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Nottinghamshire Builder Magazine - FEBRUARY 2012
Builders’ Problems SOLVED Problem: My company specialises in reinforced concrete and currently have a client that owes us a small amount of money. The contract was for a reinforced set of helical staircases. We submitted a quotation which included terms and we also received a written order from the client. During the work we submitted interim applications, which were all paid. Upon finishing the job we submitted a final invoice for just over £5,000 and a few days later the client requested remedial works to be carried out. By this time, not only had plastering and painting been carried out on our work, but the fit-out had been finished and the retailer was trading. I believe this is an attempt to avoid payment. There was no formal specification issued by the client and the work was unique and is not covered by any formal standards. I also believe that the work has been carried out to a high standard. I was thinking about putting this dispute to arbitration / adjudication, although I am now considering reducing the price to below £5,000 and bring the case through the small claims track. Your opinion would be appreciated.
Vernon, Leicestershire Response: Hi Vernon. Firstly, arbitration and adjudication are 2 completely different ways of resolving construction disputes. An arbitration award is binding on the parties (successful appeals are few and far between), although there must be an agreement in writing between the parties before
Spurious remedial works the dispute can be referred to arbitration. An adjudicator’s decision where a dispute or difference has been referred under the [new] Construction Act 2009, is ‘temporarily’ binding. This means it is binding until finally decided by arbitration / litigation, the result of which allows the ‘winning’ party to retain the right to the money (if a value was indeed referred). Regarding your specific problem, adjudication may not be suitable due to it bordering on the low value threshold. I usually like to see monetary values of at least £8,000 and above in order to make it worthwhile to use adjudication, although this does depend on the complexity. The reason for this is the cost which even if you win, you will still be liable for. These costs are for the nomination fee (i.e. the RIBA charges £288.00 including VAT), and then the fee for whoever is your representative. It is impossible to value what this fee will be, but even for a case where the issues are not complex, you could still be looking at a fee in excess of £1,000. On top of this, you always bear the risk of ‘losing’ and the adjudicator deciding that you should pay his fee. That said, if you believe you have a good case, then you could secure a net income of around £3,500 – if you are successful. Alternatively, what about undertaken the adjudication process yourself with only some outside guidance? The great advantage of statutory adjudication is that once the dispute is referred to an adjudicator (assuming you are successful), you secure a High Court enforceable decision in 28 days. Compare this to litigation, the
judgement of which would be at least several months away. Perhaps the notice to adjudicate may bring your client to at least make an offer or even pay up. With litigation, providing your claim is only just above the small claims track threshold, I think it would be a good idea to limit your claim to below £5,000.00. I believe your claim to be quite a simple issue (i.e. contract terms and standard of work), and there would be little risk in the court allocating the dispute to the next track. That said, the downside is that recovering costs is severely limited and it will take several months to get a hearing. As regards to the remedial work, if the terms are silent as regards to standard, then it will be an implied term for you to have carried out your works using reasonable skill and care (or maybe fit for purpose, which is a higher standard). From your outline I suspect that you will
be quite effective in demonstrating that you have met the required standard and the complaint made is vexatious and frivolous. In any event, your client will have the burden to show that you have breached the contract. Also bear in mind that the Construction Act requires any monies to be withheld from a payment application to have been the subject of a withholding notice – and if the notice is out of time, then no monies can be withheld. If you are going to instruct a third party (i.e. a solicitor / construction professional), make sure they are experts in the area of construction law. One final point. You could consider mediation. However, from experience if the other side is not genuine, then this would be a waste of time and money. Good luck. © Michael P. Gerard MSc, PGDipLaw, PGDipBar, FCIOB, MCIArb, MAE The advice provided is intended to be of a general guide only and should not be viewed as providing a definitive legal analysis.
Author background Michael is a Barrister, Chartered Builder, Registered Adjudicator & Accredited Expert in quantum and planning matters. He is Managing Director of Michael Gerard & Co www.michael-gerard.co.uk a company of chartered building consultants and quantity surveyors who provide a specialised service in the areas of construction law, quantum, programming, business recovery and insolvency support to the construction industry.
Colwick Remains Popular With Occupiers Savills has completed the sale of one of the former F W Mason & Sons industrial buildings on Private Road No.8, Colwick, Nottingham. The factory/warehouse premises only recently became vacant in December, following the restructuring of the former Masons timber company. Director Ian Muxlow of Savills represented the vendors and said: “Colwick has a good established industrial base and continues to attract occupiers due to its excellent location, lying just to the east of Nottingham City Centre. Despite the continued challenging market conditions, we are still receiving a good level of enquiries for freehold industrial property on Nottingham’s main industrial estates. We are pleased to have secured a sale of this property within such a short space of time.” The property comprises a detached industrial/warehouse unit with two storey offices providing a gross internal area of 27,069 sq ft on a site of approximately 1.04 acres.
An established leader in the field of door furniture design and manufacturing, A S Hardware have acquired the property to facilitate their expansion and relocation from their existing premises on the Lenton Lane Industrial Estate. Tony Ellis, Managing Director of A S Hardware comments: “Our business and workforce have grown significantly over the last 12 years since we purchased our current factory in Lenton and we have been seeking suitable premises to facilitate our expansion for some time. Given that our most valuable assets are our skilled employees, a site close to the centre of Nottingham was a major factor in our search criteria so as to ensure minimum disruption to their day, and the new site is ideal with both good public transport and road links”. Savills are also retained by the same Private Pension Fund clients to dispose of another similar sized building, but on a much larger site in Colwick, which comprises an industrial/warehouse unit extending to 30,105 sq ft on a site just in excess of 3 acres. The property is available on either a freehold or leasehold basis.
I once stayed in a four-star hotel. All the rooms were full of petrol.