Construction litigation: are we doing it better?

• Jurisdiction: Australia
• Date: 01 December 2011
• Author: Gerber, Paula

[This article provides the first in-depth scholarly examination of the substantive procedural reforms recently implemented in the Technology, Engineering and Construction List ('TEC List') of the Supreme Court of Victoria. The authors determine whether the rules governing construction litigation in Victoria represent world's best practice by comparing them with the rules and procedures of the United Kingdom, which are generally regarded as world leading. The conclusion reached is that while the new rules in the TEC List are a step in the right direction, there is still room for significant improvement in this area.]

CONTENTS I Introduction II Situating the Reforms within Wider Contemporary Debates A Civil Procedure Reforms B The Vanishing Trial C The Finality of Construction Dispute Resolution D Standard Forms E Arbitration III Construction Litigation--Is It Really Any Different from Other Litigation? A Highly Technical B Number of Parties C Document Intensive D Why Construction Litigation Is Suitable for Reform IV The Technology, Engineering and Construction List A Objective B Case Management under the TEC List C Resources Conference D Discovery Reforms 1 Narrowing the Test for Discovery 2 Discovery Conference 3 Production by Electronic Transfer of Documents E The New Case Management System F Expert Evidence 1 Reducing the Number of Experts 2 Limiting Expert Evidence 3 Experts Conclaves 4 Hot Tubbing G Statement of Issues H Chess Clock Hearings I Costs Orders V Room for Improvement? A Docket System B Compulsory Conferences C Pre-Litigation Requirements D Cultural Change VI Conclusion--Are We Doing It Better? The construction industry is known for conflict almost as well as it is known for its most spectacular construction and civil engineering projects. (1)

I INTRODUCTION

Approximately seven years ago, Gerber and Mailman asked the question 'construction litigation: can we do it better?', (2) and concluded that 'the time may be right [for Australian courts] to reinvigorate construction litigation by introducing reforms for commercial building disputes'. (3) Since then, the Supreme Court of Victoria has significantly transformed the way in which it manages and regulates construction litigation, including, in 2009, by converting the Building List into the Technology, Engineering and Construction List ('TEC List'). It is therefore timely to ask the question 'construction litigation: are we doing it better?' This question is more important today than ever before, since within the last year, the number of cases initiated in the TEC List has almost doubled, with the list consisting of 32 cases at the time of writing. (4) This article scrutinises the Victorian reforms using a comparative analysis in order to determine whether the Supreme Court's reforms represent world's best practice, and ultimately concludes that while the new rules represent a significant enhancement, there is still room for improvement.

In addition to providing the first in-depth scholarly analysis of the TEC List reforms, this article serves a secondary purpose. Renowned American construction law professor Justin Sweet recently lambasted the dearth of scholarly research in the field of construction law. (5) The authors have heeded Sweet's call for more research in this area, and this article plays a modest role in redressing the problems he identified.

II SITUATING THE REFORMS WITHIN WIDER CONTEMPORARY DEBATES

In order to provide context, it is useful to examine the reforms to the rules governing construction litigation in Victoria against the backdrop of other recent reforms to civil procedure rules, and developments in construction dispute resolution generally.

A Civil Procedure Reforms

Many of the TEC List reforms were developed during a period when civil procedure rules in Victoria, and nationally, were being overhauled. The modern requirements, imposed by the Civil Dispute Resolution Act 2011 (Cth) and the Civil Procedure Act 2010 (Vic), will have, and indeed are having, a significant impact on potential litigants, alternative/appropriate dispute resolution ('ADR') practitioners, and lawyers. (6) The changes reflect a philosophy that litigants should consider and, if possible, use ADR (including negotiation) before commencing an adversarial battle. (7) It has been noted that '[i]ncreasingly, policy makers and courts are setting new behavioural standards for litigants, would-be litigants and their representatives and are requiring disputants to meet obligations to resolve disputes before accessing courts.' (8) The new federal and state legislation essentially require that disputants take 'genuine steps' (Commonwealth) or 'reasonable endeavours' (Victoria) to resolve their differences before commencing litigation. (9)

When introducing the Victorian legislation, then Attorney-General Rob Hulls indicated that the 'bill's intention is to give real meaning to the saying that litigation should be a measure of last resort.' (10) Policymakers and members of the judiciary endorse this view of the role of litigation, with then Chief Justice of the High Court of Australia, Murray Gleeson, stating:

Access to justice has a much wider meaning than access to litigation. Even the incomplete form of justice that is measured in terms of legal rights and obligations is not delivered solely, or even mainly, through courts or other dispute resolution processes. To think of justice exclusively in an adversarial legal context would be a serious error. (11) The recent legislative reforms represent a continued evolution in the use of ADR in Australia, and recognise the changing role of the courts within the modern Australian dispute resolution environment. This will undoubtedly affect construction disputes in a meaningful way.

B The Vanishing Trial

In her article 'Judging the Vanishing Trial in the Construction Industry', Beverley McLachlin noted that

[t]he trend is clear: fewer and fewer construction cases are reaching the courts where the law is developed. Increasingly, instead of being resolved by judges, construction disputes are being sent to mediation, arbitration, or other forms of alternative dispute resolution ... (12)

Warren Winkler, the Chief Justice of Ontario, attributes the general trend away from litigation to the fact that '[o]rdinary litigants simply can't afford to take their cases all the way through trial'. (13) Parties to construction disputes are focused on a speedy, low cost resolution, rather than developing the common law. (14) The fact that an increasing number of parties are eschewing construction litigation makes the TEC List reforms even more important. If construction litigation is not perceived as a viable form of dispute resolution, then the construction lists within courts may suffer a similar fate to the dinosaurs. The TEC List reforms represent the Victorian Supreme Court's efforts to counter the vanishing trial phenomena by making construction litigation a more attractive form of dispute resolution.

C The Finality of Construction Dispute Resolution

John Uff notes that in the last few decades, there has been significant growth in the variety of dispute resolution avenues available to parties involved in construction disputes. (15) However, there is likely to be a place for construction litigation in the smorgasbord of dispute resolution procedures, because there will always be those cases that can only be resolved through the imposition on the parties of a final and binding decision. Uff contends that effective dispute resolution should strive to be final, albeit subject to some exceptions. (16) Thus, for the TEC List to be an attractive option for parties to a construction dispute, the parties must have confidence that the decisions made during the course of the litigation will not be subjected to multiple challenges. Uff notes that the Technology and Construction Court ('TCC') in the United Kingdom ('UK') 'has now settled into a much more mature role' where its decisions are generally accepted by the parties as being as binding as decisions of other divisions of the High Court. (17)

D Standard Forms

The overwhelming majority of construction projects are undertaken using a standard form contract, albeit one that is often heavily amended. Such contracts generally seek to limit the number of disputes and establish dispute resolution regimes, including the insertion of compulsory arbitration clauses, for those disputes that the parties have not been able to avoid or resolve themselves. Justice Byrne refers to the 'contractual provisions which seek to confer finality on the determinations of contract administrators, particularly determinations with respect to progress certificates, contractual discrepancies, time extensions and the like' as being one of the most important dispute minimisation/resolution strategies. (18)

Other contractual provisions designed to minimise and resolve disputes include requiring claims to be made as they arise, so as to avoid unwieldy global claims at project completion, and more novel approaches such as 'provisions for mini-trials and for negotiations at CEO level.' (19)

Unfortunately, the most widely used standard form contract on Australian commercial construction projects (AS4000) fails to include any form of ADR; (20) it provides only for arbitration or litigation.

E Arbitration

The traditional response to the risk of construction disputes has been to include arbitration (compulsory or optional) within the dispute resolution clause of standard form contracts. (21) Courts have tended to endorse this course of action by readily staying litigation if one of the parties seeks to arbitrate the dispute pursuant to a valid arbitration clause in a construction contract. (22) However, despite this support, these days parties in a dispute are less inclined to choose arbitration as their preferred dispute resolution method. Justice Byrne suggests that this is because 'lawyers hijacked the...