The role of an expert witness in a building dispute

If you are involved in a domestic building dispute, whether as a building professional or homeowner, it will often be beneficial or necessary to retain an expert witness.

The role of an expert witness in a building dispute is to provide objective, qualified and documented evidence relevant to the facts in dispute.

Engaging an expert witness is usually a complex and expensive exercise. Further, the expert’s role as an impartial observer, and not as an advocate for the instructing party, is often misunderstood. Parties to a dispute can become anxious when it appears that the expert they have retained is not “on their side” or that the other party’s expert is an “opponent” in disputed proceedings.

It is therefore helpful to understand the role of expert witnesses, their obligations to a tribunal or court and how they can assist in determining a building dispute.

What is an expert witness?

An expert witness is a qualified professional with both specialised technical knowledge in a particular area or industry, and the necessary skills to provide an opinion, in writing and verbally. This opinion may be used as evidence in negotiations, dispute resolution processes or during tribunal or court proceedings.

When and why is an expert used?

The role of the expert is to assist the parties in negotiating a settlement, or if the matter proceeds to a tribunal or court, guide the decision-maker towards a reasonable determination.

A residential building dispute does not typically concern the interpretation of a contractual term, which, in a court or tribunal, would be a matter for lawyers to argue.

Rather, a residential building dispute typically concerns claims of incomplete and/or defective construction work the nature of which is highly technical and industry specific. The subject matter of the dispute may be a single dwelling or a multi-storey residential complex.

A layperson is not qualified to provide evidence of a technical nature which, in court or tribunal proceedings, could be considered an opinion or hearsay. Similarly, a lawyer is not qualified to assess the costs of rectification of a building.

In such matters evidence should be given by a person with specialised knowledge in the subject matter that is based on his or her training, study or experience. One example of an expert is a quantity surveyor.

Retaining an expert witness

The selection of an expert witness is typically made by the lawyer representing a party to the dispute, who will identify a professional with the necessary expertise required for the particular case and the ability to provide written, and oral evidence, if required.

Written instructions should be provided to the expert which will include an overview of the matter, the issues in dispute, the matters to be addressed, and additional information that will assist in compiling the report, such as building contracts, plans and specifications, and invoices for building materials.

Most unresolved domestic building disputes are heard in a tribunal with specific rules and codes of conduct regarding the use of an expert witness and the required format for expert reports. This is generally to ensure consistency and uniformity. A copy of the relevant expert evidence guidelines and reporting requirements from the tribunal should always be attached to the instructions given to the expert.

It may also be necessary to engage an additional expert with specialist knowledge, such as a structural engineer, to provide a supplementary report for specific issues like a retaining wall claimed to be defective.

A quantity surveyor may be engaged to assess the cost of rectification works for more complex matters. For relatively simple matters, retaining an expert may not be necessary, as obtaining quotes from building professionals and tradespersons may be sufficient.

The expert report

An expert will draw upon his or her construction knowledge to provide a qualified opinion in response to the issues raised in the instructions. A report will typically include:

  • the expert’s formal qualifications, experience and field of expertise in which the evidence is being provided;
  • a summary of the issues upon which the expert is required to report;
  • any facts or assumptions upon which the expert has relied (i.e. the letter of instruction);
  • the identification (and categorisation) of incomplete, non-compliant and/or defective building work;
  • an opinion as to why the building work is incomplete, non-compliant and/or defective, qualified with reference to relevant standards, construction codes and tolerances, and the building contract, plans and specifications;
  • any examinations, investigations or tests used to form the opinion;
  • an assessment of the cause of a defect;
  • recommendations for the rectification of incomplete, non-compliant and/or defective building work including reasons for the recommendation;
  • suggested methods for rectifying the incomplete, non-compliant and/or defective building work including any reasonable alternative remedies;
  • the estimated cost of the recommended rectification work.

The duty of impartiality

Tribunal and court rules, practice notes and directions require that an expert witness is impartial and not an advocate for a party to a proceeding. He or she has an overriding duty to assist a tribunal or court on the matter relevant to the expert’s expertise.

Independence is paramount and any hint of bias towards the instructing party by the expert can be detrimental to that party’s case and may initiate a request by the opposing side for the tribunal to disregard that expert’s evidence.

The expert’s reputation and credibility in such circumstances will also be at stake.

Conclusion

An expert witness may be retained to provide an impartial qualified opinion to assist in determining a matter in dispute.

Choosing an expert with the requisite qualifications, knowledge and experience to provide an objective opinion is essential for many building disputes. When retaining an expert, it is also important to bear in mind that the expert is not an advocate for the instructing party.

If you or someone you know wants more information or needs help or advice, please contact us on +61 2 9248 3450 or email info@bradburylegal.com.au

Protecting your plans: intellectual property basics for architects

Architectural designs and plans are a valuable commodity in the building and construction industry. With technology facilitating the seamless reproduction, transformation and dissemination of printed and digital material, architects should be vigilant in protecting their original creations and their livelihoods.

This article provides an overview of copyright law in Australia and explains how architects may take steps to protect their original works from copyright infringement.

Application of copyright law to architectural designs

Federal copyright protection was introduced in Australia in 1905 and has since evolved into the Copyright Act 1968 (Cth) which is currently in force. This Act includes broad categories of subject matter benefiting from its protection, to keep pace with emerging technologies.

The subject of copyright material comprises ‘artistic works’ or ‘forms of expression’ rather than ‘ideas, information or facts’ – that is, the actual production of work in a material form, rather than a mere idea or thought.

Architectural drawings and designs (whether sketched or generated with software), models of buildings and the buildings themselves all fall within the category of ‘artistic works’ and are therefore protected by copyright law. An architect will also have copyright over plans drawn from ideas or instructions received from a client, as they have been produced and expressed in a material form.

What is copyright infringement?

The owner of copyright work has an exclusive right to reproduce it in material form, publish the work and communicate it to the public.

Infringement of copyright occurs when a person does anything that constitutes the exercising of these rights, or the authorising of another person to do so without permission of the owner.

Essentially, the creator of the work should have control over its commercial exploitation including licensing the use of the work to a third party.

To prove infringement, there must be a fundamental link between the original work and the copy. This link can often be established where an infringing party has seen or had access to the original work.

The alleged reproduction of the work must be in a material form with an objective similarity between the original and copy. The objective similarity need not relate to an entire work provided a substantial part of it is reproduced.

In copyright cases concerning architectural drawings and plans, the reproduction of unique, distinctive or important design aspects can be influential in determining whether the work has been infringed.

Protecting plans from infringement – service agreements

Because copyright subsists in an original creation, such as architectural drawings and designs, there is no requirement (or method) to register the work with an authority to obtain the protection of copyright law. This makes the process appear simple, however it opens the door to disputes over who is the original creator of the work.

Architects can be proactive in protecting their original work by ensuring that a service agreement is entered into by every client who retains their services.

The agreement should set out the terms of retainer, the parties’ respective rights and their respective responsibilities. It should also include provisions regarding intellectual property rights and the licensing of the work created by the architect.

A licence may be exclusive or non-exclusive.

Generally, a service agreement will provide that an architect retains ownership in the copyright of their work but allow for the licensing of the work created to the client who has paid for it.

An exclusive licence will allow the client of the architect (the licensee) to exercise the rights to the exclusion of all others. This means that the licensee may take action against others for infringing the copyright and using the material, including action against the original creator of the work.

A non-exclusive licence limits the use of the material by the client (licensee) in accordance with the terms negotiated and contained in the agreement. A non-exclusive licence will enable the architect to continue to use the works and allows the architect to grant further non-exclusive licence rights to other parties. This may be appropriate if an architect intends to reuse the work elsewhere.

Implied licences

If there is no service agreement or if an agreement is silent as to the assignment of copyright, the law generally recognises an implied licence for the benefit of a client who has commissioned the architect for a certain purpose, such as the production of plans for a specific site.

The extent of the implied licence will depend on the circumstances. However, it is generally limited to one-off use of the plans on the site for which they were designed.

The recognition of an implied licence may leave an architect vulnerable in circumstances where the relationship between the architect and client breaks down and the retainer is terminated. A written agreement with provisions stating that any implied or express licence will be revoked, and that the agreement is terminated in the event that the client refuses to pay the architect for the services, should help to protect the architect in such circumstances.

Other steps to protect copyright works

In addition to having a service agreement in place before commencing work, there are other steps architects can take to protect their designs.

Copyright notices and the copyright symbol “ © ” should be placed in prominent positions on all original work.

When giving sample drawings and designs to potential clients, architects should also provide a written warning stating that allowing access to the plans does not constitute an implied licence to use them, and that copyright remains at all times with the original creator.

Architects can also keep original drafts, drawings and references tracking the production of their work, and any other information such as commencement dates, instructions, notes and communications, that all may assist in proving the work’s originality, should this become necessary.

Remedies for infringement

Proceedings for copyright infringement may be instigated in the Federal Court or the Federal Circuit Court.

Remedies include an injunction (restraint) which prevents the immediate and future use of the copyright material by the infringing party, an award of damages for financial loss, or an account of profits requiring the infringing party to forward all profits made from the material to the owner or licensee. The infringing party may also be ordered to pay legal costs.

When calculating damages, the Court may consider the infringing party’s conduct and whether it was deliberate or reckless, the benefit accrued to the infringing party and the need to deter others. Exemplary damages, which are additional damages, may be awarded for conduct that is flagrant and deliberate.

Conclusion

Copyright laws acknowledge that creators of original material should receive legal recognition and reward for their efforts and that third parties should not benefit unlawfully from a creator’s work.

Although copyright subsists for the benefit of the creator of an original work, architects must be proactive in protecting and enforcing these rights.

Builders should also be cautious when requested to work with clients who bring ‘their own’ architectural designs to be used in a proposed building project to ensure that use of the design has been authorised.

If you or someone you know wants more information or needs help or advice, please contact us on +61 2 9248 3450 or email info@bradburylegal.com.au

The Modern Slavery Acts: what businesses need to know

After much discussion, the Australian government has followed the examples set by the NSW government and overseas countries.

On 29 November 2018, the Modern Slavery Act 2018 (Cth) (Commonwealth Act) was passed by Parliament. It will join the Modern Slavery Act 2018 (NSW) (NSW Act) and impose reporting obligations on large businesses.

Both Acts will come into effect when the respective governments announce it in their gazettes in the near future. The first reporting obligation will likely kick in on 30 June 2020.

It is hoped that such anti-slavery laws will make a dent into the staggering number of people that are subjected to modern slavery. The Global Slavery Index estimates that this is 40.3 million people globally, 25 million in the Asia-Pacific region, and 15,000 in Australia. Such exploitation is estimated to be produce $150 billion per year for the global private economy.

Who is affected by the Commonwealth Act?

Entities that:

  1. are based or carry on business in Australia, and
  2. have a revenue of over $100 million for a financial year,

are affected by the Commonwealth Act.

This includes not just individuals and companies, but also partnerships, trusts, and superannuation funds. Not-for-profits and foreign companies should be aware that the Act will apply to them if they satisfy conditions (1) and (2) above. All Australian-based principals and contractors should check their balance books. Any entity that might be affected by the Act should seek advice.

In total, there are approximately 3000 large companies and entities who will now be required to lift the lid on how their supply chains create risks of modern slavery.

In a world first, the Australian government itself will also be subject to the same reporting requirements as the private sector. This includes not just the Australian Government, but also Corporate Commonwealth entities, and Commonwealth companies. The Act does not capture state governments.

Any entity may also volunteer to submit a report on its activities.

However, even if an entity does not fall under (1) or (2) above, it may be affected by the NSW Act (see below).

What do entities have to do?

Entities must produce a signed Modern Slavery Statement. This statement must:

  • describe the structure, operations and supply chains of the reporting entity;
  • describe the risks of modern slavery practices in these operations and supply chains;
    • this includes the operations and supply chains of any entities that the reporting entity controls (e.g. a subsidiary company)
  • describe actions taken by the entity to assess and address these risks (including due diligence and remediation processes);
    • this will include policies and processes to manage the risks and training for staff about modern slavery
  • make an assessment of the effectiveness of these actions;
  • describe any process of consultation that a reporting entity has with entities that it controls, and
  • include any other relevant information.

The statement must be given to the Minister for Home Affairs within 6 months of the end of the reporting period. As mentioned, this will likely be within 6 months of 30 June 2020.

These reports will be stored by the Minister for Home Affairs, in a register that will be called the Modern Slavery Statements Register. The Register will be made accessible to anyone for free on the internet.

The Commonwealth Act imposes no obligations on businesses to actually take steps in response to the risks of slavery in supply chains. It merely requires reporting on them.

Legally trained readers will be thinking that these obligations can only apply to natural persons or corporate entities. This is why, in the case of non-persons like partnerships, the obligations will be imposed instead on a responsible member of the entity. This will fall on persons such as a trustee, or an administrator.

What if the entity doesn’t report?

In short, nothing.

In contrast to the NSW Act (below), the Commonwealth Act does not provide for any penalty if an entity does not produce a report.

However, this might change in the near future as the Commonwealth Act takes effect and entities develop processes for compliance. The federal Labor Party has indicated that it supports penalties for an entity’s failure to report. Thus, depending on the outcome of 2019 elections and other factors, this situation may change.

What about state laws?

Entities should be aware that they may be subject to separate obligations imposed on them by state governments.

For instance, in mid-2018 the NSW government passed the NSW Act which requires entities to report to it about risks to modern slavery. In fact, these obligations are in some cases much more stringent.

Like its Commonwealth counterpart, it is not yet in force.

When it does come into effect, the NSW Act will apply to organisations that:

  1. supply goods and services for profit or gain, and
  2. have employees in NSW, and
  3. have a turnover of $50 million or more for the financial year.

Certain NSW government agencies are affected, as are non-corporate entities such as partnerships. Not-for-profits however will not need to report to the NSW government.

To satisfy the NSW Act, an entity’s modern slavery statement must outline steps taken to ensure that an organisation’s goods and services are not the product of supply chains in which modern slavery is taking place.

In contrast to the Commonwealth Act, the NSW Act imposes hefty penalties for not producing a statement to the NSW government, or for providing false or misleading information in the statement. The maximum penalty is $1.1 million in either case.

The NSW Act also allows courts to make modern slavery risk orders against a person. Such orders may prohibit certain actions, such as contacting any victim of the modern slavery offence.

Conclusion

Large businesses and not-for-profits now have legal obligations to examine their goods and services supply chains. They must inform the public about their findings and what they are doing to address them. In some cases, they will be reporting to multiple governments so they should seek advice as soon as possible on the requirements that apply to them.

As the Assistant Minister for Home Affairs states, it is hoped that these Acts will drive a ‘race to the top’ in which businesses compete for the favour of market funders, investors and consumers by improving their supply chain ethics.

If you or someone you know wants more information or needs help or advice, please contact us on +61 2 9248 3450 or email info@bradburylegal.com.au

Personal Property Security Register and the construction industry

The introduction of the Personal Property Securities Act 2009 (PPSA) was a move by government to streamline the registration of securities over personal property. The Personal Property Security Register (PPSR) is a national, electronic register of security interests in personal property that was established on 30 January 2012.

How does the PPSR affect me?

If you have an interest over any personal property you need to register that interest on the PPSR in order to ensure that you have priority over any other claim.

Whilst the operation of the PPSR is by no means limited to the construction industry, there are a number of industry specific situations that can arise. Taking proactive steps to avoid any potential loss of interest is an important step in any construction project.

Construction industry-specific effects of the PPSR

If you are involved in a construction project that involves parting with possession of personal property including, for example, scaffolding, formwork, plant and other equipment, you would be wise to consider registering your interest as a matter of urgency on the PPSR.

Failing to register your interest on the PPSR could result in that interest being defeated at some later date if the party with possession, such as the owner of the site or the head contractor, manages to grant a later security interest in your goods or goes into liquidation. Your security interest might then lose out to another’s security interest over the same property, or in the case of insolvency, you will have to get in line with other creditors.

Temporary works

Temporary works such as formwork and scaffolding that are removed at the end of a project are examples of personal interests over property that should be registered on the PPSR.

Prior to the introduction of the PPSR, a contractor would simply rely on their legal ownership to protect their interest and remove these items at the end of a project. Now if you fail to register your interest in these or other temporary work items you may be in for a nasty shock at the end of a project. This is because the party in possession, such as the head contractor or site owner, sometimes passes title onto another purchaser. If that occurs and the new purchaser registers their interest on the PPSR, then you may well find that your interest in those goods is defeated by the new purchaser’s claim.

This is because registered claims take priority in many cases.

Retention of title

If a supply contract includes a clause providing that title to goods will not pass to the purchaser until full payment has been received, then because of the PPSA that clause is likely to mean that a security interest in favour of the supplier arises. Your interest will need to be registered on the PPSR if it is to be enforced against third parties.

Leasing equipment

If you own and lease goods and equipment for use on building sites you may be surprised to learn that legal ownership of the equipment may not be sufficient to protect your interest.

Under the operation of the PPSA, the lease may be considered to be a PPS Lease. Your interest in any goods or equipment covered by the lease will be deemed to be a security interest. A failure to register your interest on the PPSR could result in you losing ownership if another party uses those goods or equipment as security for another loan.

Principal’s rights on take out

It is not uncommon in construction contracts for the principal to be given the right to take over a contractor’s construction plant and works in the event that the contractor defaults on their portion of the construction contract.

The principal’s right to act in this way is likely to be considered a security interest under the PPSA. If you are a principal you must register your interest on the PPSR in order to ensure that you have priority over any other possible competing interests.

How can the PPSR help me on my construction projects?

The PPSR provides a national central register where you can record any interests you have in goods including plant or equipment, or in the case of principals, any rights to take out.

Very importantly, the PPSR also provides a useful resource for checking whether goods you may be thinking about purchasing or accepting as collateral are already encumbered with a debt or charge. This is particularly relevant if you are thinking of purchasing construction specific goods such as plant equipment including formwork or scaffolding that are currently located on a construction site. Check the PPSR to ensure that there is no prior interest registered in these goods prior to purchase.

The PPSR is also an excellent risk protection tool. If you find yourself on the other side of the table and are trying to raise funds for your business using your interest in plant equipment, including scaffolding and formwork as collateral for any loan, you may find that you are able to raise finance more easily because potential purchasers are able to check on the PPSR to confirm that the goods you are offering as collateral are not subject to a pre-existing loan arrangement.

A properly registered interest on the PPSR can mean that you are the first party in line to get your goods back if a party in possession attempts to raise funds using your plant equipment as collateral. This is a much more preferable position to be in at the end of what may be a very long queue of an insolvency process if your customer goes belly up, owing you and many others money.

Ensuring that registrations on the PPSR are correct and complete is also important. Our experienced lawyers can advise and assist you on all aspects of the operation of the PPSR and particularly how it can assist those working in the construction industry. If you or someone you know wants more information or needs help or advice, please contact us on +61 2 9248 3450 or email info@bradburylegal.com.au.