1. A Guide to Investigating Construction Disputes
by Cameron Ford
This guide is intended to assist with investigation of large construction disputes
including claims by one side against the other. The methodology can be used in
disputes of any size and type.
Typically a dispute will be one side wishing to make a claim on the other and the
investigation will be as to whether your company has a claim, or whether there is any
substance in the other side’s threat to make a claim.
It should be assumed that the dispute will end up in court, and the investigation should
be conducted rigorously, analytically and methodically to prepare for that eventuality.
Even if court proceedings do not eventuate, the result of the investigation will
ultimately be whether to pursue or resolve a dispute of many millions of dollars. It
must be based on a solid legal and factual foundation to enable the company to make
the correct decision and to justify it to shareholders and any others properly interested.
Deciding not to pursue a claim or dispute is just as big a decision as deciding to
pursue one.
There will be a number of facets to resolving a large dispute. Not all of these will be
the domain of the investigation team. Some of those facets are:
Practice reform
Settlement
options
Financial
ramifications
Alignment of
stakeholders
Board
notification
CEO notification
PR issues
Political issues
Legal liability
Resolution

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This guide examines the four major phases of the investigation, being:
Phase 1 Establishing the investigation
Phase 2 Conducting the investigation
Phase 3 Reporting the results of the investigation, and
Phase 4 Finalising the investigation.
It does not deal with the other aspects of the dispute mentioned above which are
properly the domain of the company.
Phase 1 Establishing the investigation
Establish the investigation involves developing:
1. Terms of reference
2. A budget
3. An investigation team
4. Systems and processes
5. Corporate commitment.
Terms of reference
The terms should make it clear exactly what is to be investigated, the type of report
expected and the time frame for the report to be produced. It is not uncommon for
terms to be refined as the investigation progresses and information is revealed.
The project and corporate landscape can also change during the investigation, making
changes to the terms necessary.
Some preliminary scoping of the problem may need to be undertaken to determine the
most efficient terms of reference if sufficient is not known.
Legal professional privilege becomes important at this early stage because the way the
terms are framed could determine whether privilege attaches to the investigation or
not. It is better to keep the terms of reference confined to the need for legal advice
and not to include, for example, a general request for a report on what occurred or
recommendations on how to change practices etc. Privilege is considered in greater
detail below, and it is important not to skip that section.
Sample terms of reference are:
You are instructed to obtain and provide legal advice to the Chief Executive Officer
as to [eg, whether the company has any claim, OR whether the company has an
defence to any threatened or potential claim brought by xxx, OR the company’s legal
position in relation to the dispute, OR … ] arising out of [briefly describe the contract
or circumstances] and for that purpose to investigate the circumstances and report to
the CEO with that advice on or before [date].
Budget
This will be determined by the size and complexity of the dispute, its significance to
the company, the necessary size and nature of the team, and the urgency of the
situation.

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The investigation team
Depending on the size and complexity of the dispute, a team will need to be
assembled to investigate and analyse the results. That team will typically comprise:
• lawyers
• engineers
• programmers
• accountants
• other experts, depending on the technical nature of the dispute.
If the team is charged with negotiating solutions, or if the dispute is politically or
publicly sensitive, it may be necessary also to have on the team or as consultants to
the team:
• political strategists, and
• PR experts.
The team may be drawn from within the company or externally and engaged on
contract, while some services may be provided by external firms and independent
experts.
Critically, the team must have a high degree of independence from the project being
investigated, with some members coming from outside the organisation to ensure
practices are not taken for granted, and everything and everyone is questioned.
It is better not to have on the team anyone who is or was involved in the project under
investigation. It is difficult for that person to be independent and to see things other
than through the prism of their experience and their already established views. It is
advisable for those people who may have special knowledge of the history of the
project to be witnesses, interviewed by the lawyers at the appropriate time in the
appropriate way as discussed below.
It may be advisable to house the team separately from the project being investigated
to reinforce the perception and reality of independence, and to preserve confidentiality
and legal professional privilege.
A large team and investigation should be run as a project in itself, with the appropriate
project management approach.
For the reasons set out below under the heading Legal professional privilege, all
factual investigation should be directed by a lawyer, and all reports of factual
investigations should be given only to a lawyer. The lawyer can then forward reports
to those who need them.
This determines the structure of the team. To protect privilege and to ensure the
investigation is being conducted thoroughly, a lawyer should lead the factual
investigations and all other investigators should report to a lawyer. The lawyer can
then report to the project director or company, but if the investigators report directly
to the project director or company, there is a very good chance their reports will not
be privileged and they will have to be disclosed to any litigant where they are
relevant.

4. 4
Structure
A suggested structure to preserve privilege and ensure efficient investigation and
analysis is as follows.
Company or
Investigation
Leader
Lead Lawyer
Political
Strategists PR experts
Independent
accountants
and other
experts
External law
firm
Investigating
lawyers
Independent
engineers
Independent
programmers
Lawyers
The lawyers conducting the investigation and analysis should be experienced dispute
resolution lawyers. There are many different legal specialties, each with their own
unique skills, and dispute resolution lawyers are skilled at unravelling a factual
morass, eliciting facts from often reluctant witnesses, taking detailed statements from
witnesses, using their forensic skills in determining the relevance of facts and which
of them are crucial, and determining how the law applies to the facts.
For a large dispute where there are many witnesses, it may be necessary to have a
team of lawyers interviewing witnesses, all reporting to the lead lawyer. The team
need not be large unless there is an unusually large number of witness or the issue is
extremely urgent.
A paralegal or junior lawyer should have the sole responsibility of collating and
indexing documents. This is not an extravagance as documents are crucial to a case
and often prove or disprove witnesses’ recollection or reconstruction of events. If
proper track is not kept of documents as they are obtained by the investigation team,
some are invariably lost, to the real advantage of the opponent.
If you don’t have all the documents, you are flying blind and cannot know what your
opponent has up his sleeve. Neither do you have a chance to put unhelpful documents
to your witnesses to see if there is an explanation.
Engineers
Almost invariably it will be necessary to obtain an expert independent opinion as to
the technicalities lying behind the dispute. It will be appropriate initially to obtain the
view of the engineers working on the project, but they are not independent and their
opinion, even if correct, will carry little weight with an expert determiner, arbitrator,
mediator or judge. They will also be close to the project and will typically be affected
by emotive issues irrelevant to the legal resolution of the dispute. These issues may
also cloud their opinion and make it less reliable than that of someone independent.

5. 5
Engineers of high repute should be chosen to provide their opinion. If in doubt, a law
firm should be asked who they would recommend, and ideally the firm should engage
the engineers to protect privilege and to ensure the engineers are seen as being truly
independent. Experts such as these should agree to abide by the Federal Court Rules
governing experts, which are designed principally to ensure experts are independent
and do not simply give the desired opinion .
Programmers
If relevant, programmers will need to be involved. The same comments apply here as
those above to engineers. If available, it is appropriate to draw the engineers and
programmers from the same independent firm.
Accountants
Forensic or other accountants may be necessary to investigate the amount of any loss
and to provide an independent expert opinion. The same comments apply here as
made above to engineers.
Legal professional privilege
Do not skip this part. It is vital to the investigation.
Before examining the areas for investigation in detail, it is important to say something
about privilege. It is vital that privilege be understood by the investigation team and
those to whom it reports. If it is not properly understood, either the team will not
have the freedom to report accurately and completely all it learns, or it will give a
complete report which may be discoverable by the other side in any litigation, or by
some other party in litigation years later.
This last point is often overlooked. It is not only the present opponent who might be
interested in a copy of any report or investigation. A different opponent years down
the track may be entitled to the documents if the issues in that dispute are similar to
those investigated. This is particularly so if any systemic problems or practices are
relevant.
It is also important to understand privilege to guide the establishment of the
investigation team. To preserve privilege properly, all of the factual investigation
should be done at the direction of a lawyer, and all of the results should be reported to
a lawyer. It then should be a lawyer who reports on the results to the company, in the
form of an advice and in anticipation of legal proceedings or without prejudice
negotiations.
A suitably qualified lawyer should be consulted when the team is being established to
ensure the procedures are set up to protect privilege and confidentiality. If not set up
at the beginning, privilege may be lost for ever.
Every document created by the investigation team should have as its header words to
the effect of “PRIVILEGED AND CONFIDENTIAL – FOR THE PURPOSE OF LEGAL ADVICE
AND IN ANTICIPATION OF LEGAL PROCEEDINGS AND WITHOUT PREJUDICE
NEGOTIATIONS. DO NOT COPY OR FORWARD”.

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This does not create privilege in a document. It protects privilege if it already exists.
If those words or similar are not used, there is a chance any privilege in a document
will be lost.
Those words also serve the twin purposes of identifying documents created by the
investigation team, and informing recipient of documents that the documents are
privileged and should not be copied or forwarded. If that happens, privilege can be
lost as explained below.
What is privilege?
Legal professional privilege is an exception. It is an exception to the general rule that
all relevant documents must be produced to the other side. There are a number of
exceptions, or “privileges”, to that general rule, one of them being legal professional
privilege. When we say a document is “privileged” we are using shorthand for
“privileged from production”.
Test
Legal professional privilege applies if the document came into existence for the
dominant purpose of giving or receiving legal advice, or for use in anticipated legal
proceedings.
In other words, if one of those purposes was the dominant purpose the document
came into existence, it does not have to be produced to the other side.
Dominant purpose simply means the main purpose. There may be a number of
purposes for which a document comes into existence, but if the main one is one of
those privileged purposes, the document itself is privileged.
For example, a report on an accident may be prepared for a number of purposes, such
as to make an insurance claim, to prevent future accidents happening, to determine if
anyone should be disciplined, to test corporate policies and procedures, and to
determine if anyone is legally liable.
That report will not be privileged unless the main purpose was to determine legal
liability. The other purposes are not covered by privilege. If determining legal
liability was just another one of the purposes, the report will not be privileged and it
will have to be produced to the other side in any litigation.
So, reports for the purpose of enabling a company to decide how to arrange its
funding, how to get projects back on track, how to manage its affairs, how to price
future bids, what contracts to bid for, whom to employ/fire, how to reform its
practices, whether its practices need reforming, determining what went wrong,
determining who was at fault, etc etc will not be privileged. They must be produced
to anyone in litigation where they are relevant.
From or for a lawyer
This test can be put another way. A document will not be privileged unless it is from
or for a lawyer. Even then it is not certain that it will be privileged, but it will not be
privileged unless it is from or for a lawyer. This is an oversimplification but is a
handy test for those without formal legal training.

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The questions to ask in determining if a document is privileged are:
1. is it from or for a lawyer? If no, not privileged. If yes, go to 2;
2. what is the dominant purpose?
3. is it for giving or receiving legal advice? If no, go to 4. If yes, privileged.
4. is it for use in anticipated legal proceedings? If no, no. If yes, privileged.
That can be represented as:
Privilege can be lost
The simplest way privilege can be lost is by someone copying or forwarding the
document. The copy or the forwarded document are new and separate documents
from the original. If the dominant purpose of their creation was not privileged, they
will not be privileged even though the original was.
For example, legal advice may be given to the CEO which contains factual matters as
to the background of the issue. This is typical. That advice is privileged. But if the
CEO copies that advice to the Chief Risk Officer and asks him to look into the
problems and address them, that copy is not privileged because it was created for
internal management purposes.
The better course is for the lawyers who provided the advice to give the CRO a copy
of the advice. This is privileged because it is legal advice from a lawyer. How the
CRO reacts is a matter for him and does not affect privilege. Alternatively, the
problems could be extracted from the legal advice, reworded and given to the CRO.
Privilege can also be “waived”. There are many ways this can happen, but the most
common is where one side tells the other part of what is in the privileged document,
Is the
document
from or for
a lawyer?
What is its
dominant
purpose?
Is it to seek
or provide
legal
advice?
Is it to use in
anticipated
legal
proceedings?
NOT PRIVILEGED
PRIVILEGED
Yes
Yes
Yes
No
No No

8. 8
or gives them a summary of the content of the document. For example, privilege has
been waived in barristers’ advice where solicitors wrote to the other side and said “we
have barrister’s advice that we will win”.
This is another reason why only lawyers should communicate the content of any legal
document to anyone.
Systems and processes
It is necessary to:
• designate a secure location on a hard drive for electronic documents and files
to be saved. This must be a location to which no-one outside the investigation
team has access so as to preserve legal professional privilege. If anyone else
has access to the documents, privilege can be lost.
• designate a secure method and location within the premises for storage of the
documents collated by the investigation team.
• establish protocols for the receipt and circulation of documents and
information by and within the investigation team so everyone is aware of all
relevant matters.
• indentify the author of each document created by the investigation team for
privilege purposes and for future reference.
Corporate commitment
It is vital if the investigation is to have any success, for there to be commitment at the
highest levels of the company to the investigation. At times the expense will seem
high and will be questioned, there will be resistance from project members at their
time being “wasted”, their practices being questioned and because of the uncertainty
as to the result, and the investigation may not reveal palatable truths. To overcome all
of these and more, there must be commitment from the beginning to going all the way
with the investigation rather than pulling out when the going gets tough.
Phase 2 Conducting the investigation
The team is established, or at least the core, they have premises, systems and
procedures established, and they know the essence of the dispute from those who have
commissioned them. The next phase is to start investigating.
Bear in mind that there will be considerable myth and folklore around the project and
the dispute. It is important not to accept these at face value and to dispel them with a
disciplined, rigorous, analytical, unemotional approach.
Investigations and legal cases typically take sharp twists and detours along the way.
Do not be dismayed or distracted by these. Most avenues have to be pursued for a
time at least to determine if they are fruitful or mere dry gullies.
Discoveries, either legal or factual, will be made one day that suggest a good claim or
defence but are dashed by an equal and opposite discovery the next day. Again, this
is typical and does not mean the investigation is not no track. The important thing is
not to raise expectations unrealistically by prematurely reporting good news.

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Areas for investigation or analysis
There are five main areas to be investigated or analysed. They are the:
1. contract
2. facts of the dispute
3. expert explanations
4. amount involved, and
5. programming.
The reason for this is obvious but should still be stated. A claim or a defence to a
claim is a combination of facts and the law – it is not either in isolation. Often there
may be grounds of factual complaint about the other side’s behaviour, but if the
contract or the general law does not support the complaint, there is no claim.
Likewise, the contract may be clear in prohibiting certain behaviour, but if the other
side’s behaviour does not really contradict the contract, there is no claim.
This can be demonstrated in a simple equation:
X =FACTS LAW CLAIM
If the facts are, for example, that a company has suffered a loss of $10m and a delay
of 10 months, but that the contract or the law protects the other side, the equation is:
X =0 0
$10m +
10 months
Contract analysis
The contract must be thoroughly and independently analysed by the lead lawyer and
other lawyers on the team. It must be read as if for the first time in the organisation,
and without any regard at all to the interpretations applied by the project team. This
should be the first step as, until the contract is properly understood, the relevant
questions cannot be asked.
Do not accept at face value any view of the contract held by the project team, even by
those of ultimate seniority or apparent great experience. Over time, the project team
will have acquired or fixed on certain interpretations of the contract and will have
certain views. Those interpretations and views may in fact be a hang over from the
bid team and may or may not be correct. Simply because a particular interpretation
appears to have been adopted by both parties does not mean it is correct or that it is
binding.
Very strong opinions can be held by those in the project team, both as to the contract
and to the facts. They should be respected but not necessarily accepted. It is a

10. 10
common phenomenon that those closest to the dispute feel the strongest but do not
necessarily have the clearest view.
Opinions can be expressed with voices raised and tables thumped, but this does not
make them correct. Lawyers and judges tend to think that if such emphasis is needed
to support an argument, there is not much else to it. An equation which has proved
true for at least 20 years is:
VOLUME + VEHEMENCE ≠ VALIDITY + VERACITY
There is every chance that the contract will have been administered by commercial
managers who may or may not be legally trained and who may not have the degree of
independence from the project leaders to question received interpretations and
approaches.
The preferred approach is to gain an understanding of the contract unassisted by
anyone in the project team, and then to check with the appropriate people as to their
interpretation and how it has been applied. If there is a difference, the correct
interpretation will have to be determined, and you will need to have the courage and
independence to disagree if need be.
There is a good chance that wrong interpretations, procedures and approaches have
been taken because of assumptions or misunderstandings at the beginning. They
should be brought into line with the contract as soon as practicably possible and in a
way which preserves the company’s position.
Management and front-line staff will have certain understandings of their rights and
obligations under the contract. They should not be accepted at face value, and the
question to be repeatedly asked is “Why?”. Insist in being shown a clause in a
contractual document which imposes the obligation or gives the right. If it is not
there, has it been agreed ex-contractually or is it a trade usage?
It is convenient to draft a table of rights and obligation under contract to assist in your
understanding and to help explain it to the project team. To this table can be added
more columns later as necessary to record how those rights and obligations were
performed and what happened in practice. A draft table is below with fictional data.
The last two columns would be added as the factual investigation progressed.
CLAUSE OUR RIGHT /
OBLIGATION
OPPONENT’S
RIGHT /
OBLIGATION
WHAT
HAPPENED?
NATURE OF
CLAIM
ARISING
15.2(b) Give written
notice in 5 days
of discovery of
latent conditions
Give direction or
variation within 5
days of notice
Urgent. No
written notice.
Oral notice
followed by
oral direction.
Estoppel by
conduct.
Cl 15.9 urgent
situations?

11. 11
Notices
Notices and claims given under the contract should also be collated and analysed.
Most contracts have strict provisions relating to the giving of notices and the making
of claims, with other steps also having to be taken if notice is given.
The notices and claims should be compared closely with the terms of the contract to
ensure they comply and, if they do not, arguments developed as to why they do not
(for example, inability due to the nature of the breach alleged).
Since the purpose of notices and claims is to enable the other side to know of a
potential dispute and not to be taken by surprise, if the notices and claims do not
comply with the contract, a fresh notice or claim should be given as soon as possible
with the necessary information to comply. Considerable thought will have to be given
as to how this is done so as not to undermine the company’s position or the arguments
developed as to why the notices and claims already given do not comply.
Factual investigation
Once the contract is understood, the factual investigation can begin on a proper
foundation. There are two parts to a factual investigation, witnesses and documents.
The factual investigation should be conducted by the lead lawyer, assisted by his team
(if any). Others dipping down into the factual investigation has the tendency to
confuse the investigators and the project team, muddy the waters, duplicate effort,
occupy limited time of witnesses, annoy witnesses by repeating stories, and dilute
evidence by
Documents
Ideally, all relevant documents would be gathered and then put to the witnesses for
their comment and explanation. This is not possible in practice because may
documents are only discovered after speaking to witnesses and obviously someone
must be spoken to to learn where the project documents are kept and how they are
accessed.
Nevertheless, as many documents as possible should be identified, collated and
indexed (the index is very important and should not be overlooked). Often there will
be a central document repository which can be searched in any number of ways to
obtain documents.
All documents should be placed in easily accessible files or folders and stored
centrally and securely. These will ultimately be used externally to support the claim
or defence, or internally to show why there was no claim or defence. They will
probably be kept separately from the project documents thereafter, even when the
investigation is complete, to preserve both privilege and the history of the
investigation.
A notice should be circulated to all in the project team as soon as the investigation
team is assembled that they must not destroy any documents. To do so would be in
breach of the discovery obligations under court rules and could lead to significant
penalties. Not only is it in breach of the rules, but valuable evidence is lost which
again can give the opponent an advantage.
When more facts are known and if there are tens of thousands of documents (as there
probably will be), key words can be developed to search the documents electronically.

12. 12
These are typical Boolean searches which can be applied to most document forms
including PDF.
Witnesses
The term “witnesses” is used to emphasise the importance of this part of the
investigation. It should be assumed that the dispute will end up in court, and
everything should be done properly to that end. Even if it does not go to court, the
advice will ultimately be whether to pursue or resolve a dispute of many millions of
dollars. It must be based on a solid factual foundation to enable the company to
make the correct decision and to justify to shareholders and any others properly
interested.
The purpose of interviewing a witness is to learn what that witness knows and to
record it in their own words. It is not to educate the witness or display the
interviewer’s knowledge.
There are six steps to a thorough factual investigation of witnesses, namely:
1. identification of witnesses
2. preparation for interview
3. conducting the interview
4. drafting the statement
5. amending the statement
6. finalising the statement.
There is a temptation to shortcut these steps and to “get to the crux” quickly. This
temptation should be resisted as yielding to it produces inferior results which can be
unreliable as a foundation for making or resisting a claim, developing corporate
strategy and for reforming practices. There is rarely an effective second chance to get
it right.
Preliminary chats with witnesses might be held, but care has to be taken and they
should only be held by experienced dispute resolution interviewers. There are at least
two potential problems. When interviewed properly later, witnesses often feel “I’ve
told you all this before” and become antagonistic and unhelpful. Even where they do
not do so, they can edit their evidence because they think they have told the
interviewer relevant parts before, or that the interviewer knows them from chats with
other witnesses.
The purpose of interviewing witnesses is to get to the real facts, to dispel myth,
folklore, supposition and obfuscation, and to determine what each witness actually
knows for themselves. This last is particularly important and often not known, as it is
important to know what each witness actually knows first hand themselves rather than
what they have heard. If this does not occur, the myth and folklore simply spread.
These three are vital in determining what action to take on a potential claim and, from
a broader view, developing corporate strategy on the project and generally.
Inexperienced interviewers look for evidence that supports their position, rather than
simply everything that the witness knows. It is not helpful to the ultimate decision the
company has to make to obtain only part of the story. The company needs to know
the whole story, good and bad, to be able to make an informed, defensible decision.

13. 13
Identification of witnesses
Those commissioning the investigation will know the identity of the leaders of the
project being investigated. That does not mean they are the key witnesses or that the
investigation should commence with them. Questions should be asked of others
around the project to ascertain, as far as possible, those who might be relevant to the
investigation.
As with documents, not all relevant witnesses will be known at the beginning of the
investigation. Some will only become known or relevant as the investigation
progresses and takes the twists and detours typical of investigations.
Which witnesses you commence interviewing will depend on the nature of the issue
being investigated, the project and the people. For example, if it is suspected that
problems lie with management of the project, it might be better to commence with
interviewing those above and below management.
This is to try and learn as much as possible around the probable issue and arming
yourself with as much information as possible before interviewing those who are
thought to be the potential cause. Similarly, if the cause is thought to be with the
front line staff, interviews might be better commenced with those around them, rather
than with those people.
The aim is to be equipped with as much information as possible to conduct
meaningful interviews with those thought to be at the heart of the issue. Without this
issue, vital questions can be missed and answers amounting to no more than rhetorical
flourish and Gallic gesticulation can be wrongly accepted. Hard facts and documents
are needed to test the assertions of those thought to be around the centre of the issue.
Do not assume that there will be a second chance to interview crucial witnesses and
thus arrange an interview prematurely. There may well be time to interview them
again, but often there is only one chance to interview people effectively, particularly
if they do not wish to tell the whole truth. Even if they are initially co-operative and
truthful, second and subsequent interviews can annoy and frustrate so that less than
the full story is gleaned.
Of course, it may be possible to interview effectively again where information is
obtained contradicting earlier statements, but then and adversarial position can be
taken which may not be helpful to the investigation. On the other hand, it can be used
to elicit admissions or further information. There is more than one approach, but these
issues need to be borne in mind when deciding which approach to take.
Once the witnesses are identified and the approach determined, a timetable for the
interviews should be drafted. This will have to yield to practicalities and there is
every chance interviews will have to be conducted when witnesses are available,
which probably will not be in the desired order.
Preparation for and conducting interviews
This is not the place to teach how to prepare for and conduct interviews. It is assumed
that they will be conducted by experienced dispute resolution lawyers. The purpose
of the interview is to learn what that witness knows and to record it in the witnesses’
own words.

14. 14
Those not experienced in dispute resolution may feel that the lawyers are being overly
formal or rigorous. To allay that suspicion, below are some useful guidelines for
conducting effective interviews:
• the interviewer should listen more than he speaks. A good guide is 90%
listening and 10% speaking, with that speaking being mainly asking questions.
• the interviewer should not tell a witness what another witness has said unless
it cannot be avoided to obtain this witnesses’ comment. (and it usually can be
avoided). A witnesses’ evidence is weakened if it is based on or is in response
to what others have said (reflecting human experience that we tend to
moderate our views and memories to that of others).
• the interviewer should not suggest answers or wording to the witness. While
this may look good no the statement and appear to be supportive of the case, in
the end it will be very unhelpful as it will not reflect the whole truth and will
undermine the factual foundation. It never helps to do this.
• the interviewer should record the witnesses’ own words, not the interviewer’s
paraphrasing or understanding of those words which invariably leads to errors.
• it is usually more convenient to type answers as they are given rather than
handwrite and transcribe later. If the typing is proficient enough, the witness
can be given a draft of his statement at the end of the interview for checking,
with strict instructions not to copy it or show it to anyone. Handwriting might
be used where to type would intimidate a witness or cause them to be less
open.
• sometimes it is useful to give the witness an idea in advance of the topics for
questioning, but it is usually preferable to speak to them without much
warning.
• the witness should never be given a list of questions in advance or as an
alternative to an interview. Answers to those questions are never complete or
accurate, and vital ancillary questions are missed which only become relevant
in an interview. The demeanour of a witness is also very important, even
outside court. The interviewer needs to be able to form an assessment of
whether he is being given the whole truth or something less.
• everything a witness says should be doubted.
• the interviewer should never promise or indicate to a witness that something is
“just between them”, or that the matter won’t go anywhere, or that no-one else
will be told. It is a promise which cannot be kept while keeping your duty of
faithfulness to your employer. One reason is that sometimes an investigation
into a dispute will reveal breaches calling for disciplinary action. If such a
promise is made, either the interviewer’s or the company’s position is
compromised in any future action.
Drafting, amending and finalising the statement
There are different degrees of statements, ranging from the draft general outline,
to a signed, witnessed statement. It is not worth taking mere notes of interviews.
The lack of discipline involved for both interviewer and witness makes them of
little use, and they can in fact be a hindrance because of their opacity, lack of
detail, and their half-truths. They are often worse than having nothing.

15. 15
Probably the investigation will not call for a signed statement, but there is a
chance it will for a number of reasons. It is worth mentioning those reasons to
enable a decision to be made.
A signed statement would be obtained where:
• there are serious doubts as to the witnesses’ veracity and quite a lot hinges on
the evidence. A signed statement might be obtained here to reinforce to the
witness the seriousness of the matter, to hold the person to their evidence later,
or to have them declared a hostile witness if need be. This last can usually
only be done if the witness contradicts in the witness box a previous signed
statement. The value of having someone declared a hostile witness is that they
can be cross-examined, a benefit of inestimable value where a witness turns.
• the witness is in a job or personal situation where he may not be able to be
located in a number of years’ time. Under limited circumstances, if a witness
cannot be found, a signed statement can be adduced in evidence in
proceedings.
• the witness is old, ill or in a highly dangerous job and there is a higher than
usual chance of their death. Again, under limited circumstances, signed
statements of witness who have since died is admissible.
As stated above, the statement should be drafted at or immediately after the
interview in the words of the witness. If the statement is not typed during the
interview, it should be dictated or typed immediately following. The next day is
usually not soon enough because the interview’s memory of detail and of
understanding their notes fails.
Once drafted, the statement should be given back to the witness to check for
errors. The ideal is not to email the draft statement to the witness but to sit with
them while they go through the draft. This is to prevent their losing privilege by
forwarding it to anyone else, which frequently happens for odd reasons.
When the witness has made all the changes they wish to make, which should not
be discouraged at all (to get the whole story), final amendments should be made
and the statement signed (if required) and filed. A copy should not be left with
the witness. It is the company’s property, not theirs, and leaving it with them runs
the risk of copies being made and privilege lost. If court proceedings eventuate,
matters in the statement can be put to the witness to help them remember, and
their statement can be used as the basis of the evidence to the court (usually now
in the form of a statement initially).
On no account should one witness be shown the statement of another.
When all the witnesses have been interviewed, a bank of facts will have been
assembled and it should be thoroughly analysed for inconsistencies, anomalies,
unexpected consistencies and its general import.
A factual matrix can be prepared from the statements on each of the allegations or
issues in the dispute. This helps distil the evidence and reveal exactly the quality
of the evidence for each issue. A sample matrix with fictional data is:

16. 16
ISSUE BILL SMITH AMY JONES JIM BROWN SUMMARY
We notified
the principal of
the latent
defects ASAP
Told Todd
Brooks of the
principal at 7
am the next
day at a chance
meeting offsite
(no meeting
diary). Brooks
now says he
doesn’t
remember.
Todd Brooks’
offsider, Peter,
asked her what
the latent
defect issue
was. She
didn’t know.
Question: what
is Peter’s last
name?
Peter ?? told
him at the
beginning that
he didn’t want
any hold ups
with a whole
lot of paper
work with
anything on
the job and that
they had to
work together
to get it all
done. Peter
had acted on
oral
notification of
other issues
(not latent
defects) in the
past.
Smith orally
notified
Brooks,
acknowledged
by Peter ??’s
comment to
Jones. This
was in
accordance
with a previous
general waiver
of written
notice.
Independent experts
Independent experts such as engineers, programmers, accountants and the like are part
of the factual investigation.
There are four steps in their involvement, which are:
1. choosing the expert
2. briefing the expert
3. the expert conducting his investigation, and
4. the expert reporting.
Choosing the expert
It is important that the right expert is chosen, not the cheapest or easiest. Their
opinion will be a major factor in the multi-million dollar decision the company has to
make about the dispute. It is false economy to skimp on the expert, which produces
confusion, distraction and frustration for the investigating team and a flawed result.
It should be assumed that the expert will have to give evidence, or at least that his
report will have to be shown to the other side. To that end, the expert should be of
good repute in his profession to give his opinion weight and credibility both with the
other side and with the court (or adjudicator, mediator, expert determiner etc).
The size, nature and urgency of the dispute will partly determine which expert is
chosen. Some experts work in large firms where they can call on many people to

17. 17
investigate, and people from different disciplines. This may be desirable in a
particular dispute, or may not be necessary.
If in doubt, a panel firm of solicitors or a barrister could be asked for their
recommendation.
Briefing the expert
This is the most important part. An expert’s opinion is only as good as the brief. The
brief will be discoverable to the other side and to the arbiter of fact. A standard and
effective way in which to undermine an expert’s opinion is to attack his brief to show
that it is incomplete, biased or wrong.
The expert has to be seen as independent and should comply with the Expert Code of
Conduit (NSW version attached).
To prepare the brief, the approach is:
1. identify every document and piece of information the expert needs to provide
an independent report; and then
2. remove all documents which contain information the other side should not see
and replace them, if possible, with other documents or information which are
not so sensitive. This may not be possible and a decision will have to be made
by the lawyers about how best to brief the expert.
Care also has to be taken to ask the right question. If the wrong question is asked,
privilege may not apply or the answer needed to resolve the dispute satisfactorily is
not obtained.
The expert should be commissioned by either the lead lawyer on the investigation
team, or the external law firm if one is being used on the investigation.
Expert investigation
To provide a meaningful report, the expert will have to have access to all people,
documents and information. If there is any commercially sensitive information,
protocols need to be established around to whom in the expert’s office they are
disclosed, how the information is protected, and how it is reported. There may have
to be a sealed attachment to the report containing the commercially sensitive
information if it is vital to the report, or some other way or protecting the information.
A deed of confidentiality could be signed by the expert, remembering, though, that the
experts will be professionals who owe that duty in any case.
The investigation leader will almost certainly have to intervene on the expert’s behalf
periodically to facilitate that access.
Expert report
The report should comply with the Code of Conduct.
It is not improper to obtain a draft of the report, but bear in mind that a draft is
discoverable to the other side. The purpose of obtaining a draft is to ensure the report
complies with the Code of Conduct and that it answers the questions asked in the
brief. It must not be to have the expert rewrite his opinion to something more
favourable.
An expert is within his rights to (and in fact should) refuse to amend his report if the
proposed amendment does not reflect his views.

18. 18
The report should be provided to whoever commissioned it, the lead lawyer on the
investigation team or the external lawyers, and then distributed by that person to
others.
Quantum
Determining the amount involved in any dispute is a separate line of enquiry and
usually calls for expert assistance. This assistance may come from the independent
experts, programmers and accountants, but it could also come from lawyers
experienced in investigating quantum of claims. One of those lawyers could be made
a member of the team, appointed as consultant to the investigation team, or engaged
as an independent expert.
That person will conduct investigations in conjunction with but probably
independently from the lawyers investigating the facts of the dispute. If the scope of
investigation is confined, one person could investigate both but typically the size of
the dispute will require separation of functions.
To preserve privilege, that person should also report to the lead lawyer or the external
firm.
At the end of the investigation, there should be
• indexed folders of documents
• indexed folders of witness statements
• folder(s) of expert reports
• folder(s) of quantum assessment (if relevant)
Analysing the results
It is slightly artificial to deal with analysing the results only after the factual
investigation is complete, as in reality the analysis is continuous as facts are being
learned. However, a complete analysis will not be possible until the last expert report
is obtained, which usually occurs after the witnesses are interviewed and the
documents collated.
In a case of any size, there will be a number of complaints or allegations each
potentially giving rise to legal claims or defences. In turn, those claims or defences
can be expressed in different legal forms. A convenient way to analyse the facts,
allegations and legal consequences is in a table similar to the one on the next page.
It is a good discipline to draft a Statement of Claim to see what is needed to establish
the case and what evidence there is. This will reveal deficiencies in the evidence and
enable it to be determined if the missing evidence can realistically be obtained.
At the end of the analysis there should be a complete understanding of the potential
claims or defences, the legal consequences, the amount of days and dollars involved,
and the prospects of success of each.

19. 19
CLAIM LEGAL
BASIS
FACTS DIFFICULTIES COMMENTS/
ASSESSMENT
1. Notified
latent defects
ASAP
2. $5.7m
rectification
3. 2 weeks
EOT
1. Cl 15.2(b)
2. Estoppel
3. Waiver
4. Variation
to contract.
Smith orally
notified
Brooks,
acknowledged
by Peter ??’s
comment to
Jones. This
was in
accordance
with a
previous
general waiver
of written
notice.
1. notice not
written
2. variation not
written
3. word-on-word
4. Peter gone
1. Course of
conduct should
be able to
overcome
problems of
notice and
variation.
2. Prospects fair
to good
Phase 3 Reporting the results
A number of reports will probably be necessary, but everything should flow from the
legal advice given either by the lead lawyer or the external firm. Again this is to
preserve privilege.
It is far better to keep reports to a minimum to avoid privilege being lost for a variety
of reasons. Oral reports can supplement written reports where necessary.
The reports required might be:
• Legal advice on liability
• Summary of legal advice
• Report on investigation team’s activities
• Board report
• Lessons learned from investigation about project
• Lessons learned about investigation process
Little need be said about the first two. Privilege applies to the summary of the legal
advice since it is conveying privileged legal advice.
Report on investigation team’s activities
If this report is required, it should be written by a lawyer on the investigation team
and should make clear at the beginning that (1) the team was established to investigate
facts for the purpose of obtaining and giving legal advice, and (2) the report is a
summary of those facts as found, provided for the purpose of legal advice and for use
in anticipated legal proceedings and without prejudice negotiations. Possible wording
is:
This report is a summary of the facts as found by the investigation team, which was
established for the purpose of finding facts to give legal advice to the company and, if
necessary, obtain legal advice from external lawyers. It is provided to assist in

20. 20
understanding the factual background to the legal advice given and to prepare for
without prejudice negotiations.
The report should be careful not to be, or appear to be, for a dominant purpose which
is not privileged, such as reforming practices, preventing future accidents happening,
determining if anyone should be disciplined, or simply to find out “what happened”.
Board report
The Board should be encouraged to accept the legal advice as the only report. This is
because any other report could have dual and equal purposes of making legal
decisions and making commercial/management decisions.
If a separate Board report is required, it should convey the minimum amount of
information necessary to inform the Board properly of the issues, be stated to be a
summary of the legal advice, and not venture into commercial or management areas
such as recommendations for future practices, reforms, discipline etc.
Lessons learned about project and investigation
It is very difficult to imbue these documents with privilege, since they are self-
evidently for a purpose other than legal advice, etc. They are clearly for the purpose
of reforming practices in the project and the company generally.
For this reason, they should be kept as non-specific to the project as possible, and
should instead be promulgated simply as new policies, guidelines, procedures,
without reference to the project or the investigation.
Remember that even if this dispute does not go to litigation, an opponent years down
the track can seek inspection of these documents if they can be made relevant, for
example by drawing in systemic problems, practices, procedures, etc.
Phase 4 Finalising the investigation
Exactly how the investigation is finalised will depend in part on what flows from its
reports. There might be litigation, claims under the contract, negotiations, or nothing
at all.
Whichever outcome results two things are important – to preserve the documents and
findings for the future, and to preserve privilege. Even if no action is being taken, it
may be necessary at some time in the future to justify why no action was taken.
All documents gathered and created by the investigation team should be indexed,
boxed, marked clearly as being legally confidential and privileged, and stored under
the authority of a permanent lawyer in the company. If there is no permanent lawyer,
it should be under the authority of the Company Secretary or the CEO.
In the boxes there should be a separate, clearly marked folder with all of the reports,
so someone coming to the matter in the future can easily determine what occurred.
If notices and claims need to be made or updated following finalisation of the
investigation, someone either in the project team or the company should be made
responsible and equipped with whatever they need.

21. 21
If the investigation team is disbanded, their personal addresses, emails and phone
numbers should be obtained to enable them to be contacted if needed in the future.
Those details should be given to whoever in the company formed the team initially.
__________________________________________