2018 Litigation Forecast - Construction Summary

2017 was an active year in the construction and building litigation space.  In light of recent legislative amendments and decisions from the courts, we think 2018 is likely to see an increase in the number of parties referring disputes to adjudication under the Construction Contracts Act 2002 instead of taking formal court action.

Amendments to the adjudication regime in the Construction Contracts Amendment Act 2015 which took effect in December 2015, fundamentally altered the nature of that regime from one directed at simply securing timely payment and encouraging cashflow to one directed at all rights and obligations in construction contracts. These amendments increase the significance and reach of adjudication determinations, leaving parties to re-litigate in Court or follow the contractual process such as arbitration in the face of an adverse determination.  However, in reality, the time and cost involved in re-litigating the dispute means that parties often do not have the appetite and/or resources to follow it through to this stage.  Because of this, adjudication is likely to assume more prominence in 2018 and is set to become the dominant dispute forum for all parties involved in construction projects in respect of all types of disputes, no matter their complexity.

Adjudication is likely to assume more prominence in 2018, and is set to become the dominant dispute forum for all parties involved in construction projects.

There have also been some interesting judgments relating to class actions in the defective building space, particularly in relation to materials used for cladding.  In light of the fresh product issues facing the construction industry (such as steel), our view is that class actions are likely to remain prominent in construction litigation and 2018 may see a growth in the number of these proceedings.

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