PRM SEM 02 - 08. Dispute Resolution and Risk Management

Question 1

Dispute Resolution

Answer 1

It takes a lot of time and costs a lot of money in lawyer and expert fees to go to the High Court. It makes sense to avoid this, for both plaintiff and defendant.

Indeed the whole Weathertight Homes Resolution Service and Act establishing it is an attempt to avoid costly and protracted litigation. We will look at this in a separate lecture.

When an issue or dispute arises we try to take the following steps to resolve it:

• Negotiation
• Mediation
• Arbitration
• Expert Determination
• Adjudication
• The Disputes Tribunal
• The Building disputes Tribunal
• District Court
• Appeals

Question 2

Negotiation

Answer 2

Talking about the issue offsite in a neutral venue after everyone has calmed down. Perhaps with the help of an experienced person.

Question 3

Mediation

Answer 3

Mediation involves two parties negotiating a solution with the help of a mediator. Its cheap, simple and quick but relies on a consensus or mutual agreement.

AMINZ (Arbitrators and Mediators Institute of NZ) can provide professional help ..
It is the first resort of dispute resolution for both the NZIA and the Weathertight Homes Resolution Service.

People often prepare for mediation by preparing evidence and bringing an expert witness. This too can be expensive. Sometimes in mediation parties don’t admit any negligence or guilt but agree to settle to just make the whole issue disappear.

In leaky building cases the general split has been builder 60% council 20% architect 20%. But there have been recent changes - see next lecture.

Parties can make their own rules for mediation eg no lawyers, no surprises (exchanging evidence in advance), complete confidentiality, no appeals etc.

Question 4

Arbitration

Answer 4

Involves an independent and impartial arbitrator making a decision.

Generally both parties need to agree to go to arbitration. This is still relatively cheap and simple.

The Arbitration Act 1996 encourages arbitration to settle commercial disputes rather
than litigation in the courts.

Question 5

Expert Determination:

Answer 5

Unlike arbitration, is not governed by legislation. Expert Determination is a consensual process by which parties to a contract agree to refer matters in dispute to an independent person to decide. The independent person has expertise relevant to the matters in dispute between the parties and is engaged to decide the disputed matters as an Expert and not as an Arbitrator.
The process is controlled by the parties themselves, who agree beforehand whether
or not they will be bound by the decisions of the Expert.

Question 6

Adjudication:

Answer 6

Loosely means a process similar to arbitration except only one party can turn up at the hearing. Even if the other party doesn’t attend they are still bound by the decision. “Adjudication” under various Acts (eg the Construction Contracts Act 2002) has a distinct meaning.

Adjudication can also mean going to the courts below:

• The disputes tribunal
• The building disputes tribunal
• District Court
• High Court
• Appeals - Court of Appeal and Supreme Court

Question 7

The Disputes Tribunal

Answer 7

For claims under $15,000 (or $20,000 if everyone agrees), much less than the usual building dispute so not much use to us.

Question 8

The Building Disputes Tribunal:

Answer 8

Despite the official sounding name this is a private company offering services like others. But it is an example of mechanisms that can be used for disputes between contractor, sub-contractors and homeowners. They. can use many of the processes described above but most commonly handle arbitration and adjudication as required by the Construction Contracts Act 2002 (see above, also discussed

Question 9

District Court

Answer 9

The District Court is generally for criminal cases but will deal with civil cases up to
$200,000.

Question 10

High Court

Answer 10

The High Court handles most civil litigation as we have been discussing above.
Generally one is seeking compensatory damages (actual compensation for losses incurred) as we have discussed but also costs (of the action eg lawyers and consultants fees).
It is not uncommon to settle out of court or half way through a court case.

Question 11

Appeals

Answer 11

Sometimes going down one of these resolution routes will close off the possibility of action in other routes eg mediation is final once the parties sign an agreement. However for arbitration and adjudication, generally a party can appeal the decision to a higher court.

In the NZ courts, generally, a decision of the High Court can be appealed to the Court of Appeal and in turn to the Supreme Court.

Question 12

Risk Management:

Answer 12

You can’t contract out of liability (although everyone tries!). To manage your liability in negligence you should:

• Have risk minimalisation systems eg checklists, policies, programmes,
  models of good practice to follow.
• Use peer review: get a colleague to look at your office production systems or
  documentation of a job while you look at theirs. This is widely used by
  engineers.
• Keep up to date with knowledge through CPD (Continuing Professional
  Development) and education.
• Advise when specialist or consultant services are required.
• Put in writing your issues or concerns and communicate these to client and consultants.
• Operate through a limited liability company.
• Have Professional Indemnity (Pl) Insurance.
• Have your house and possessions in a family trust.

These will be discussed in more detail in the NZACS guest lecture on Risk Management, as well as the lecture on setting up an architectural practice.

Question 13

Resolving Problems