How the construction dispute landscape has changed
According to a recent report by Arcadis entitled “Does the construction industry learn from its mistakes?”the average value of disputes in the UK construction industry has transformed from being the lowest globally, to one of the highest. While the principal causes of construction disputes may not have changed greatly, the landscape in which they are unfolding certainly has. With construction disputes continuing to grow in size and complexity we speak to Victoria Russell, a consultant at Fenwick Elliott LLP, to find out more. Victoria’s wealth of experience as a construction law specialist, including her recent award of The Society of Construction Law’s President Medal 2018 for her outstanding contribution to construction law, means she is perfectly placed to tell us about some of the developments she has experienced.
Could you please give me an overview of the changes you have seen throughout your career?
When I was close to qualifying as a solicitor in 1981, I answered a job ad in The Times which said “Great future for a good fighter”. It didn’t mention construction. I thought it sounded interesting so applied, and got the job. All my friends thought I was mad. I was the first female lawyer my then firm had hired. Four years later, when I became a partner, I was horrified to discover that they had drawn up a list of all the clients they thought would object to having a woman as their solicitor. Fortunately for me, none of them had done so. I really hope that wouldn’t happen now.
There have been many changes to construction dispute resolution in the intervening 37 years. When I started my career, the construction judges were called Official Referees. Case management was occasional and haphazard and trials were double- or triple-booked, causing enormous delay and uncertainty plus huge expense. Litigation was a battlefield, with few if any emerging victorious.
Back then, the standard forms of contract were largely JCT, usually with an arbitration agreement, so the majority of disputes were resolved by arbitration. Arbitration, however, became the mirror image of litigation, with lengthy and expensive hearings. Lawyers were unfortunately to blame.
Which changes do you feel stand out as improving the handling of construction disputes?
It became clear that dispute resolution needed a major shake-up. After the Arbitration Act 1996, the developments which have been most significant, and had the most impact, include the Woolf reforms leading to new Civil Procedure Rules in 1998, intended to provide access to justice. The introduction of pre-action protocols has resulted in much earlier exchange of information by all parties and there is now a clear expectation that parties will make serious attempts to try and settle their differences at pre-action stage. There’s more of a “cards on the table” approach.
The judges in the Technology and Construction Court have led the way in demonstrating how best to manage cases, and have pioneered a far more efficient and effective way of litigating. There are much clearer lines of judicial and administrative responsibility for the civil justice system. There are shorter waiting times for trial. Judges have a “hands-on”attitude, which can only be a good thing.
The advent of all forms of Alternative Dispute Resolution (ADR), but particularly mediation, and the introduction of statutory adjudication under the Housing Grants, Construction and Regeneration Act 1996, have combined to change the landscape of dispute resolution. Domestic arbitration has largely faded away. Adjudication has proved a successful and usually relatively cost-effective way of resolving disputes. The courts uphold the vast majority of adjudicators’ decisions and most cases don’t go on to subsequent litigation. Mediation is widespread and often results in satisfactory settlements.
Part 8 proceedings have been particularly useful and Part 36 helps promote a greater incentive for parties to settle.
Litigation has, however, for too long remained very expensive, and disproportionately so for small to medium sized claims. The recent Jackson reforms are intended to address this, introducing strict cost budgeting requirements with sanctions for non-compliance. Costs should now be more predictable and proportionate.
How do you think technology has changed the landscape of construction disputes?
This has, of course, been the other biggest change. When I qualified in 1981, there were telexes and word processors, happily now long since consigned to the bin. Technology has had a dramatic impact on virtually every aspect of dispute resolution. There is now full digital access to the courts, with pleadings and other documents filed online. Disclosure is managed electronically and the many weeks I spent in the early years of my career sitting in site huts ploughing through and marking up shelves full of lever arch files seem a distant memory.
Judgments are now reported on bailii.org as soon as they are handed down, so it is much easier to keep up to date. Research is largely conducted online too, which is much simpler and easier than it used to be.
You mentioned disclosure being dealt with electronically, do you feel it has become more or less burdensome?
I think that disclosure has actually probably become more burdensome, despite and because of the advent of technology; there are more documents to review largely because of the vast number of emails which people send, as well as texts.
Any other changes, or perhaps anything you think might never change?
Parties don’t now just contract on JCT. After a period of getting used to it, NEC has proven both popular and successful, and there are a range of other forms as well as partnering and alliancing agreements. It amazes me, however, how we still regularly get clients who have very little idea whether they have an enforceable contract and if so, what its terms consist of. The “battle of the forms”will perhaps never fade away.