6 minute read
Building disputes need a more
Building disputes need a more efficient resolution process
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As chair of the civil litigation committee, and as a lawyer practising in, amongst other things, construction disputes, I have a concern over the cost and delay associated with residential construction disputes.
Whilst a range of legal issues often arise over issues to do with licencing, quantum meruit claims, apportionment of liability, contractual formalities, limitation issues and workers liens, in my experience the most common issue that arises is the builder asserting entitlement to payment for work and the owner asserting that the work is defective.
Disputes over residential building work are time consuming, incredibly expensive, ineffi cient and highly stressful. From the owners’ perspective there are emotional issues involved in a family’s major asset and place of residence being left in an unfi nished or unsatisfactory state. From the builder’s perspective a failure to get paid has a fl ow on effect, which can cause the builder to have cash fl ow issues which might affect the ability to pay suppliers or subcontractors who in turn have their own families to feed.
Simply put, it is highly desirable that building disputes be resolved quickly and effi ciently.
Unfortunately, the traditional legal system model seems to involve the following kind of process: • Initial letters of demand and pre action meetings where parties take polar positions. • Institution of proceedings. • Arguments over pleadings. The pleadings are often complicated because there may be a range of sub issues, and arguments over particulars are common – for example why is an item of work defective, what standard is relied on, how was it departed from, what was the consequence, what needs to be done to fi x it and so on. • Discovery. • The obtaining of expert reports by each party. Those reports might include a report from a building inspector, architect or engineer, and there may be multiple reports obtained which go to liability. Further reports are then needed to establish the quantum of fi xing defective works, usually from a quantity surveyor. Each report may cost between $5000 and $10,000, or more. • After exchange of reports there is often a process of supplementary reports and responding reports as well as meetings of experts. • Experts often differ in their opinions, that often being a consequence of who instructed them. A builder will usually want to adopt the cheapest solution to fi x a problem; the owner usually wants what they contracted for. Often issues
arise as to who is to blame for what has occurred. • Mediation – often the parties by this point have spent more than the dispute is worth, and the settlement often ends up consumed by legal and expert fees. • A trial – building trials invariably take far longer than ordinary trials, often in a simple building matter with a small number of issues lasting over a week, and where there is a lot of defective work alleged often lasting weeks or months.
The trial process often involves the Court taking a ‘view’ of the site in question, and usually involves extensive evidence from experts, explaining in detail the relevant drawings, Australian Standards, technical terms, and agonising over matters of detail through the oral system of question and answer in chief and cross examination. It is not unusual for a building dispute to cost hundreds of thousands of dollars and take many years.
In the meantime the builder is unpaid; the owner usually is putting up with defective work and being highly stressed; neither party can readily afford the cash drain of legal fees.
One must question the effi ciency of that process.
The legal issues themselves usually do not take too much time to argue, even if complexities arise. It is the factual and
technical questions that take the time.
If one strips back the process of determining the technical questions, the process involves each expert going on to site for usually no more than a matter of hours. It is the process of obtaining a multiplicity of reports, and educating lawyers and judges about those reports that takes the time.
In my view a more effi cient approach to resolving the technical questions is for a person or persons with the appropriate qualifi cations to attend on site and prepare a report which becomes the factual fi nding. The parties might make submissions to the expert, but it would the expert who makes the fi nding. If the issue is an engineering issue that person would be an engineer; if a question of cost the person might be an experienced builder or quantity surveyor; and the issue is quality of work that person might be a building inspector or architect.
By having the expert determine those factual questions one avoids the delays of multiple rounds of expert reports and the lengthy trial. There is no reason why those factual issues could not be determined in a matter of weeks rather than years.
To that end my suggestion is that there be a specialist building Tribunal established, either as part of SACAT or independently consisting of a pool which might include legal members, but more importantly comprise a pool of recognised experts. Legal questions might be determined by a legal member, perhaps as part of a panel, but the technical questions would be determined by the experts. The aim would be to reduce the time taken to determine a dispute to a matter or weeks or months rather than years with the associated saving of costs.
Each of QCAT, VCAT and NSWCAT have jurisdiction to hear and determine residential construction disputes. As long as there is an appropriate pool of technical expertise to draw on to decide the technical questions it is my opinion the approach has much to commend.
The simple reality is that most owners involved in residential building disputes are ordinary people with limited fi nances. The Court process is simply too slow and too expensive for ordinary people to afford. B
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