Effective Business Dispute Resolution Methods
Five Established Business Dispute Resolution Procedures
Negotiation: A discussion aimed at reaching an agreement. It is considered synonymous with settlement, agreement, collaboration, and bargaining. Negotiation can be defined as a channel of communication intended to reconcile differences between parties and to settle conflict jointly. Face-to-face meetings are more professional, allowing for observation of emotional cues.
Conciliation: An alternative dispute resolution (ADR) process where parties to a dispute use a conciliator. The conciliator meets with the parties separately and together to resolve their differences. It is a method to resolve disputes outside of the courts.
Mediation: A third-party facilitates discussions between the client and contractor to settle the dispute. The mediator advises on ways to resolve the dispute. This method is less common in the Australian building industry, possibly due to a lack of trust between parties.
Collaborative Law: A legal process enabling couples who have decided to separate or end their marriage to work with their lawyers and, occasionally, other family professionals. This helps avoid the uncertain outcome of court and achieve a settlement that best meets the specific needs of both parties and their children, without the underlying threat of litigation.
Arbitration: Arbitration is generally described as an efficient, impartial, and enforceable method to resolve commercial disputes. An independent arbitrator, agreed upon by both parties, can be employed. Some contracts (generally not those in residential construction) include an arbitration clause, forcing parties to arbitration. It’s crucial to choose an unbiased arbitrator. Arbitration offers speedy decisions and maintains privacy. The party at fault typically pays the arbitrator’s fees.
Litigation: The settlement of legal disputes before state courts. Due to the time and cost involved, litigation is the last and least preferred option.
Implementation and Review of Procedures in the Workplace
Good contract administration is essential. The contract must be clear, concise, and enforceable by law. Proper use of contracts ensures all parties know their obligations. Once executed, timely and proper administration is vital. Open communication and recorded decisions are crucial. Claims for extensions of time and variations should be documented and given to the client within the contractually stated time. Verbal instructions from the client or architect should be formalized in writing via a site instruction.
Staff Performance Management
Staff performance management supports and enables employees to work effectively, allowing the organization to meet its needs. Managers communicate with employees, assess their performance, and provide feedback. Key Performance Indicators (KPIs) in the construction industry can include:
- Cost versus budget
- Number of complaints
- Number of incidents/accidents
- Material usage versus ordered amounts
- Number of defects
- Number of variations
Organizations with effective performance management plans usually experience increased productivity and higher employee motivation, especially when combined with positive reinforcement incentives.
Recording Procedures for Dispute Resolution
Employers with best practices will have a simple, quick, fair, confidential, and transparent dispute resolution procedure in place. This may be part of a modern award, enterprise agreement, company policy, or employment contract. Employees should be aware of these procedures. A builder can manage staff by:
- Making regular diary entries about attendance, arrival/leaving times, and lunch breaks.
- Recording feedback from clients and co-workers.
- Monitoring and evaluating staff’s KPIs.
- Assessing the quality of work and variations.
- Keeping evidence of any warnings (verbal or written).
Poorly Managed Performance and Bullying Claims
Keep records, such as a site diary, to document working behaviors, attitude, work performance, and interactions. Ensure a witness is present during meetings to corroborate claims.
Accessing External Arbitrators or Conciliators
Contact your industry association for advice. They understand disputes and can offer guidance on who to contact.
Examples of Typical Building Business Disputes
1. Variation or Project Delay: Refer to the contract to determine if an extension of time is permissible.
2. Quality Issues: Refer to drawings and material schedules to assess if the client’s expectations align with the agreed-upon specifications.
Parties Involved in Building Disputes
Builders, suppliers, subcontractors, authorities, clients, architects, and unions.
Dispute Resolution Process
Disputes should be resolved according to the dispute resolution clause in the contract. Best practice dictates a simple, quick, fair, confidential, and transparent procedure, whether included in an award, agreement, policy, or contract. Relevant parties should be aware of these procedures.
Water Egress Dispute in Residential Wet Areas
Water egress from a residential wet area (bath/shower) can lead to a waterproofing dispute involving the builder, owner, and potentially other parties due to building damage.
Clarifying Issues in a Waterproofing Dispute
Consult an industry expert and gather records and evidence. Hire a specialist (e.g., a waterworks expert) to assess the situation, determine the cause, and potentially prove innocence.
Acceptable Informal Process for Disputing Parties
Arrange an informal meeting in a neutral location, such as a coffee shop. Allow the other party to speak freely and feel heard. Use effective two-way communication, focusing on listening.
When to Contract External Arbitrators or Conciliators
External arbitrators or conciliators should be consulted when disputes cannot be resolved internally.
Relevant Statutory Laws for Resolving Home Building Disputes
Work Health and Safety Act (NSW) 2011: Provides a framework to protect the health, safety, and welfare of all workers and others in NSW workplaces.
Home Building Act 1989: Outlines the minimum statutory rights of homeowners, builders, and contractors, covering warranties, payments, deposits, insurance, and other matters related to residential construction work.
Dispute Resolution in Accordance with Common Law
Three-Tier Court System in NSW for Litigation
- Local Court: Limited to $40,000 (excluding personal injury claims) and presided over by a magistrate.
- District Court: Limited to $250,000 (except personal injury claims) and presided over by a judge. Hears appeals from the Local Court.
- Supreme Court: Unlimited jurisdiction in civil cases, presided over by a Supreme Judge. Hears appeals from lower courts.
Unsatisfied Ruling
If there are grounds for an appeal based on points of law, the case can be moved to a higher court.
Court for a Death on a Building Site
This would be a Supreme Court matter. As a director, you could face negligence or manslaughter charges. Mitigation would require proving effective safety measures were in place.
Disputed Development Application
The parties would find themselves in the NSW Land and Environment Court. This court has jurisdiction over development applications and modifications under the Environmental Planning and Assessment Act 1979.
Using a Scott Schedule for Incomplete/Defective Work
A Scott Schedule identifies the specific questions a judge must decide in building disputes, particularly those involving complaints of bad workmanship. It helps determine the amount to be paid to the party rectifying the defects.
Examples of Typical Building Business Disputes
Builder and Client Disputes: These arise primarily from a lack of communication. Common issues include:
- Quality of work
- Variations
- Extensions of time
- Performance and completion
- Document interpretation
- Progress payments
Builder and Subcontractor Disputes: These also often stem from insufficient communication. Common issues include:
- Quality of work
- Performance and attendance
- Variations
- Payments
Parties that might be involved:
NCAT’s first step is to try and resolve the dispute through conciliation. If the dispute is over $10,000 and they reach agreement before the hearing, the NCAT will make an order(s) to formalize the agreement in writing. A copy of the order is given to both parties.