Building and Construction Disputes- Changes to the way you must handle these

From 1 October 2014, new Court Rules were introduced to supplement the existing District Court Rules (Supplementary Rules).

Amongst the changes was the introduction of Rules about building and construction disputes, for claims in excess of $100,000.

These Rules relate to the steps that parties must take before they commence a Court action. They are fairly strict, and involve the input of your lawyers. There are serious consequences for the parties, if the Rules are not complied with.

The main object of the Rules is to facilitate resolution of disputes and to avoid unnecessary delays in the Court system. A brief explanation of the necessary process is set out below.

Firstly, when the dispute arises, the claimant (the party claiming against another party) must send to the other party (the respondent) a letter of claim, clearly setting out such things as:

  • The facts;
  • the estimated costs likely to be incurred by claimant in a contested trial;
  • an offer to resolve the dispute; and
  • a proposed date and venue for a ‘pre-action meeting’ if the offer is not accepted.

The letter of claim must also attach any expert reports, and provide the respondent 21 days to respond to the letter.
The respondent can either accept the offer or provide a letter of response. The letter should clearly set out such things as:

  • the basis of the dispute;
  • which claims are accepted and which are rejected in the letter of claim- stating facts the respondent relies on;
  • any special defence to a claim;
  • whether any damages claimed or extensions of time provided by the claimant are accepted or rejected in part or in whole;
  • any contributory negligence claimed by the respondent against the claimant;
  • any counterclaim; and
  • estimate of total costs likely to be incurred by the respondent (proposed defendant) in a contested trial;
  • an offer to resolve the dispute; or
  • a response to the proposed date and venue for the proposed pre-action meeting if the counteroffer is not accepted.

The respondent must also attach any expert reports and provide the claimant 14 days to respond with any intended counterclaim.

A pre- action meeting occurs 30 days after receipt of the letter of response or the claimant’s letter of response (whichever is the later). The parties meet to:

  • identify the main issues in dispute and the main cause of the disagreement;
  • consider if and how the issues can be resolved without having to go to Court’
  • if Court is unavoidable, consider what steps should be taken to be sure that the process is efficient and expedient.

Lawyers for each party will assist the parties to reach a consensus on the likely legal costs, the expected time involved in the Court process and any appropriate alternative dispute resolution available.

Parties will also use their best endeavours to agree expert evidence, to narrow down issues, to decide on the relevant documents that should be exchanged and disclosed, and the conduct of the Court process (litigation) to minimise costs and delay.

Thereafter, if the dispute is not resolved, any party may commence a Court action. To do so, that party must first file with the Court a memorandum stating that the parties have substantially complied with the abovementioned process. The party must also include copy of the letter of claim and letter of response. These are to remain in a suppressed file, until the matter is resolved, or after judgment is entered against one of the parties, or the Court makes a final determination after a contested trial, or if one of the parties has not complied with this pre-action process.

It is a breach of the Rules if parties do not follow this process, before a Court action is commenced, unless:

  • urgent relief is sought in an action;
  • a freezing order is sought;
  • a claim is approaching the time limit in which to make a claim; or
  • complying with the pre-action process would prejudice the claimant.

Lastly, if the pre-action steps have been complied with, the Court sets the matter down for a directions hearing. The Court will set a date for a settlement conference, if it looks to be useful.

If the pre-action steps have not been complied with, the defendant (respondent) can apply (within 5 business days of being served with the Court claim) for a directions hearing, on the grounds of default by the claimant. The defendant will not have to file a defence unless the Court directs so after the hearing.

At the initial directions hearing, the Court will consider the consequences of any default in compliance. The Court may consider the suppressed file, and/ or make orders that the non-complying party pay the other party’s costs.

The District Court has also introduced “Fast Track Rules” for certain disputes including Building and Construction. The object of this is similar to the Rules mentioned above (expediency in the Court system, to encourage early resolution etc.). However these Rules are limited to claims which are, in the opinion of the party/solicitor for the party, not exceeding $250,000 and a trial is not expected to take more than 3 days.

A contested trial is a last resort. This is where the Judge makes the final decision and delivers a judgment.

So, although complying with the new Court Rules is a “process”, at least before you get to trial, you can be certain that you have had the opportunity to explore all avenues to resolve the dispute in the most expeditious and cost effective way.

If you have any enquiries or require further information or wish to have a general discussion, please contact Anne Najjar by phone on my direct line 8360 8310 or by email anajjar@johnsonlaw.com.au

Posted on June 27, 2015 in Blog

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