Emotions can easily take control of a dispute, as the parties in the Wembley Stadium litigation found out

Earlier this month Mr Justice Jackson gave judgments on outstanding issues and legal costs in the protracted litigation between Multiplex and Cleveland Bridge (Cleveland).

The dispute, which received substantial media coverage, arose from the new Wembley Stadium construction project involving more than 20,000 tonnes of steelwork. The steelwork was commissioned to an innovative and complex design, including plans for an unobstructed view from every seat, a retractable roof, and the now famous arch, which is the largest single-roof structure in the world.

Multiplex, the project's main contractor, engaged Cleveland in 2002 under a sub-contract, based on the JCT Dom 2 standard form contract, to carry out the design, fabrication and erection of the steelwork. What followed was a familiar tale of a difficult contract ending in tears, repudiation and litigation.

Problems soon arose; Cleveland blamed Multiplex and the civil and structural engineers for delays, deficiencies and changes in design information, while Multiplex blamed Cleveland for delays in the works. Supplemental contracts were agreed, but the disputes continued. In June 2004, Cleveland succeeded in lifting the arch, whereupon Multiplex gave notice removing all remaining erection works. This was treated as a repudiation of the sub-contract by Cleveland, which stopped work. Multiplex engaged another sub-contractor to finish the steelwork, at a lower cost than contracted for with Cleveland.

This, however, was only the start of the dispute. In five adjudications, Cleveland succeeded in obtaining payment of £5.95m. Both parties then started proceedings in the Technology and Construction Court (TCC). Two trials and appeals to the Court of Appeal followed, covering 11 preliminary issues, with successes and failures for both parties. But, crucially, a finding was made that Cleveland had repudiated the sub-contract.

Less determined litigants would have settled at this point. Instead, Multiplex upped its claim and Cleveland fought on. The action came to trial earlier this year. It essentially involved drawing up a final account: assessing the damages owed by Cleveland for repudiation and defects, and the sums owed by Multiplex for work done. Multiplex failed to prove that Cleveland's repudiation caused any delay or loss to the project, because the gains from the repudiation exceeded the losses. However, it succeeded on other issues, including defects and valuation of work. The overall result was an order for Cleveland to pay Multiplex approximately £6.15m, including interest – taking the parties back almost to where they were before the adjudications.

But the costs were the real sting in the tail for both parties. Together, they had run up costs of nearly £22m. The judge ordered Cleveland to pay only 20% of Multiplex's costs of the action. As Multiplex's costs far exceeded the sum of £6.15m ordered to be paid, it was a hollow victory for Multiplex. Indeed, the dispute overall was a financial disaster for both parties.

The costs would have been even more substantial if the parties had not agreed a 'chess clock' trial limit of three months. As a result, some of the evidence, issues and consequences were not properly ventilated. The judge dealt with this problem in an innovative and sensible way. While writing his judgment, he held a number of post-trial hearings, including further written submissions, at which the points were clarified, argued, and sometimes agreed.

The judge was very critical of both parties for their approach to the dispute – especially for not doing more to attempt to settle after the preliminary issues. Millions of pounds could have been saved if the parties had agreed figures once those issues of principle had been decided. Both parties ignored encouragement to settle, and threw away golden opportunities to do so on favourable terms. In particular, the judge criticised Multiplex for increasing its claims to an unrealistic level, and pursuing unsuccessful claims, while also criticising Cleveland for failing to make offers, despite recognising that it would be the paying party.

Ending a major construction contract unilaterally involves high risks. It may well be hard to predict which party will ultimately be held to have acted lawfully, and the issue could involve protracted and expensive proceedings.

Assessment of a final account by a court should be a last resort. If there are disputes about details of valuations or losses, parties should resolve them by negotiation, mediation or expert determination. And if these issues cannot be resolved in whole, they should at least be resolved in part.

Costs protection is crucial. In major disputes like this one, each party needs to step back from the details, suppress emotions, realistically assess merits and risks, and make appropriate protective offers. The assessment and offers then need to be kept under constant review. Of course, all of this is easy in theory, but much harder to do during the trench warfare of a major dispute.