Managing those E’s and O’s: construction defect claims

Morag McGreevey (00:13): Hi everyone. Welcome to Navigating Project Disputes, Torys’ project litigation series. Today, David and I are discussing construction defect claims.

David Outerbridge (00:22): Thanks, Morag. So, in today’s video, we’re going to talk about how best to prove your construction defect claim with a focus on three key issues that need to be considered at the earliest stage. So, the first thing you need to be thinking about in a construction defect claim is getting an expert witness. The second thing is getting your expert in there to do some early physical examination and testing of the defect.

And the third is that you, the lawyer, need to be thinking about what to prove, what needs to be proved to establish your claim. But before we get into that, Morag, tell us, what are we talking about when we talk about a construction defect?

Morag McGreevey (01:02): A construction defect isn’t limited to poor quality of work. This type of claim is broad enough to encompass everything from problems with a project’s design, to issues with the materials used, to poor performance of the end product.

David Outerbridge (01:15): Now, construction defect claims can be framed in a number of different ways, which will determine which parties are responsible, the value of the claim, the cost of repairing the deficiency, for example, if you’re dealing with a negligence claim, you have to prove different facts than if you’re dealing with a breach of contract claim.

Morag McGreevey (01:33): One of the first things to consider when faced with a construction defect claim is whether to retain an expert witness. Oftentimes, defect claims are very technical in nature. The strength of one’s position at trial or in settlement negotiations will be determined in large part by the quality of the expert opinions.

David Outerbridge (01:53): So, there’s three key things you need to think about when you’re selecting an expert witness. The first is that it’s extremely important to pick a top expert, not just an expert, but the person who’s the most qualified in the subject matter of your claim. The second thing you want to be thinking about is it’s essential to perform some due diligence on your expert.

If you’re dealing with an expert who’s got some skeletons in their closet, you don’t want to learn that later. You need to find out early whether they have some hidden vulnerabilities, like they have a financial connection to a party, they have a past judicial finding against them that they’re biased, or they’ve been found to lack the qualifications to give the type of opinion that you need.

Then the third thing you want to be thinking about at the outset with your expert is you want to find an expert who is an effective communicator, somebody who is reasonable and honest and comes across that way.

Morag McGreevey (02:42): Parties should think about retaining experts sooner rather than later in the litigation process, particularly in industries that are highly specialized, where it can be difficult to find someone with the required expertise, especially when you’re dealing with litigation with multiple parties, all seeking their own independent legal expert in the same action. More to the point, though, expert evidence often drives many of the substantive decisions made by the client and the legal team, including deciding what documents are relevant, what topics to explore on discovery, and at the most basic level, the identification of the parties at fault.

Consideration should also be given at an early stage to retaining two experts on a given topic, one independent expert to testify at trial and a second expert who’s not required to be neutral to be part of the litigation team and assist and give advice throughout the process.

David Outerbridge (03:35): Now, the second thing we recommend at the outset of a construction defect claim is to make sure you take the right steps to preserve and inspect the physical evidence. It’s critical to ensure that your expert gets to the site, gets an opportunity to view the defect—photograph it, sample it, test it—before the defect gets remediated and since many defects get remediated either in real time during construction or on an expedited basis as a warranty claim, it means time is of the essence in getting your expert in there.

Morag McGreevey (04:04): Depending on the nature of the claim, the parties may undertake physical testing to assess the nature or cause of the defect. Depending on the nature of the claim, the parties may undertake physical testing to assess the cause of the defect, for example, testing the chemistry of a substance or destructive testing to assess whether a reasonable manufacturing process was followed.

In theory, this step can happen at any stage of the litigation process. However, front loading physical testing is usually important both to ensure that evidence is not destroyed prematurely and to help in assessing, at an early stage, the nature and strength of one’s legal claim.

David Outerbridge (04:44): Now, engaging in testing early can also be important for determining who to sue before you lose your limitation period. You have a limitation period that begins when the defect was discovered, and sometimes these defects will be discovered in real time in the middle of the project. So, to make sure that you don’t miss your limitation period, you need to know the facts.

Get your expert in there. Get your testing done all within the necessary period of time before you have to start a claim.

Morag McGreevey (05:10): Knowing the facts early is also important for a third task that needs to be addressed: identifying the legal basis for advancing the construction defect claim. For example, to prove a defect claim in negligence, a plaintiff often needs to show that a defect creates a danger to human health or safety. If the defect is not dangerous, the plaintiff will have a difficult time making out a legally viable claim in negligence.

Expert evidence and inspection of physical evidence are needed to assess issues of dangerousness. If a defect is dangerous, this may expand the pool of potential defendants because a plaintiff will not be restricted to suing only those parties with whom it has a contract.

David Outerbridge (05:51): On the other hand, if you have a claim that’s based on breach of contract or breach of warranty, you may have an easier time proving it. You may have a better chance of recovery, although it all depends on what your contract says. So a critical early task in your construction defect claim is to analyze with the benefit of your expert evidence, with the physical test results, whether your contract provides protection for the type of defect you're dealing with. Understanding the legal basis for your claim and the potential for recovery is your first step in formulating your litigation strategy.

Morag McGreevey (06:23): But of course, these are only a few of the preliminary issues to consider when bringing or defending a construction defect claim. The projects team at Torys can assist project participants in all aspects of a construction defect claim, including in the pre-litigation phase when considering many of these preliminary issues. Thank you for joining us today for navigating project disputes.

David Outerbridge (06:45): Thanks, everyone.