Litigation in the construction industry

This article is all about Litigation in the construction industry.

Stravelles run a course in Adjudication which aims to allow the student to run their own adjudication as the referring or responding party without paying for legal representation.

We support legal representation in more complex cases but we want to encourage especially smaller companies to feel more confident fighting for their contractual rights.

Introduction to Litigation in the construction industry

Litigation is simply a fancy word for bringing a dispute to the public courts system. Like so many words in the English language it is from a Latin verb meaning ‘to go to law’.

It literally means ‘the process of taking a case to a court of law so that a judgment can be made’.

Going to the court for a dispute to be resolved is an ancient practice and can be traced back to almost any early version of history.

Process of Litigation in the construction industry

In litigation both sides hire legal representations who battle it out in court.

The process commences by the claimant filling out and issuing a specific claim form to a specific court. The claim form will set out the dispute, their argument and what they are looking for.

This claim is then served on the defendant who may simply admit full or partly liability and offer a settlement. Or the defendant can deny liability and mount a defence of this claim.

The court will review the form and place the case in an appropriate track which can be either small claims track, fast track or multi track.

Then a trial will eventually be held whereby the judge will listen to all the evidence provided by both parties. The judge will then issue their judgement.

The judge may issue a payment order against the losing party for damages/compensation plus legal costs.

Apart from money, the judge may issue an order for a party to carry out some action or an injunction ordering a party not to do something.

Power of the courts system

Courts derive their power from the people. The power of the courts is separate from the power of the state, the church and any other power.

The court is able to review a dispute and issue a binding decision on the dispute.

Advantages

Courts have the reputation for producing the best quality decision on a dispute. This is because there is so much resources dedicated to the dispute such as a courthouse, a judge, legal representatives for both sides and so on. All of the participants will have a deep knowledge of previous case law and the decisions issued.

Judges in courts have a huge amount of power. In civil cases they can order the parties to comply with their decision. Ultimately, a civil court judge can issue payment notices and winding up notices, they can literally close a business if they do not comply with the court order.

There is a well trodden path of appeal should a party not be happy with the decision of the court.

Disadvantages

Someone has to pay for the venue, the judge, the courts and so on. This is usually the losing party.

There is almost unlimited time to obtain a final judgement from the court. It all depends on how busy the court is and the complexity of the issue to be resolved.

Because of the unlimited time frame of a court case the costs can also be unlimited. A typical civil court case can last one to five years including endless appeals.

There is no privacy. The courts are open to the public so any dispute you have could be reported to the media and members of the public.

Just because the court issues a decision it doesn’t mean the issue ends there. The judgement can be appealed to higher courts.

The big problem with litigation

Typically, each side will adopt and advocate extreme positions that are polar opposites to each other.

Using the principle of ‘leaving no stone unturned’, each party will Trott out barely arguable points which have little chance of success.

Because of this, the process is very lengthy, dull and combative as well as expensive.

The Technology and Construction Court

The Technology and Construction Court is simply a public court where most technology and construction disputes are dealt with.

All cases in the Technology and Construction Court follow the the Civil Procedure Rules (CPR) and supplementary Practice Directions (1999) which aim to make the process as efficient as possible.

The Court also encourages parties to resolve their issue before entering into full blown litigation. The Compulsory Pre-Action Protocol aims to ensure both parties try to resolve their issue before starting court proceedings or worst case define the issue to make it easier to resolve in litigation.

Statute of Limitations

In most simple construction contracts a claim will not be entertained after six years from the date of the cause of action. For contracts under seal claims can be brought up to 12 years from the date of the cause of action.

Conclusion

Litigation is by far the worst form of solving a dispute in the construction industry. If you want the slowest, most expensive, most adversarial method of resolving a dispute then choose this method.

Otherwise choose negotiation, mediation, adjudication, arbitration or any other form of alternative dispute resolution.

Thankfully, most construction contracts include clauses that steer parties away from the courts system. Mediation is now very much encouraged and most court judges will expect that a dispute has been through mediator or similar before ending up anywhere near their court.

Litigation is send as the last resort and rightfully so. However, its main purpose now may be as an encouragement to resolve a dispute by simply being so bad any other process is better.