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Impact of Civil Justice Reform on construction disputes

Most construction disputes involve complex technical and factual issues, voluminous documents, many witnesses and long project history. As a result, it takes a long time and significant expense to resolve construction disputes in court. The Civil Justice Reform (CJR) which came into effect on 2 April 2009 aims to reduce delay and legal costs of construction disputes in the Hong Kong High Court.

This article discusses the impact of the new CJR rules on the typical components of construction litigation particularly pleadings, discovery, case management, witness statements and experts, and make a few high-level strategic comments in the running of such cases. Pleadings.

Construction disputes are factually and technically complicated. It is difficult to set out a case with precision before the facts and technical issues have been examined in detail. Before the CJR, parties would normally prepare the bare minimum at the beginning and try to refine the case during the proceedings, which could delay the proceedings.

Under CJR, parties are required to engage sufficient resources to state their most precise material facts and to confirm the accuracy of those upfront (a failure to do so may be regarded as contempt of court!). Costs will be incurred sooner rather than later and it is no longer acceptable to run speculative and fanciful arguments which cannot be verified early on.

Discovery

One of the special features of a construction dispute is the huge volume of documentation involved. This has been criticised as a major source of litigation expense: it lengthens trials and can be used by richer litigants to delay, harass and exhaust the financial resources of poorer opponents.

Under CJR, the court may limit the scope of discovery in construction disputes to documents which are only directly relevant to the issues.

The new rules are likely to benefit contractors more than employers/sub-contractors because main contractors typically keep most of the documents of a project.

Case management

New case management procedures were introduced under CJR (see O.25) to speed up the litigation process. Parties are expected to set out a timetable leading up to trial within 28 days after the close of pleadings. Before a timetable for trial is agreed, all parties must be fully up to speed in respect of their cases by the time the Case Management Conference is held. Non-compliance with the timetable is generally unacceptable to the court.

In some recent cases the court showed it is serious about case management. For example, in Lee Kwok Ning Lobo v Emcom International Ltd, the court refused to adjourn a hearing despite the parties' agreement. Also, in Lee Sau Fat v FH Security Services Co Ltd, the court by its own motion restored the proceedings because the case was inactive since discovery was completed in 2007. The court criticised the parties for failing to progress the case with reasonable expediency.

Witness statements

This area is least changed under the CJR. The only addition is that a witness may only amplify his or her witness statement and give evidence on new matters which have arisen since the statement is served with the approval of the court. As construction disputes and ultimate entitlements usually depend on which party is more prepared on factual matters, very detailed statements are a must.

In the recent Nina Kung case, the trial judge rejected Chinachem's application to call witnesses during the trial on the basis that the probative value of the new witness evidence did not outweigh the unfair prejudice caused to the trial.

Experts

Experts play an important role in construction disputes because complicated technical issues such as programming, quantity surveying and engineering matters are usually involved. Under CJR, the court may (under O.38 r.4A) appoint a single joint expert (SJE) at the case management stage, taking into account:

• whether the issues requiring expert evidence can readily be identified in advance
• the nature of those issues and the likely degree of controversy attaching to the expert evidence in question
• the value of the claim and the importance of the issue on which expert evidence is sought, as compared with the cost of employing separate expert witnesses to give evidence
• whether any party has already incurred expenses for instructing an expert who may be asked to give evidence as an expert witness in the case, and
• whether any significant difficulties are likely to arise in choosing the joint expert witness, drawing up their instructions or providing them with the information and other facilities they need to perform their duties.

The court is not expected to appoint a SJE for complicated construction disputes, rather a SJE will normally be appointed where the value of claim is low and the issues are relatively simple.

On the other hand, the court will try to limit the scope of expert evidence by requiring the parties to agree to a list of questions for experts. Experts will not be allowed to adduce evidence which is irrelevant or beyond the scope of the list of questions. Our experience with matters in the Construction and Arbitration List is that questions which generate a 'yes' or 'no' answer is desirable. Other recommended approaches are multiple choice questions and providing a selection of answers for experts to select.

In the Nina Kung case, Chan applied to adduce evidence from a substitute handwriting expert because the original expert's evidence was not favourable to him. The trial judge allowed Chan's application on the basis that the new expert report contained evidence that was relevant to the just resolution of the dispute over signatures.

Conclusion

Dispute arises in almost every construction project. The new measures under CJR are likely to make construction litigation more efficient and more cost affective overall than arbitration. While the actual impact and effectiveness of these new measures under CJR continues to be tested in court every day, they do seem to be very positive and sensible overall.