CLAIM £56,000 – LEGAL FEES £160,000!
There was a story in the papers a few months ago about a couple who paid their neighbour £53,000 to build a ‘luxury’ gym in their garden. Unhappy with what they got, the words ‘rubbish’ and ‘shoddy’ being used, they demolished and rebuilt it claiming remedial costs. They were in court for a two-day hearing. The judgement has not been published but it appears that an application has been made for an appeal. So even more legal costs await!
There are several interesting points that come out of the story.
1. The costs of litigation
The sum claimed was £56,000. The claimants’ legal fees were £160,000. Just let that sink in. They could have bought three gyms for that money.
2. The reality of getting all their money back
If they win, they are entitled to their reasonable costs. Was it reasonable to rack up legal fees of £160,000 in this case? And perhaps more importantly, does the chap next door have a spare £216,000?
3. No proper contract - no clear obligations
The neighbour provided a hand-written quote which appears to have contained minimal information. As there wasn’t a proper written contract the details of what exactly the neighbour was to do and for what money is unclear. The claimants suggest he was to act as a design and build contractor. The neighbour claims he was simply offering his services as a retired groundworks foreman and machine driver to help get the gym constructed. He was only responsible for the groundworks he carried out and not any work by others. The claimant’s brother-in-law, an experienced builder, was the person supervising the works.
4. Not everything is what it seems
There seemed to be something a little odd in some of the statements made in court, so I did a bit of digging. The planning permission granted is for an outbuilding to the rear of the property for use as a home gym and shower room. It makes clear that it is not to be used as a separate residential unit. However, both the claimants and their Barrister referred in court to the building of a bedsit and a kitchenette. I wonder what the finished ‘gym’ looks like?
5. Get your contract sorted!
The number one lesson.
Overall, this highlights one of the problems with litigation for disputes over sums less than £250,000. Before going down that route you need to consider all the alternatives. If it has gone past the stage of negotiation, is mediation possible? That way a third independent party can help you both find a solution that works. Mediation is now compulsory for small claims (up to £10,000 in England and Wales) and actively encouraged by the Courts for all other claims.
In this case, as it was work on a residential property without a contract providing for adjudication, that was not an option. But where it is, adjudication may also be an alternative worth considering.
About the author
Susan Francombe is a Chartered Civil Engineer, registered Barrister and a Fellow of the Chartered Institute of Arbitrators. She works as an independent consultant, Adjudicator, speaker and trainer.
Providing advice on construction contracts and dispute resolution, she is particularly interested in adjudication. She is currently Senior Vice-Chair of the Adjudication Society and sits on the steering committee of Women in Adjudication.
Susan has supported the Institution of Civil Engineers for a number of years sitting on their Law and Contract Management Examination committee and Dispute Resolution Board.
https://businessofbuilding.co.uk/