At a construction dispute hearing in Toronto earlier this year there were no witnesses, no experts, no court reporter, no transcript, and the parties weren’t bound by the final decision.
The proceeding was a reference hearing and it was conducted by construction lawyer and arbitration specialist Harvey Kirsh who served in the capacity as referee.
A 2015 recipient of the Ontario Bar Association’s Award of Excellence in Alternative Dispute Resolution, as well as the Association’s Award of Excellence in Construction and Infrastructure Law in 2018, Kirsh believes references can be a forum for resolving construction disputes in a timely and less confrontational manner.
Although there is limited legal literature about them, references are becoming more popular in Canada because they are brief, less adversarial, and less expensive than full-blown arbitration or litigation, he says.
“The proceedings are private and usually confidential, so it is impossible to know how long they have been in use in Canada.” Based on his own experience, he estimates that period is probably between five to 10 years.
A private form of an alternative dispute resolution, reference proceedings are mandated strictly by the contract between the parties and it those parties which direct it and who determine the governing rules, and the authority and jurisdiction of the referee, he explains.
In that respect they are different from a “judicial reference” which is contemplated by the court’s rules of procedure of a particular province and where a judge may direct a reference, either to a master (a court official) or to a lawyer upon whom the parties agree, of all or part of a litigation proceeding in order to determine an issue.
There is no reason they can’t be used in wide array of projects, but they tend to be used for resolving disputes on large infrastructure projects where governments either own or are partners in the projects, he says.
Certainly that was the case in the Toronto hearing which involved three distinct claims between the Government of Nunavut and a P3 (public-private partnership) consortium. That city was selected for convenience and minimizing costs, says Kirsh, who asked to act as referee based on his 40 plus years as a construction lawyer and several years’ experience as a construction arbitrator.
Due to the confidential nature of the hearing, Kirsh can’t reveal details of the dispute, the parties involved, his decision, and the final outcome. But he was able to shed some light on the process and how reference hearings should be conducted.
One of his first steps in the procedure was consulting with the parties to determine their own wishes and requirements: “within the guidelines of the contract.”
“When I learned they did not require examinations for discovery or expert witnesses, we were able to tailor the reference proceeding to suit their (the parties) needs, and to streamline it.”
Referees usually have sufficient independence, experience and expertise in construction and construction law to be able to discharge their responsibility of servicing the requirements of the disputing parties, while guiding them towards a successful resolution. And, while they are bound by the law, there is a certain amount of flexibility and informality in reference hearings not allowed in court cases or even complex arbitration, he says.
Asked why a court reporter and a transcript weren’t used, Kirsh says that would only be the case if parties wanted to preserve their right to appeal the decision to a court, in which case they might want to refer to the written record of the hearing.
However, some references such as this one stipulate that the referee’s decision is not final and binding, so an appeal would never be contemplated, he says.
At the same time he took “copious notes” and the parties involved also submitted documents which he was able to review and refer to when writing his decision—“which couldn’t be a one liner. I had to give a reasoned decision as required by the contract.”
The lawyer’s decision with respect to one claim was 36 pages long, 19 pages long on a second one, and 13 pages on the third. The hearing only took a few days to complete with Kirsh writing his decision within about a month.
Although underscoring the confidential nature of the hearing, Kirsh point outs: “That at the end of the day the parties were satisfied with the outcome.”
In response to a question on whether the construction industry should embrace references, Kirsh says that one type of proceeding does not fit all disputes.
“References have a role to play in the alternative resolution of disputes in the construction industry, but they are only one form of proceeding. Other forms, such as arbitration, mediation, or adjudication, may be more appropriate for other parties and other projects.”
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