Legal: Broken records can be expensive

The case of 125 OBS (Nominees) vs Lendlease in April last year highlighted the importance of not just keeping good records, but keeping them as instructed by the contract. In the case relating to the well-known falling glass from 125 Old Broad Street in London, Mr Justice Stuart-Smith observed that “unreliable records are unhelpful to a party that relies upon those records to prove a positive case without the assistance of any witness evidence or explanation”.

Despite the advances in technology and case law of the past 20 years or so, disputes still arise on building projects. As construction lawyers, we see the same problems arising repeatedly. Though occasional disputes are inevitable, there are key factors that can help minimise the costs of such disputes. Such costs can include those such as the £1m spent on photocopying alone in the infamous Wembley stadium dispute between Multiplex (now Brookfield Multiplex as a result) and Mott MacDonald. In another case, Digicel vs Cable & Wireless in 2008, the defendants spent over £2m on document review.

But similar stories arise on projects of a much smaller scale, where costs can still swiftly become disproportionate to the sums at issue. Careful management, use and application of records in the right way and at the right time can ensure a claim is understood and resolved. No matter how good the legal arguments, successful cases depend on the underlying facts. Poorly drafted or unsubstantiated claims can lead to terrible disputes – it’s crucial to ensure you have clarity on the facts if bringing a claim, and that they are clearly set out for the other side.

So how can records help, and how might they be managed? 

All standard forms of contract require the keeping of records but, perhaps unfortunately, not all of them specify what records should be kept and nor do they often provide guidance on how they ought to be kept. The recently updated Society of Construction Law Delay and Disruption Protocol (available on the website www.scl.org.uk) points to six critical items:

• The programme
• Progress records (including testing and commissioning)
• Resourcing records
• Cost records
• Correspondence and administrative records
• Contract and tender documents. 

The protocol is helpful in that it provides some advice on what ought to be kept and how, for each of the above categories. 

All construction projects are different, so record structures will be project and party specific. While a lawyer should never seek to dictate how people keep records, a few simple rules can help with the efficient resolution of a later dispute. 

Records are entirely acceptable whether in paper or electronic form. They might cover anything from site diaries to variation orders to photographs. The variety of records, particularly in construction projects, means there is often more information than can be managed without considerable effort or a reasonably sophisticated system of management.  

The key is to organise records in such a way that they are easily searchable. There ought to be a structure to any record keeping system, no matter whether it is a paper system or the latest all-singing electronic document management system (DMS). 

The most important thing, should your dispute reach a tribunal or court, is what you can prove happened (or didn’t happen), rather than what actually happened. To maximise your chances of success, keep notes of conversations and confirm in writing matters discussed orally. The better and more structured your record keeping, the more chance of success if something needs resolving. 

If an issue arises on a project, consider creating an “issue” store. Store all the documents relating to an issue contemporaneously and in chronological order. That will make it a lot easier to identify the chronology – as well as any gaps in the evidence – as and if the dispute escalates. Such a store will be an invaluable resource if third parties are required to examine the claim. If records can be easily and quickly identified, much time and effort are saved. 

There are sophisticated document management systems available. However, these systems are only as good as the discipline of the people using them. Even the most expensive DMS can be rendered useless through poor discipline or training. A project can generate thousands, if not millions, of emails. It is therefore crucial to ensure that a DMS is used correctly to keep identifiable records on a project-by-project and issue-by-issue basis. 

Photographic records can be useful in resolving a dispute. If some part of the project will not be visible post completion, a photograph can demonstrate what that item is and how it was installed. M&E systems, for example, are often inaccessible post completion. However, photographs must have certain features to be useful. Like other records, they need to be traceable and identifiable, and it must be easy to tell at what point in the construction process the photograph was taken. Most modern cameras can store that information in the meta data of the image. Camera phones can usually store a GPS location of the photograph, but it is even better to record the geographical location accurately. 

In conclusion, while disputes will always tend to arise, some of their pain and expenditure can be avoided.  Keeping and managing records in such a way that they can be quickly and easily retrieved can pay dividends in the long term: well-structured records will help in the event that it becomes necessary to resolve a dispute.