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Bestcase Ads 1/16/08 11:15 AM Page 1 LAW TIMES / JUNE 9, 2008 COMING SOON An online research tool 1.800.263.3269 Focus On CONSTRUCTION LAW significant slowdown in the U.S., business for Ontario's construction lawyers is remaining robust — al- though some say a bit of refocusing will still be necessary this year. Investment in non-residential building construction was up 3.1 per cent in Ontario in the first quarter of this year, compared with the last quarter of 2007, including gains in investment in the commercial, industrial, and institutional construction areas, and was up 4.2 per cent in Toronto, according to Statistics Canada. The number of non- residential building permits in the province was up 0.3 per cent in the first three months of the year, compared with January to March 2007, but was down in Canada as a whole. With 10 lawyers practising con- hile economic experts say Canada is set to feel some effects from the struction law, both on the front- end contract negotiation drafting, project structuring side, and the dispute resolution, and litigation side, Bob Beaumont, a lawyer with Osler Hoskin & Harcourt LLP in Toronto, says that things have been "extremely busy." And the firm sees it continuing for a period of time. Business for construction lawyers remains robust W Industrial building booming BY HELEN BURNETT Law Times area, for example, there is a huge amount of work being carried out in the province and on the books, says Beaumont. The sources of that work are or- ganizations including the Ontario Power Authority, Ontario Power Generation, and Infrastructure Ontario, which has 16 projects under construction, including hos- pitals, a youth detention centre, the Durham courthouse, and 24 projects in various stages of coming on-stream, he says. He notes that this is "a good In the industrial construction news story in Ontario." To date, things have stayed busy in terms of commercial con- struction; however, Beaumont says he wouldn't be surprised if that slows down a little bit. "But with Infrastructure On- tario and the OPA, [and] Ontario Power Generation, I think the market is going to continue to be very vibrant in Ontario," he says. Beaumont says that over the last couple of years, and as the level of activity has increased, the risk al- location has shifted a bit, in that contractors have had more options available to them and are not will- ing to take on some of the risk on projects that they had previously. "I see a little bit of a shifting of the pendulum back, where contractors are pushing back on Bob Beaumont says business has been "extremely busy" in the area of construction law. liability and responsibility and trying to limit their exposure on these projects," he says. Another change that they're seeing a bit of, and that contract- ing clients are seeing as the U.S. economy slows, are a number of U.S. contractors and construction participants looking to Canada to try and take advantage of the activity, he says. "From a firm perspective, we've fortunately been the ben- eficiary of that on a number of occasions," he says. Through involvement in an association called the Forum on the Construction Industry, part of the American Bar Association, the firm has developed a lot of contacts with firms in the States, and, as their clients start to look at opportunities in Canada, the firm has been assisting contractors to get established here, he says. In terms of the projects happen- ing at the moment, Gowling Laf- leur Henderson LLP construction lawyer Ken Movat also notes that there is a refocusing happening towards the government-participa- tion jobs, or P3 projects. On the litigation side, Movat adds that an example of something that this area of law will be seeing more of, as a potential result of the way the economy is turning, is an increasing number of Companies' Creditors Arrangement Act appli- cations in court. Movat notes it's something that has occurred infrequently in the last few years. "I think its going to occur with more frequency; we're going to find that there are people who are in financial difficulty due to harder economic times," he says. "As a result, the impact on the legal practice will be that people like me will be finding that they're doing more of this kind of work, representing trade contractors and other people in the construc- tion business who are faced with the fact that there are other play- ers in the business who are falling upon hard financial times," he says, or a lot more work that has an insolvency aspect to it. He says that it has not oc- lawyer with Torkin Manes Cohen Arbus LLP, says that it has been a re- ally good run for contractor clients over the last few years. While the crash in the U.S. residential market hasn't yet hit here, Hersen doesn't necessarily think that it will. He cautions that the con- curred a lot at this point in time, but he thinks the profes- sion will see more of it. "My sense of it is my partners at this firm who are on the finan- cial services side and banking side are probably seeing less activity on the lending side. Less money is out there; as a result, less con- struction is going on," he says. Greg Hersen, a construction struction market in Ontario has been so overheated for so long that a slowdown is inevitable, but there is a difference between this inevitability and a crash. "Before a construction lawyer is going to be affected by a slow- down in the economy it has to hit my clients," he says. Possible effects from a slow- down may include busier construc- tion litigation practices if there are more defaults, while the corporate side may slow down, as less projects are being started, he says. LT ADR leads in resolving construction law disputes BY HELEN BURNETT Law Times A lead the field in resolving construction disputes. But some are also discussing the concept of a model of statutory adjudica- tion similar to the one used in the U.K. Duncan Glaholt, of Toronto firm Gla- lready a popular choice in this area of law, alternative dispute resolu- tion is expected to continue to and we'll continue to see the [act] used by people and we'll see cases get into court through the [act], but then be stayed in favour of arbitrations and in some cases, mediations," he says. Stanley Naftolin, a lawyer with Goldman holt LLP, says that ADR is becoming more common in construction disputes, and he expects this trend to continue, grow, and be- come more prevalent. He also believes ADR will dominate the construction dispute field in the years to come and notes that very few construction disputes now end up before the courts for final determination. "The one access point to the court sys- tem is through the Construction Lien Act, Sloan Nash & Haber LLP in Toronto, who is also a private mediator and arbitrator in construction law disputes, says he doesn't know if most construction disputes are end- ing up before mediation but notes that he is certainly seeing a lot of them. "The parties that I deal with on the mediations are certainly sophisticated con- struction people in most instances, their counsel certainly know what mediation is all about, and that's critical, in my opinion, to get the parties to reach a successful reso- lution of their issues," he says. "Mediation continues to be a strong re- source for the construction industry and the legal profession in dealing with construction disputes, and its really taken hold and is grow- ing significantly," says Glaholt. Naftolin says that in this area of law he has had good success in getting parties to reach a resolution in all of their out- standing issues with mediation. "I have found that where the mediations very expensive, because there are just so many issues that arise in a construction litigation case," he says. are consensual, in other words, the parties have agreed to go to mediation as opposed to being ordered to come to mediation as a result of a court direction, those that are con- sensual have led to very successful resolutions of the disputes in issue," he says. Those that have been directed by virtue of a court order are a bit more difficult, he says, as the parties may feel compelled to be before the mediator to try and resolve the matter, and it can sometimes be tough to get them into a settlement mode. He adds, however, that he has had a fairly good success rate even with respect to those that have been court-ordered. "Construction litigation can be very, struction cases, says Glaholt, as most con- struction disputes are multi-party, as aligning the arbitration clauses is challenging. In the coming years, one issue that will become a greater problem is deciders of fact competing for business in the arbitration area, as well as the absence of binding authority, as the decisions are private, says Glaholt. "I think that we're going to miss, very Arbitration has some limitations in con- shortly, a growing and coherent system of principle and applicable law," he says. "I think we're seeing real problems emerge in other jurisdictions with respect to the WHICH DIRECTION IS BEST FOR YOU? RainMaker Group 110 Yonge Street, Suite 1101 Toronto, Ontario M5C 1T4 Untitled-7 1 Tel: 416-863-9543 Fax: 416-863-9757 www.rainmakergroup.ca www.lawtimesnews.com 5/29/08 1:05:49 PM PAGE 9 See Process, page 11

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