Why Construction Disputes Happen - PART 3
Date: 04 August 2025
Construction projects are complex undertakings involving multiple stakeholders, tight deadlines, and significant financial investments. Despite the best intentions, disputes are common in the construction industry. These conflicts can delay projects, increase costs, and damage professional relationships. Understanding the root causes of construction disputes is essential for preventing them and ensuring smoother project execution.
Schedule a free consultation with Fouad El Chikhani for expert advice.
Quality of Work
Disputes often arise in construction projects when the completed work fails to meet the standards, specifications, or expectations outlined in the contract. This can include:
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Defective workmanship: Poor quality or careless execution of tasks.
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Use of substandard materials: Materials that do not match the agreed-upon specifications.
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Non-compliance with building codes: Violations of legal or safety regulations.
These issues can lead to delays, additional costs, and legal action, especially when the contractor and client disagree on whether the deviations were justified or acceptable.
Example: A wealthy client engaged a high-end residential builder to construct a luxury home in a wealthy Auckland district. The architectural drawings briefly mention a Level 5 paint finish (but not mentioned in the finishes schedule). However, the general specifications in the builder’s scope of works referenced Level 4 finish as the standard for internal walls, unless otherwise noted.
Issue Discovered:
Upon final walkthrough, the client noticed inconsistent wall textures under directional lighting. In the gallery hallway, where artworks were to be displayed, the walls showed visible joint lines, flashing, and uneven sheen. A private building consultant confirmed that the finish was Level 4, not Level 5, and that the surface preparation was insufficient for the lighting design.
Both the client and the contractor disagreed about the level of paint finish and the disagreement resulted a formal dispute between the parties.
Litigation and Arguments:
Client’s Position:
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Design Intent: Argued that the architectural drawings and interior designer’s notes clearly mention Level 5 finish.
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Visual Defects: Submitted photographic evidence showing how the finish failed under critical lighting.
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Expert Opinion: Engaged a paint specialist who confirmed the finish was Level 4 and unsuitable for the lighting design.
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Loss of Value: Claimed the aesthetic compromise reduced the home’s market appeal and demanded repainting and damages.
Contractor’s Defense:
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Conflicting Documentation: Pointed out that the general specifications in the contract listed Level 4 as the default finish, and no formal variation or clarification was issued during construction.
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Scope Interpretation: Argued that unless explicitly stated in the finishes schedule, Level 4 was the agreed standard.
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Project Manager Sign-Off: Presented signed progress reports and site inspection notes from the client’s representative, none of which raised concerns about paint finish during construction.
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Cost and Time Impact: Demonstrated that Level 5 finish would have requiredadditional surface preparation, skim coating, and labor — none of which were budgeted or scheduled.
Outcome:
The dispute proceeded to litigation and it was found in favor of the contractor, citing:
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Ambiguity in Contract Documents: The inconsistency between the architectural drawings and the general specifications created reasonable doubt.
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Failure by the client’s project manager to identify and address the issue during construction.
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Lack of Formal Clarification: The client failed to issue a variation or request clarification during construction.
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Reasonable Interpretation: The contractor’s reliance on the general specifications and finishes schedule was deemed reasonable and consistent with industry standards.
It was ruled that:
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The contractor was not liable for repainting or damages.
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The client bore responsibility for not resolving the inconsistency during the design and pre-construction phase.
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Future contracts should include a clear hierarchy of documents and a defined protocol for resolving specification conflicts.