Canadian Consulting Engineer

Out of Court

July 1, 2003
By Owen D. Pawson, Miller Thomson, LLP

Litigation uses up a great deal of time, money and emotional energy. A complex construction case may ultimately involve many days of trial, numerous parties, thousands of documents and difficult issue...

Litigation uses up a great deal of time, money and emotional energy. A complex construction case may ultimately involve many days of trial, numerous parties, thousands of documents and difficult issues with which a judge may not be familiar. In some Canadian jurisdictions it can take 18 months or more before a matter goes to trial. Notwithstanding these disadvantages, the construction industry still generally relies on the courts.

Practical and effective dispute resolution options are available, however, and parties should seriously consider them before committing to full-scale litigation. The range of alternatives includes partnering, mediation, binding arbitration, “referees,” mini-trials, binding expert opinions (where issues of law are not critical) or any combination of these.

In the widely used, standard form Canadian Construction Documents Committee CCDC 2-1994 Stipulated Price Contract, there is a mandatory process requiring sequential negotiation, mediation and, as a last resort, binding arbitration. Although this phased process is usually preferable to litigation, problems may arise where one or more of the parties to a dispute is not contractually obliged to participate.

Additionally, arbitration itself can be a lengthy and costly undertaking that can rival court times and litigation costs. The protocol outlined in CCDC 40-1994 “Rules for Mediation and Arbitration of Construction Disputes” requires an initial procedural meeting of the parties to determine the process. That process may include discovery of documents, oral examinations for discovery, preliminary applications and objections, and any other steps necessary to resolve the complexities of the case.

Where significant issues and amounts are at stake, even mediation can be intense and expensive. Unlike litigation where the courtroom and judge do not have to be paid for directly by the litigants, mediation and arbitration both require the parties to share the cost of the mediator or arbitrator and the hearing rooms. Furthermore, even binding arbitration decisions may be appealed to the courts when it can be demonstrated that the arbitrator made an error in law or failed to take relevant evidence into consideration.

Many experts have extolled the virtues of “partnering.” Partnering is a non-binding process in which all parties, prior to construction, agree to avoid confrontation and build the project as a team. However, partnering faces a major obstacle due to the nature of the tendering process with its emphasis on the lowest bid price. No amount of goodwill will prevent a dispute if the financial wellbeing of the low bid “partner” is at risk. Notwithstanding this concern, partnering should not be overlooked as a dispute resolution tool.

The best way to avoid disputes on your project is to ensure that there is good communication at the job site and between the construction participants. Often, regular discussions and the resolution of small problems can avoid a major dispute. Good communication also involves documenting all important aspects and major decisions associated with the construction. Be sure, for example, to circulate minutes of meetings that detail the problems, the actions to be taken and the parties responsible to rectify the problems. If you do not take the minutes yourself, ensure that you review them for accuracy as soon as you receive them. If the matter does proceed to court, proper records will be invaluable.

If a problem cannot be resolved initially by discussions, ensure that other participants are fully briefed about the nature of the dispute and any dispute resolution provisions in the construction contract. Section GC 8 of the CCDC 2-1994 Contract sets out various time frames that must be followed (usually 10 to 15 “working days” after “findings” or “notices” within which the next step in the process must be taken).

Be sure to perform a careful assessment of the dispute and the positions of the parties involved. Advice from forensic experts may be critical in proving your case. Often such experts provide “independent” advice that is persuasive to a mediator or arbitrator. Although such experts are expensive, if their advice assists in the early resolution of the dispute, they may be well worth the cost. Finally, your lawyer should provide objective advice regarding the likelihood of success based on the evidence at hand. Again, this will assist in a speedy and fair resolution of the dispute.

Owen D. Pawson is a lawyer with Miller Thompson, LLP in Vancouver, tel. (604) 643-1254.


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