Tackling disputes can be a stressful task for individuals and companies in any industry and building is no different. Justin Felix spoke to a former contractor turned expert witness and consultant to find out how builders and contractors should approach dispute resolution between each other as well as consumers.

I think it’s safe to assume that builders would prefer to avoid any situation where the need for mediation arises.

Unfortunately it does come with the territory though and it’s better to know how to tackle the situation, rather than be left in the lurch should you find yourself needing some form of alternative dispute resolution.

To make things clear, there are a number of important differences between mediation and arbitration that you need to fully understand.

Mediation involves the facilitative role of a trained third party neutral to assist parties in coming to and managing the settlement of their dispute. A mediator’s role is to help clarify and prioritise issues as well as assist parties in finding a solution. A skilled mediator facilitates a solution to the problem which best fits the needs of both parties; the mediator does not decide who is right and who is wrong. The process is confidential, voluntary and flexible, and unlike a court, there is no imposed decision: the parties themselves retain ownership of and responsibility for any settlement that is reached.

Arbitration on the other hand is an alternative means, to litigation in a court, of resolving a dispute whereby the opposing parties present their case to an independent third person, the arbitrator. After hearing the opposing cases and evidence, the arbitrator then makes a ruling based on laws pertaining to the matter.

It is far less costly to resolve a dispute through mediation than through arbitration or litigation. Because of the non-adversarial dispute resolution technique used, complex issues can be resolved in a matter of days and the business relationship of the parties can generally be preserved.

With all of that in mind we thought it would be interesting to chat with a consultant who started out as a plumbing contractor before acting as an expert witness; providing court compliant reports as well as arbitration and dispute resolution.

Robert Quick has been involved in the construction game for over 50 years and was earmarked as a plumber by his father from an early age.

“I evolved all of my education from working through my apprenticeship and night courses etc. At that stage my father employed 10-15 plumbers. Eventually my brother and I took over the business and made it rather successful. We did all of Grollo’s work in Melbourne and when they went to Sydney my brother followed.”

Having plumbed Melbourne’s Crown Casino and Rialto Towers and Hotel among many other large projects, it’s fairly easy to imagine that Robert had to contend with his fair share of disputes of all sizes over the years.

Robert shut the business down over 10 years ago, and as can often be the case when one isn’t ready to retire, comes the question, ‘What am I going to do with myself now?’

“I thought of the things I was good at and what I actually enjoyed doing. I always liked the legal side of things. For every contract I had to sign, I had to negotiate the clauses in it. I read them all extremely thoroughly before putting my signature on the dotted line.”

The decision came about quite easily.

“I thought of ways I could combine my passion for plumbing and building with my interest in the legal side and decided that I could be an arbitrator,” Robert explains.

“I first did a mediation course with The Institute of Arbitrators & Mediators Australia in Melbourne that would see me become a certified mediator which was the first step to becoming an arbitrator. I then completed a Professional Certificate in Arbitration-Advanced and General through Adelaide University.”

Robert eventually set up QP Consulting which is able to support owners, managers and body corporates, with expert advice in new building or renovation inspections, plumbing investigations of water leaks, water ingress, pre-building waterproofing, waterproofing of facades and balcony installations (inspections), piping and roofing problems.

While Robert’s business revolves around the provision of mediation and helps clients reach an amicable solution; he would much rather people avoid the cost, time and energy required to take part in the process. The way to do that, Robert believes, is through clear and concise communication between all parties. He also believes that contractors need to become more vocal with builders and their clients.

“If you have to make a change, explain it to the client or homeowner, because even if a client isn’t happy with some of the work, so long as the relationship is good, you can talk to one another and work things out.”

We asked Robert to share, in his own words, some common scenarios where the need for mediation has arisen.

COMMON SCENARIOS
I’ve been brought in on a number of occasions by a client who has had an altercation with the builder over a leaking roof. A common scenario goes like this: the builder patches up the leak with silicone because he can’t get the plumber back. The plumber doesn’t want to come back because he hasn’t been paid. He knows he hasn’t correctly installed the work to his usual standard which means that he hasn’t left a Certificate for Compliance.

At times, plumbers either have too much work or not enough. This work overload is generally filled by the apprentice working unsupervised which has been the cause of many a problem. The apprentice’s work is covered up and only comes to light further down the track when major demolition and rectification work is required. I would recommend that if an apprentice is left by himself for any length of time, then a thorough check is made of the work that he or she has performed.

I’m always disappointed when certain matters are taken to court. In the case of proceedings in Victoria, if the matter is heard at VCAT (Victorian Civil and Administrative Tribunal) then it is rare to be awarded costs, and it is even rarer to achieve 100% of what you are claiming. If you do obtain costs then the maximum you can hope to achieve is 60%. It is suggested that it is not worth going to VCAT for a sum less than $50,000. This is because by the time you have your costs, the legal representatives’ costs and the experts’ costs, it leaves you with very little in return.

It has become evident that many builders and plumbers are not aware of the requirements of the current Plumbing Codes. Many of my cases have involved water intrusion. I regularly inspect damage caused by the incorrect installation of undersized gutters, incorrect discharges from gutters (no sumps) downpipe spreaders not conforming as they are undersized, and the lack of overflows etc. My advice is that you become familiar with the current Plumbing Codes and ensure that work performed for you is up to scratch.”

I recently had a matter which involved drainage problems and each party (builder and owner) had employed the full legal team whose costs had run away from them. Each of them had spent $150,000 in the preliminary preparation, whereas I believe that the work could be rectified for $75,000. In the end each team was working to try and present a case which would allow them to win the legal costs, not just the rectification costs. The matter was settled on the court steps with no winner (only the legal team).

I was recently asked to assess a partial roof installation which was carried out by the plumber on a verbal instruction. The plumber had undertaken the work with a perception as to what would be accepted for the charge out rate. The plumber had worked for the builder previously, and had carried out work on a ‘do and charge’ rate which he believed would still be acceptable to the builder for this additional work. When I was employed, the matter had made it to VCAT with additional costs for both parties. The amount in dispute was less than a day in VCAT. This matter could have easily been settled with mediation.

I mentioned the costs of VCAT, these are as follows:

– Application costs
– Court costs
– Your time and the expert’s time for the mediation
– Your time, the expert’s time and maybe the legal reps’ time for the Compulsory Conference
– Your time, the expert’s time and the legal reps’ time for the hearing
– Your time lost in meetings and corresponding with your legal team

These are all costs, either monetary, time or aggravation costs. The mediation and hearings quite often require legal people to attend to represent the parties.

STEPS OF THE MEDIATION PROCESS

01: Agreement To Mediate
02: Deposit is held by an independent person in a trust account (costs of the mediator)
03: Both parties issued an authority for the Mediator to fulfil the function of the mediator.
04: Confidentiality agreement is signed.
05: There is no requirement to have any legal people involved in a mediation. The mediation process takes the form of an organised open discussion.
06: Some mediators like to run the mediations as a bidding war, so much so that after the initial discussion the parties are placed in separate rooms with the mediator taking bids and shuffling between them; hoping it can be settled with a bidding war.

ADVICE FOR CONTRACTORS
“It’s up to the contractor to communicate to the builder or owner and let them know what’s happening, because you can find yourself in the situation where you’re the only one taken to court, particularly if the builder has gone out of business or has disappeared.”

Robert also advises that if you are working for a builder, then you have to get to know him. You need to know how or if he pays, and ask questions like: Is he financial? Has he encountered problems with other jobs he’s done? Why is he shopping around for new contractors?

If you do find yourself in the unfortunate situation of having to deal with meditation Robert suggests:

– Ensure that both sides (the contractor/builder and the client) understand that there will have to be a compromise
– Even if you go to court it is rare to obtain greater than 60% of what you are claiming, and then you still have to allow for your time and your legal costs
– Ensure that the mediator is impartial and understands the trade
– Ensure that the mediator is certified (trained).

ROBERT’S TOP TIPS

When working for a builder
– Know your client
– Keep communication lines open at all times and if the owner has a hands on roll in the work, maintain ongoing communications with him
– If the builder is not performing in a professional manner, then you may suffer repercussions. I have found that every time a builder has performed badly, the contractors have not been paid
– If you are working for a builder make sure that you are aware of his or her payment methods
– It is important that you receive prompt payments for your work. If the builder doesn’t have the finances, then all the signed paper contracts under the sun aren’t going to help you
– Most builders are happy with their team; ask yourself the question, why are they shopping around?
– Ask around, suppliers are often a good source of information when it comes to builders/developers.
– Have everything written up in a contract
– Do not just work off the quote

When the end-user is the client
– Communicate everything clearly and concisely
– Be professional at all times
– Type up quotes and job descriptions on letterheads, not just a scrap bit of paper
– Keep them informed of any problems or changes that may arise
– It’s worth taking the hour to go back and look at a complaint rather than to spend 6 or 7 hours in VCAT and the associated legal costs later down the track. I have often seen that one or two defective items blow out to 20 defective items once the owner calls in a building consultant.

Contact:
www.qpconsult.com.au