Construction liability claims are among the most complex and contentious disputes in the legal landscape. They often involve multiple parties, including owners, contractors, subcontractors, consultants, and insurers, each with overlapping responsibilities and competing interests. In Toronto, where construction activity continues at a rapid pace, disputes are unfortunately common and litigation can be protracted, expensive, and disruptive.
With this in mind, mediation offers a far more effective path to resolution than traditional litigation, helping parties resolve issues efficiently, privately, and with minimal disruption to their ongoing projects or business operations.
The relevance of mediation in Construction and Liability Related Disputes
Construction liability claims often hinge on nuanced technical details: structural design flaws, project delays, construction defects, issues of professional negligence by architects, engineers, or project managers, breach of warranty claims, claims involving bonding and insurance coverage. Mediation allows parties to engage with a mediator who understands the underlying legal and technical context, facilitating a productive discussion rooted in the realities of construction practice.
Further, litigation in construction matters can take years to resolve and rack up considerable legal and expert costs. Whilst arbitration may offer a more straightforward process than litigation, mediation, by contrast, offers an opportunity to resolve disputes in days, often at a fraction of the cost, freeing up resources and enabling parties to focus on moving forward rather than looking back.
The construction industry in Toronto, but also everywhere else, is a tight-knit and reputation-sensitive community. With maintaining business relationships always on sight, mediation proceedings offer private and confidential, as well as non-adversarial process that help preserve professional relationships, which are often strained or permanently damaged through litigation.
Flexibility in Crafting Solutions
Unlike court judgments, mediated settlements can be tailored to the unique needs of the parties. Whether it’s agreeing on repair work, apportioning liability, or crafting creative payment structures that work in practice, mediation allows for outcomes that a court simply cannot order. This feature may be one of the most underrated advantages of Alternative Dispute Resolution (ADR) mechanisms.
The Commitment Dilemma
In construction contracts, it is not unusual for parties to hesitate in engaging with the mediation process, even when it is expressly provided for in their dispute resolution clauses. This reluctance often stems from concerns that mediation may weaken their negotiating stance or compel them to accept concessions contrary to their interests, particularly when they hold strong convictions about their position. Others may question the efficacy of mediation altogether, viewing it as a procedural hurdle that delays more definitive forums such as arbitration or litigation. Distrust in the neutrality or competence of the mediator, often shaped by past negative experiences, can further undermine confidence in the process. Additionally, some parties may simply lack familiarity with mediation or doubt its suitability for resolving technically complex disputes typical in construction projects.
Despite these concerns, parties would do well to revisit the rationale behind incorporating a multi-tiered dispute resolution mechanism that includes mediation. Doing so can help shift perspectives, encouraging a return to principled negotiation rather than entrenchment. Mediation should not be seen as a mere formality, but as a vital step toward fulfilling contractual or procedural obligations and fostering resolution in a more efficient and cooperative manner, particularly in an industry where ongoing relationships and project continuity are critical.
Crucially, failure to engage in agreed-upon mediation may also jeopardize the enforceability or admissibility of subsequent proceedings, such as arbitration, potentially resulting in procedural delays and increased costs. Thus, commitment to mediation is not only a matter of contractual enforceability but also of strategic prudence.
Approaching the Appointment of a Mediator
When selecting a mediator, parties should consider the nature of the dispute, the number of stakeholders involved, and the specific expertise required. In multi-party construction cases, it’s particularly important to select someone experienced in managing complex dynamics and layered interests.
Ideally, parties should agree on a mediator early on, when a dispute materialises, especially if liability and cost escalation are clear risks. There are several qualities that are commonly required in every mediator, such as being neutral, impartial and independent. When it comes to construction liability disputes, a construction mediator needs to be pragmatic and look at the issues in dispute in a holistic manner. Parties to a construction dispute typically rely on a dense and technical record of evidence. A mediator should remain focused on identifying common ground, while avoiding the ‘kitchen sink’ approach that can derail productive settlement discussions. A mediator must also be thoroughly prepared and take time before the session to understand the technical issues, contract provisions, and party positions to help streamline discussions.
Conclusion
Construction disputes are challenging, but they don’t need to be career-defining battles. Mediation provides a confidential, efficient, and cost-effective route to resolution that preserves relationships and limits risk.
Parties involved in a construction liability claim that are considering mediation, are invited to reach out for a tailored solution.
Khalil Mechantaf Q.Arb – Lawyer, Mediator & Arbitrator