Limiting disputation

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Limiting disputation


With a number of high-profile legal cases making headlines in recent years, architects increasingly need to be more savvy when it comes to preventing and resolving disagreements. Thomas Denhardt gleaned plenty of advice for architects and designers from legal experts in the field.

Dispute - It’s an ugly seven-letter word that most architects find sinister, yet it is blatantly ubiquitous in this world in which we practise professional architecture. With all these unremitting countrywide cases that have grounds for litigious pursuit − such as the leaky schools crisis making New Zealand school-children sick, the Stadium Southland roof in Invercargill collapsing under snow load and, even, the woman who was left permanently disabled after slipping on tiling in a public institution − it’s no wonder architects are becoming more vigilant.

The verdict is in. The jury is clearly unanimous. No architect is infallible, which is why it is indispensable from the outset to limit future conflict and understand what measures can be implemented when facing the threat of disputation. So, how can architects achieve this − whether the potential for disagreement is small or large? Unfortunately, watching copious amounts of Law and Order or the Suits TV series is not going to be beneficial. Rather, architects need to be persistently engaged with continued education on disputes, by consulting professional and legal counsel as the culpability towards professionals becomes wider.

Whether or not the risk of an architectural or building dispute is expected to occur, the best policy going forward is to adopt actions that avoid the potential for clashes to occur in the first place. This is “Risk Management 101”, stated Graham Strez, who has professional acumen in this area and is an expert advisor on disputes regarding architects. When it comes to written contracts, he quoted an old Chinese proverb: “The palest ink is better than the best memory”. 

This is why Strez recommended “having good written terms of engagement − preferably the NZIA Agreement for Architects’ Services” that underline the client’s aspirations and requirements from the outset, while apprising them of the nature and extent of architectural services available. From here, a detailed brief can be accepted, allowing the commission to be fully confirmed in writing, thus minimising the risk of future contractual claims arising.

Other actions that are effective include providing the agreed services on time, obtaining peer reviews for alternative solutions, engaging in regular contact with contractors, taking site photos and concise field notes if appointed for construction observation, invoicing regularly and “keeping clients fully informed of project progress,” Strez suggested, especially when variations in building costs and associated professional services are involved. Maintaining good dialogue with the client is highly notable here, since breakdowns in communication are one of the leading causes when it comes to architecture disputes in the residential sector.

Another point which Strez highlighted is how architects need to use appropriate knowledge and skills when it comes to practising their profession. This is classified as a “common law obligation… to exercise reasonable skill, care and diligence in the performance of their services,” he said. This duty is reaffirmed in the Registered Architects Act, the Consumer Guarantees Act (CGA) and the Building Act.

Failure to comply with this duty may constitute an offence under these Acts, which is why “architects need to be fully informed about the commercial realities of architectural practice, by realising that our design passions, if left unfettered, will not necessarily produce good built architecture or enhance the professional reputation of the architect or their profession,” Strez explained. Put succinctly, “the practice of architecture operates in a commercial, contractual and regulatory environment”; thus, good documentation, a good signed contract and good professional service by each architect are paramount.

If architects do find themselves confronted with a dispute, whether they have taken the correct measures or not, then it should always be attended to as soon as the information is available to do so. Colin Orchiston, who is actively practising in building disputes as a mediator, arbitrator, adjudicator and expert witness, explained the best approach to resolving disputes: “As time goes by, memories soften and positions harden,” he stateed, suggesting that disputes should be acted upon with an early movement towards negotiation or mediation, if necessary.

Mediation is a consensual and confidential process whereby the parties appoint a neutral mediator who “assists in negotiation”, with information, issues and points of view being raised and tested without the prospect of being used for legal proceedings later. “The outcome is determined by both parties involved, not the mediator, and the preferred outcome is an agreement that will contractually bind the parties to a particular course of action,” he explained.

There are many drivers to adopting mediation, such as usually being considerably faster and more economical than litigation; having less formality than litigation, the parties are then able to control the outcomes and have a say in procedures. Additionally, the resolution options are more flexible than litigation and neither the existence of the dispute nor the outcomes are subject to open examination.

If a dispute is simple, non-technical and within the jurisdiction of the Ministry of Justice’s Disputes Tribunal (less than $15,000 or, by agreement of the parties, $20,000), then their service can be a useful means to resolve a dispute. However, on a cautionary note, there should be a contractual method or clause which stipulates how disputes are to be resolved when the contract for architects’ services is signed. “This is more preferable than trying to negotiate such terms after a dispute has arisen,” said Orchiston.

From Orchiston’s own experience with assisting in disputes, all parties, except for those of a vexatious or belligerent nature, usually want the same thing: “to sort it out fairly, efficiently and cost effectively”. But disputes are rarely black and white, he said. Each party may have different information and/or a different view of the same information. A professional person carrying PI insurance is likely to have to involve the insurers and it is “axiomatic that parties to a dispute will seek leverage in order to attain their version of a suitable outcome,” he explained.

When compromise is not an option or the dispute reaches a deadlock, parties involved might want to settle the dispute in court through litigation, since milder resolution remedies have become futile. Jess Keating, a senior associate lawyer at Kennedys Law, who has been an attorney for numerous architecture and building disputes, emphasised how vital it is to engage a lawyer when challenged with potential litigation as a pathway to dispute resolution.While, in many cases, architects are able to use their professional expertise and have a better grasp of the issues to this end, they should not forget that an aggrieved client might consider a complaint to the NZRAB that suits such a purpose. With this in mind, he advised that “compromise by both parties might provide desirable and effective resolution opportunities, and should always be explored”.

“Just as a person taking on a complex building project should engage experts in that field, so too should a professional involved in a legal dispute engage experts in that field – that is, litigators, who are familiar with and can navigate the legal process,” Keating said. Lawyers are able to recognise an appropriate path through complex disputes by “understanding the issues facing the parties of building disputes, knowing what evidence to look for, what legal arguments should be raised, where the strengths and weaknesses of each party’s position lie and having access to expert witnesses,” she said.

By August 2011, cracks in the system started to appear, with a professional report recommending not only the removal of the Overclad system but also the replacement of the entire underlying substrate (pre-existing cladding and steel framing). “The Bodies Corporate, in conjunction with the past and present owners of Fleet Street (‘the plaintiffs’), brought a proceeding against the architect, the contractor and the Council, who in turn joined a number of additional parties, including our client,” she said. ”The two principal issues that were raised in court were whether or not the Overclad system should have been recommended, approved, installed and certified, given the state of the steel substrate, and whether or not the Overclad Eterpan sheets were correctly fixed.”

Keating was involved in a litigation case in 2015 where she represented a façade designer, one of several defendant parties facing a claim by apartment owners for over $3 million to repair damaged cladding. In 2003, it was discovered that the Fleet Street Apartments were leaking. On the architect’s advice, the owners approved the installation of an Overclad rain shield cavity system to prevent further moisture ingress. The Council granted building consent for the installation, a contractor installed the Overclad system and code compliance was granted by the Council in September 2006.

After hearing all of the evidence over a five-week trial, Justice Whata held that the architect, the contractor and the Council were liable for the losses suffered by the plaintiffs, with the architect liable for 60 per cent of the total quantum (over $3 million) with 20 per cent for each of the other two defendants. Keating noted: “Justice Whata found that the architect failed to assess the suitability of the remedial solution for this particular property and to adequately supervise the works.”

The architect’s breaches in contractual and tortious duties of care materially contributed to the plaintiffs’ losses and for that they were legally answerable. This unfortunate story, like many, serves as a reminder to architects to understand their precise role in a building project and to assess the suitability of recommended construction methods for the particular site circumstances. Neglecting to do this from inception can clearly expose the architect to potential liability through disputation, as demonstrated here.

Limiting disputation can be viewed as an ominous discussion, even a dead duck by some. However, after consulting professionals with expertise in this area, the topic seems less daunting. Rather, minimising disputation offers architects the opportunity to protect themselves, while planning the best approach to resolving a future conflict through assigning and consulting the right professional for the job.

Whether claims are compelling, non-meritorious or, in some cases, spins of mythomania, it pays for architects to tighten their methods by having high-quality documents, good signed agreements and great specialised service. Since the field of disputation can be broad and multifaceted, it is important to galvanise this professional discussion continually by engaging professionals like Strez, Orchiston and Keating, who can inform architects and provide explorative corrective procedures when it comes to the inevitable.

One thing which all architects can retain from this discussion is that legislation is incessantly in a state of flux, always moving forward. Therefore, it is prudent to always be meticulous when it comes to the danger of disputation, by appointing a lawyer or other qualified professional who has the power to alleviate, if not potentially negate, what can unanimously be regarded as an onerous side of architecture practice.

PN 1.200 Liability Issues
PN 9.109 Dispute_Resolution_Arbitration_Act_Sep_2009
Professional Negligence by Jackson & Powell.
Construction Law by Thomas Kennedy-Grant.

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