Dispute Resolution In Construction by Henry Hathaway
July 16, 2018 | Silver Shemmings
Generally, within the Construction industry, it is widely accepted that disputes are a fact of life and will in most cases centre on the amounts due under an agreement. Ultimately, parties will enter into such agreements with the best of intentions and words such as collaboration will be at the forefront. What then occurs is a dispute or difference in relation to the amounts owed under an agreement, or for works carried out that are alleged not to be in accordance with the contract or extra over to the contract. This is a scenario that all too commonly results in parties adopting adversarial positions with competing interests.
Adjudication has been introduced to Ireland and its overall success will be subject to observation in the coming years but if our experiences in the UK are representative, then it is likely to be a success. The courts in the UK adopt a position of “pay now and litigate later”, and while adjudication does not adopt the same enquiry or employ the same degree of witness evidence as in litigation, as a process it is quick and ultimately cheaper than litigation or arbitration. This is particularly helpful when it is a matter of cash flow to a construction company.
However, what remains important in adjudication is how the parties present their positions as it is a process that usually will be based on paper evidence. This means that when it comes to the bottom line, the Adjudicator will make his decision based on the information available in front of him, evidence that is more persuasive and that, on the balance of probabilities, is the right answer from that which was presented. Therefore, one of the key aspects to this form of dispute resolution, and of any other forms, will ultimately depend on the quality of paper evidence. This may appear quite an obvious statement, but it is inherently an area that is lacking when it comes to the construction industry. Whilst many parties will never have been involved in litigation or adjudication, this does not explain the reasons as to why they typically remain so unprepared.
Ultimately, there are two common elements to all claims. Firstly, it must be established that there is an entitlement to the claim under contract or common law, this is the element of demonstrating liability. Secondly, the evidential basis of the ascertainment or quantum is required. Fundamentally, whether bringing about a claim or defending one, these are the core points that need to be established.
Even when parties attend a meeting to attempt to resolve their differences, there will be a requirement for a structure or overall strategy on how to approach the dispute. As Ireland enters the Adjudication arena, it will become necessary to understand that ultimately the question which will be asked is what parties agreed to, on what terms and for what value. Adjudicators, like the Courts, will not be minded to make a bad bargain into a good one; rather that they will give effect to the terms of the agreement and then apply those to the dispute before them. In simple terms, the Adjudicator will seek to understand what the common intention of the parties at the time of contract was and what has changed? This is the baseline position and ultimately everything will be measured against this.
This then leads to the point of the agreement itself. When considered, most disputes occur on issues that in fact are borne from the date of the agreement itself. The disputes may not manifest themselves for some time after the formation of the agreement but, in reality, they always existed.
The key to understanding how to prevent disputes, or how to achieve the best position in a dispute, will turn on the application of a first principled approach to the issue itself. The ability to establish a solid and robust position is borne from the application of the contract terms and discharging the evidential burden which will seek to demonstrate that, on the balance of probabilities, this version of events is the more likely course of events. This is a process that is continuous and requires the necessary intensity and application throughout, and not merely at the time the dispute occurs. If parties adopt such a positive attitude and maintain the establishment and ascertainment principle throughout the period of the contract, then it will be in a far stronger position than simply addressing it when the issue occurs. This will include the need to comply with the actual terms of the contract including any onerous points as non- compliance can be fatal to the success of such a process.
Author Henry Hathaway is a Partner with Silver Shemmings Ash and is a graduate of Trinity College Dublin (Civil Engineering). He is a qualified Civil & Structural Engineer and has previously spent twelve years in the Construction Industry representing both Contractors and Clients in Engineering and Project Management, he specialises in Pre-Contract Negotiation, Contract Formation, Project Lifecycle, Tender Development, Identification of Delay & Disruption, Establishment of Claims, Ascertainment of Costs
At Silver Shemmings Ash, we provide seminars and training alongside our core activities in contentious and non-contentious matters, the purpose if these is to facilitate a greater knowledge and understanding of construction and property law. There remains a considered lack of training in such areas for companies and one to which we look to address.
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