Canadian Lawyer

w w w . C A N A D I A N L a w y e r m a g . c o m N o v e m b e r / D e c e m b e r 2 0 1 4 13 ConstruCtion industry looks to dispute resolution boArds l ess construction industry dis- putes are landing before the courts as the industry instead opts for mediation and arbitration, but that hasn't always proven the best solution and the legal community is exploring other options, says Vancouver construc- tion lawyer Mike Demers, vice-chair of the Vancouver Regional Construction Association's executive board. "Parties are attempting to use media- tion more often and virtually every con- struction contract in the province pro- vides for arbitration, rather than a court litigation process, to resolve disputes," he says. "But, the traditional belief that arbi- tration is less complex and expensive has not proven to be true. In fact, arbitration of contentious construction matters has become nearly as complex procedurally, and can be even more costly, than a court proceeding." Demers notes some arbitrators are charging upward of $1,000 per hour to serve in that role, and the parties to the arbitration have to pay those costs, unlike judges who are paid for by the govern- ment. He says the drawbacks of both arbitration and litigation have caused the legal community handling construc- tion disputes to look at other alterna- tives. "There is an increasing interest in using dispute resolution boards," he says, with the board consisting of a collection of industry experts who have both the legal and technical expertise necessary to "resolve the dispute early and quickly." Another possible option for dispute resolution that is trickling into Canada via international firms, and is common place in the United Kingdom is "adju- dication." It is a new concept for resolving dis- putes, says Demers. "It is essentially quick and dirty rough justice where the dispute is settled by an independent party with experience in construction matters. By law in the U.K., the time from start to finish for a dispute is 35 days, unless the claimant agrees to an extension and even then it can only be extended by another 14 days. The dispute is settled when the issue is fresh, not several years after sub- stantial completion of the project." It is not considered "perfect justice," says Demers as there are tight time lines that parties must adhere to when putting forward the complaint and responding, but it does away with lengthy, drawn out cases where each side's legal team attempts to "leave no stone unturned." By U.K. law, the adjudicator's deci- sion is binding until the dispute is finally determined by legal proceedings, arbi- tration, or agreement of the parties. "Anecdotal evidence of the U.K. experi- ence is that, by and large, most adjudica- tions are the final word, and the parties to the dispute are generally content to live with the adjudicator's decision rather than engage in further legal proceedings over the dispute," noted Demers. The disputes are not going away as trends appear. "We seem to be seeing an increasing number of payment disputes. . . . In addition, there are lots of disputes over changes and extras [to a project] where the genesis rests with poor quality drawings or specifications that the vari- ous project participants are stuck having to deal with. Architects and consultants are not being given enough time or money to allow them to put out 100 per cent shovel-ready drawings. . . . It's crazy to me that this continues to happen, time and time again, but it does." Contracts are also becoming more complex. He says contractors and sub- contractors today need to know how to effectively manage that risk and the contract administration obligations that contracts bind them to. "It is not enough anymore just to do good work. You have to do so much more than that to just stay in business, let alone succeed." — Js Untitled-3 1 2014-10-29 8:34 AM

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