is important to ensure that you are well prepared and able to fight your corner, should a dispute arise. There are a number of ways in which you can do this, and by being prepared, you will find that many issues can be resolved quickly and without the need for recourse to formal dispute resolution processes.
Know your rights and obligations
The first step is understanding your rights and obligations in respect of any works undertaken, whether as employer, contractor, sub-contractor or consultant. There is no substitute for having a properly executed contract or agreement in place which accurately reflects the bargain reached with your counterpart and sets out clearly what it is you have agreed to do, and what you will receive in return. A claim for breach of contract can be brought up to six years, or even twelve years (if the contract is under seal) after practical completion. Unfortunately, it is not unusual for parties to realise some years after the fact that there is no formal agreement or appointment in place or that despite negotiations having taken place between them, no formal agreement was ever signed, or the agreement that was signed, does not say quite what you thought it did!
Maintain good records
The preservation of good records is a crucial aid to establishing what, in fact, happened on site and how a particular situation or issue arose or was managed at the time. Too often, people are forced to rely on their memories in formal proceedings, with the inevitable result that both sides "remember" things slightly differently. If one party can refer to a contemporaneous note , this will usually be considered better and more convincing evidence by a court or arbitrator, than the conflicting testimony of the opposing party's recollections. In addition, it is not unusual for employees to move on, and often the employee with particular knowledge of the issue concerned has left the company. It must be asked – what happens when there is no-one left to do the "remembering"?
The maintenance of good records is particularly important in circumstances where the employer is one step removed from works. A clear record of the parties involved and what happened during the course of a project will be vital particularly if a claim arises some time after the works finish. While an employer's primary recourse will often be to the main contractor, solvency issues may force an employer to look elsewhere for remedies and it needs to know where to look! It is also important to remember that parties may have remedies outside of the contract, and an awareness of the rights and obligations which may exist outside the executed contract is vital.
Be equipped for discovery
Discovery is a process whereby parties are obliged to make available to the other side documents which are relevant to the issues in dispute, and arises both during court proceedings and arbitration. Less formal procedures may also involve making certain documents available to assist in the resolution of the dispute. The extent of discovery can range from agreed disclosure in a mediation or conciliation to a formal order for discovery by an arbitrator or a court. Compliance with a discovery order requires a party to produce all documentation requested by the other party (and approved by the court as being relevant and necessary to the matters in dispute) to the extent that it has such documentation in its power or possession.
The obligation to comply with a discovery order is often onerous. In litigation or arbitration, parties may be required to swear an affidavit of discovery, listing all of the documents that it has in its possession or power which are relevant to the issues, and confirming that there are no further documents. A party is required to identify, but does not have to produce, the documentation over which it claims legal privilege. The failure by a party to provide full and proper discovery may lead to that party's claim or defence being struck out or may constitute contempt of court and as such, discovery obligations should always be taken seriously.
The main obstacles a party faces in making discovery is identifying all the relevant documentation within its possession. Advances in technology have made this increasingly difficult. "Documentation" encompasses electronic documentation and, therefore, emails, microfilm, videos, photographs, computer discs are all included. Often parties will realise that documentation is stored on a remote server or that email correspondence is contained on an email address of an employee that has left the company. All these difficulties need to be addressed and all such documentation collated.
While discovery obligations are undoubtedly onerous, knowledge of what records you have and where those records are stored from an early stage, are essential in being equipped for discovery and ensuring that if and when discovery arises, the expenditure of time and resources is kept to a minimum.
Insisting on a formal contract while the other party just wants to get on with the job, or diligently maintaining notes and records of the progress of works even when a project is running smoothly and according to plan, may seem unnecessary, but there is no better way of ensuring a fair result for yourself and your business than such effective management of documentation.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.