What Causes Construction Litigation?
Over the last 50 years, close to 70 reports have been written about the construction industry, but none of them have sought to squarely address the causes of construction litigation.
Whilst a number of academics have tried to address the topic (at least 25 in the last 30 years), none of them have looked at High Court Technology and Construction Court (TCC) litigation specifically.
Daniel Shaw, a Partner at Hamshaw, therefore set about researching the causes of TCC litigation with the University of Cambridge, by analysing 927 court judgments handed down between 2004 and 2014.
The Method
Daniel read the transcript of each judgment, which is the document published online which states, in the Judge’s own words:
the facts of the case – what had happened between the parties which had given rise to the dispute;
the law – the principles of law that applied in the circumstances, and needed to be considered in order to resolve the dispute correctly; and
the result – what the correct resolution was in light of the facts and the law (and, crucially for the lawyers, why that was the correct resolution).
English judges are amongst the best in the world, and the judges of the TCC are exemplary. Judgments are often long because the TCC judges take so much time to set things out clearly. That means that, more often than not, it is clear from the facts set out in the judgment why the parties have ended up in court.
Wherever that was not clear (or there were lots of different possible reasons), reading how the Judge applied the law to the facts revealed the heart of the dispute between the parties: Judges are careful to ensure they discuss the points that needed to be resolved (i.e. the points that required the court’s intervention, and therefore the points which had caused the parties to go to court).
The Results
The results of the analysis showed that errors or failures in entering into contracts, and errors or failures in drafting contracts, were the two most prevalent elements causative of TCC litigation. Almost 50% of all hearings (not just trials) in the TCC over the ten-year sample were the result of these things.
Whilst it is not sensible to draw firm conclusions from only one study, Daniel’s research suggests that those involved in construction projects should take care to ensure that their contracts are carefully drafted and properly entered into in the first place, otherwise they risk expensive and time-consuming litigation later down the line.
Often, parties at the start of a contract are in good spirits, are amicable, and are keen to get on with the job. This can mean that contract drafting and signing is not always high on the list of priorities. Standard forms, and standard terms and conditions, can be sent back and forth between parties without much thought or attention. Daniel’s research suggests that this can cause expensive problems later down the line.
Hamshaw can assist you to review, amend, or prepare contracts correctly first time. We can review your existing documents, or prepare fresh ones. We can also advise on appropriate standard forms and how you might wish to consider amending them to suit each job.
Click here toHamshaw today. We are happy to discuss fixed prices for fixed scopes of work, or we can work on a monthly retainer basis if you need regular contract review/drafting support.