We have previously discussed the various options for resolving a construction dispute. We now turn our attention to handling matters that are likely to become or have already become litigious. Litigation can be a costly and time-consuming process and as such, clients should not underestimate their ongoing involvement in the matter. It’s easy to overlook this factor when evaluating the cost of running litigation – traditional law firms in their estimates do not include the time required from the client and the cost to the business of diverting staff to manage the dispute. Below, we set out the core elements of the litigation process and the role clients play at each stage of the process to better help you understand the process.
The Stages of Litigation
Litigation can be broadly separated into four stages:
- Pleadings – each side sets out the facts as they see them.
- Discovery – each side produces all relevant documents to the court and the other party.
- Mediation – the parties are required to attempt to negotiate a resolution of the dispute with the assistance of a mediator.
- Trial – each party argues its case and produces its evidence before a judge.
Additionally, in the context of construction disputes, clients will typically require expert evidence to support an argument that a particular building standard was not met. The other party may then need to call its own expert to weaken or refute the existing expert evidence. The purpose of mapping out the stages of litigation is so that you can be aware of what they mean for you as a client.
Your claim or defence must be one that the law recognises. It is not sufficient to have some general grievance with the other party or to raise its conduct on another unrelated project or matter as being somehow relevant to the case at hand. For your lawyers to work out how to plead your case (or defence), your staff or you will need to run through all of the relevant events and communications between the parties. Your solicitor may advise you to retain a barrister to ensure that your case is presented in the most legally and factually accurate manner. Finally, the court filing fees may cost you between $1,000 – $3,000 for the commencement of a proceeding.
Clients must produce both to the court and the other party every communication and document that is relevant to the case. If there are thousands of relevant emails, your lawyer will need to verify and categorise each one, irrespective of the value of the claim. As part of the discovery process, you will be required to produce any documents that harm your case. While this may be counterintuitive to you, it is standard within court proceedings.
Whether you like it or not, the court is likely to order that mediation takes place. The court will also require that the parties make a reasonable attempt to settle the matter at mediation. The parties are generally also required to share the costs of the private mediator and the venue.
Your witness will need to take time off work to provide evidence in court and for the other side’s lawyer to cross-examine. Additionally, your lawyer will likely want to have each day’s court proceedings professionally transcribed to review before the next day of the trial. Lastly, you will need to prepare for the documents you have provided in the discovery process to be made public when they are put into evidence in the case. This means that any member of the public may be able to inspect and copy them after the trial.
The Time it Takes to Litigate
The time it takes from the commencement of a court proceeding to its conclusion can vary considerably. The parties may disagree as to whether each other’s pleadings are sufficiently clear and particularised. If they cannot resolve that disagreement, then an application will need to be made to a judge for consequential orders. If one party does not believe that the judge has properly exercised her/his discretion even on that preliminary issue, then it may seek leave to appeal. The parties may likewise have disagreements at each stage of the litigation which (depending on the depth of their respective pockets) may result in multiple applications to the court long before a trial date has even been booked in. In the interim, your construction project may be on hold, and your workers will still need to be paid.
The Cost of Litigation
Solicitors and barristers typically charge by the hour. What this means for you is that the even just the process of sorting, categorising and cataloguing discovery documents can be a very expensive exercise. Moreover, the amount of work that your solicitors will have to devote to your case is subject to the demands of the court and the manner in which the other side handles the case. If the other party is particularly aggrieved or unreasonable, it may create a lot more work for your lawyers.
Additionally, if the court believes that a range of issues are relevant to the matter, then your solicitors will be bound to advise you and prepare your case accordingly. Much of the way a court proceeding unfolds cannot be predicted at the outset and so parties need to accept that while they are entitled to be provided with accurate cost estimates along the way, there is no guarantee as to what the final costs will be.
Litigation is Unpredictable, Agreements are Final
In all but the most straightforward of cases, your solicitor will not guarantee you a certain outcome in the proceeding. This is because even if the parties themselves can agree on the relevant issues for the judge to determine at trial, the judge may have different ideas. Additionally, it is for the judge to work out how much weight to give certain pieces of evidence. Neither you nor your lawyers can predict how your witnesses will perform in court. They may get very nervous and stumble over their words or forget key facts. They may inadvertently contradict themselves or become hostile to the cross-examining barrister. Your expert witness may make comments that are outside of her/his expertise and thereby weaken her/his credibility. All of these unforeseeable factors will determine how the judge perceives the witness. Finally, even if you succeed at trial, an appeal court may rule against you.
In contrast, negotiated outcomes (while usually involving some element of compromise) are final. Cases can be settled before proceedings even begin right up until just before judgment is handed down. By settling a case, you alleviate the risks associated with running a trial and can resolve the dispute quickly and relatively cheaply. Additionally, if you are expecting to work with the other party to complete a project or development, it’s a good idea to get on with it and preserve as much good will as you can.
When a dispute arises, it’s important to be aware of your options. Obviously, your first point of call is to be familiar with the provisions of the contract dealing with disputes. However, even if you are permitted to litigate a matter, it is advantageous to carefully work out what it is you will achieve by doing so and at what cost, relative to the other dispute resolution options.
Above and beyond the professional costs of retaining lawyers and barristers is the cost to your business of diverting staff to assist with preparation of the case and to act as witnesses in court. It is worthwhile attempting to work with your lawyers to prepare an internal costs estimate for running litigation, separate to the one that your lawyers are required to provide to you for their services. This is aside from the personal costs in the form of stress to business owners that can result from court proceedings. As mentioned at the start of this article, litigation is a costly and time-consuming process and you should only initiate proceedings after careful consideration.
If you have any questions or need assistance commencing or defending building disputes, get in touch with our specialist construction lawyers on 1300 544 755.