October 23, 2014

Maxims and axioms from a construction litigator


In construction, there are a number of things we hear on the job site – little maxims, definitions or shots that tell a bigger story and convey rules to live by to maximize productivity and minimize cost. From ‘measure twice, cut once,’ to ‘make-work projects,’ to ‘if you can’t find the time to do it right, you won’t have the time to do it again,’ to comments about the poor dog, we’ve all heard, if not uttered, these and many more such phrases.  

This month, I’ll throw out a few such maxims and axioms that we in the construction litigation world use to convey messages and rules of thumb, for what they might be worth!  

Remember the fish  
An old-school country lawyer is preparing his client for trial, in his office adorned with the trophies of his favorite pastimes – hunting and fishing. At one point, he points to the wall and asks his client, “If that fish could talk, do you know what he’d say? I wish I’d kept my mouth shut!”  

There is a lot to be learned from that phrase. In the construction industry, we need to be careful about what we commit to in writing or allow to be minuted at meetings. We should write our correspondence as if a judge might read it one day. This is particularly true when we want to tell someone what we really think about them, or an issue. Even internal correspondence is fair game: most of what you write internally will have to be produced in the event of litigation. All of your opinions, and views of life, will accordingly be there to be evaluated. Remember the fish!  

It doesn’t matter who is right: What matters is who has the best evidence  

Keep this one in mind all throughout a project. The saying has the same moral as the one about finding time to do it right in the first place. If there are changes in the work, document them when they are fresh in your mind. If contractual approvals are required, get them. If notices are required, give them. If you think you might have to prove costs, keep detailed records sufficient to show a stranger, ie. a Judge, that you incurred these costs doing the specific task you say was required. If backup to the costs are required (timesheets, supplier invoices, lead letters on hourly rates, costing guides, etc.) compile them at the time, so you don’t have to recreate them later. Move all emails into project-specific folders every week or so, so you (and everyone else in your company who touched the job) don’t have to do it later, when they might not even remember what job an email relates to. In other words, keep good evidence!  

Remember what “sue” stands for  
We should remember, if we want to sue the other side, what ‘sue’ stands for: Slow; Uncertain; Expensive. There is no question that the wheels of justice turn slowly. An average construction claim will take two or three years to litigate; many take a lot longer. There are simply too many steps required, and too few resources available in the system, to get most litigation proceedings to trial quickly. The problem is exacerbated in construction, where disputes are often very document-intensive. 

Litigation is uncertain, because there are always two sides to every story and because the result will depend on who you get for a judge and on how the various witnesses perform. It is certainly wise, if you think you have a slam-dunk and don’t know why the other side doesn’t just give up, to do your best to see it from their point of view. This will help in risk assessment. It should also be understood that winning might only be the starting point. In many cases, collecting on a judgment might be the biggest challenge to recovery. 

Litigation is also expensive (though you probably didn’t need to be told that). Lawyers who know what they are doing charge handsomely for their expertise. Also, because construction litigation can be document-intensive and complicated, many, many hours will have to go into the process. In addition, our litigation system is not set up to make the winning party whole. The winning parties will only collect a portion of their legal fees, if successful. Depending on the jurisdiction they are in and what offers to settle were made, successful parties will ‘eat’ between 15-50 per cent of their costs. In addition, you will never get compensated for your time, or the time of your employees, in preparing for and participating in the litigation. This, of course, can result in hours, and hours, of time. All of this should be taken into consideration in deciding on a settlement position.  

Remember the old bull There are, of course, limits to what reasonable people will do to settle litigation. Sometimes, the other side makes continuing with the process a necessary evil. In other circumstances, a determination of who was at fault in relation to, for example, a failure in the work or significant construction delays, cannot be made until the process runs its course. In those cases, it is sometimes wise to remember the story of the old bull.   

An old bull and a young bull are standing on a hillside. The young bull says to the old bull, “Let’s run down the hill and make love to one of those cows!” The old bull replies, “Let’s walk down the hill, and make love to them all.” Remember the old bull. The quick and easy fix is not always best. Have a good contract in place. Meet your contractual obligations and document what is happening on site. Don’t let things fester unresolved. Have good, experienced counsel knowledgeable in the area — and contact him or her before you do or don’t do something you will later regret. Work the process, and take the time to be prepared. Don’t look for the quick and easy way out. Too many litigants presume that the matter will settle in their favour only to find out, too late, that they are not prepared and have a big problem on their hands.  

Robert Kennaley of McLauchlin & Associates practices construction law in Toronto and Simcoe, Ont., and speaks and writes regularly on construction issues. He can be reached for comment at 416-368-2522 or at kennaley@mclauchlin.ca. This material is for information purposes and is not intended to provide legal advice in relation to any particular fact situation. Readers who have concerns about any particular circumstance are encouraged to seek independent legal advice in that regard.