Tuesday, May 29, 2007

Before shovel to earth, it's pen to paper - Randi Chapnik Myers

Take a stroll in downtown Vancouver, Calgary or Toronto, and you'll feel the frustration. Drivers lean on their horns, stuck in car jams caused by road delays. Half-finished buildings litter the skyline. Sure, it's easy to blame the disappearing (or striking) trades who can't seem to finish what they start. But have you ever considered the billion-dollar question: With costs mounting by the minute, who's on the hook?

What no one sees is the frustration of those in charge - the engineers, architects, contractors - who, against all odds, are sweating to build Canada's commercial infrastructure.

"Typically, we're on their side," says Bob Jenkins, construction litigator at Jenkins Marzban Logan LLP in Vancouver, and member of the Canadian College of Construction Lawyers (CCCL), an association of about 75 specialists from across the country who meet at yearly conferences - including this weekend - to swap industry contacts and bone up on the newest legal rules. For these men and women, sorting out who pays when construction goes awry - from condos to shopping malls to transit systems to dams - is all in a day's work.

Until a dispute erupts, they may seem invisible, but, in fact, construction lawyers are behind every transaction from the get-go, drafting the complex contracts upon which the construction we see everywhere is based.

Take, for example, P3 agreements (public private partnerships) where, more often, mammoth public projects, such as Prince Edward Island's Confederation Bridge, the Toronto area's 407 toll highway and Vancouver's Sky Train system, are being privately funded and managed for a set period of time after which ownership reverts to the government. "It's a means by which Canada gets infrastructure built with very little public funding," Mr. Jenkins says.

Document drafting is just one of the construction lawyer's myriad skills. "We're also amateur architects, engineers, even electrical and soil experts," says Stanley Naftolin, a CCCL founding fellow who litigates construction disputes at Goldman Sloan Nash & Haber LLP and mediates or arbitrates them there or at Team Resolution in Toronto. That's because, whether these lawyers are dealing with liens, tenders, or sureties, or defending delay, liability or workplace claims, they're quickly morphing into construction gurus.

"In this business, it's not enough to know the bricks and mortar," Mr. Naftolin says. "You have to know how the bricks and mortar are designed, how they stay together, how the ground can support their weight." Otherwise, costs start growing from the ground up.

The litigation surrounding Toronto's Sheppard subway line is a prime example, says CCCL past president Harvey Kirsh, construction litigator at Osler Hoskin & Harcourt LLP, who acted as counsel for the TTC. It was only after the contract was signed that subcontractors, digging into the soil, found that it was contaminated, likely from an old gas station that may have sprung a leak.

"Right out of the gate, there were unforeseen delays," Mr. Kirsh says. As usual, everyone involved in the project started pointing fingers. "The contractors sued the owners who sued the design consultants." In no time, damages mushroomed to a whopping $40-million - almost half of the projected price to build.

Despite the perception to contrary, heading off to battle in court is no panacea. It can take years from the date that a construction claim is filed to when a judgment is rendered, and even longer for money to be recouped. So these days, parties are opting instead to bring their cases before a mediation or arbitration consultant. While arbitrators act like judges and render decisions, mediators help guide the warring sides toward their own agreement.

"The upside is that huge conflicts can be resolved fast so construction can continue. Also, decisions are often right on the mark," Mr. Jenkins says. But on the downside, because the resulting agreement is private, it cannot be used as a legal precedent.

So, when a similar issue arises in another case, the argument starts all over again. And yet the trend away from litigation continues. "Interestingly, it's my experience that judges love when someone else decides a construction case," Mr. Naftolin says. "It's that esoteric a field."

Keeping on top of such a specialized field takes work. At CCCL conferences, the weekend is packed with high-end educational seminars that only a legal mind could appreciate, such as: "The lien is dead, long live the lien: Can the equitable doctrine of estoppel resurrect expired lien rights?"

Mr. Naftolin says: "Whether the topic is 'developments between insolvency legislation and the construction lien act,' or 'entitlement to damages in construction litigation,' we really hone in. We leave no rock unturned."

Papers delivered by fellows are regularly published in the Construction Law Reports. A few are also archived on the CCCL website (cccl.org). Also online are links to the college's mini-Construction Law Library and to its roster of members, some of whom are named in the Lexpert Guide to the Leading 500 Lawyers in Canada.

As for Messrs. Naftolin, Jenkins and Kirsh, along with incoming president George Macdonald (a partner at McInnes Cooper in Halifax), they are all gearing up for this weekend's celebration of the college's 10th anniversary at Predator Ridge Golf Resort in Vernon, B.C. Topics slated for this year's agenda: the state of construction for the upcoming Winter Olympics in B.C., as well as the current legal rules surrounding the discovery and production of electronic documents.

"As usual, we'll bring in the leading international authorities," Mr. Naftolin says, referring to past speakers from as far as England, Mexico and Australia. "The fact is, none of us knows it all. From each other, there's always so much more to learn."

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