This is how a simple house extension turned into a simple dispute, which turned into a bitter dispute, which turned into a very expensive legal case. And for what?
Mr And Mrs Bullard of Bournemouth fell out with Mr Burchell the builder. Mistake. Then they dug in. Mistake. Then they litigated. Mistake. Then they went to the Court of Appeal. “Horror story,” said Lord Justice Ward. But if it is, it’s an ordinary horror story.
The house extension was nothing special. The third-stage payment came due when the roof was on. That £13,500 wasn’t paid. The customer picked holes in the roof work. The builder walked off. No money, no work. By the way, there was only about £5000 worth of work left to finish the job completely. But confrontation got in the way.
The builder began a court action for £18,500. Mr and Mrs Bullard counterclaimed for £100,800 plus 10 further heads of loss, which they would “explain later”. As for the roof, the whole bloomin’ lot, according to the customer, was to come off and be rebuilt. I have seen all this time and time again. As the litigation rumbled on, Mr and Mrs Bullard and Mr Burchell will have become more and more angry, fed up and spiteful. And just to make things worse, both sides will be writing cheques to their experts, their lawyers and the courts. Litigation is like dying and going to hell.
Now comes the heart of the horror. By the end of the Bournemouth trial, the Bullards had spent £70,000 and the builder £98,000 in fees. Result? The roof was a tad iffy. It required a mere £3900 repairs. As for the other “defects” and claims, Mr and Mrs Bullard’s approach was over-egged. They got a mere 13% of what they claimed. So, the builder had a net win. The Bullards were ordered to pay him £5000. So much for a five-day county court trial.
But who pays the costs? This is where the judge put a foot wrong. He ordered the Bullards to pay the costs of the builder and the builder pay the costs of the Bullards. The Court of Appeal looked hard at this.
The Bullards had exaggerated their counterclaim. Then their expert had got it wrong about replacing the roof. I think the Bullards lost the sympathy of the court. The builder had dropped clangers but had been ready to put his work right and did not exaggerate his position. So the Court of Appeal changed the costs order: the Bullards would pay their costs and 60% of the builder’s costs. And for good measure, the Bullards would pay the costs of the appeal – another £22,500. There were tears in Bournemouth.
At the heart of all this litigation and waste was a minor complaint worth £3500. Then (and this always happens) there was a scramble to beef up the complaints. There was something to support the Bullards’ worries, but not enough to deprive the builder of all his money. So the penalty in litigation comes to the Bullards‘ door: £150,000. The builder’s unrecoverable costs were £40,000.
Now then, can we have a word with the Court of Appeal please, and the Lord Chancellor’s Department, and those committees that liaise with the Technology and Construction Court? Is it worth looking at a better way of deciding these small building disputes? The Court of Appeal said that these cases are ideal for mediation. That’s not always right. Nor does mediation always work. Nor is it cheap. Nowadays protagonists go to lawyers and experts to plan their campaign in mediation. Oh dear. Instead, is it at all possible for the court to order an “expert determination”? This, in effect, is an arbitrator blessed with the powers to conduct an inquiry. The vehicle is the Arbitration Act 1996 but with express agreement to allow the arbitrator to use specialist knowledge to, say, investigate the roof as he would as an expert. The arbitral investigation does not need lawyers, nor any other experts. Moreover, much of the “due process” of the arbitration can be on paper or when inspecting the work. One organisation I have heard of is the Construction Conciliation Group. It operates a fixed fee system to investigate, conciliate then, if necessary, contractually decide the dispute.
But I hope the arbitral expert will not just adjudicate on the materials presented by lawyers. The expert is a sleuth, a person who finds out what’s up with the roof, and reaches a conclusion that’s binding and enforceable in the courts. Costs? A wafer of what the Bullards and Burchalls spent in Bournemouth.
Tony Bingham is a barrister and arbitrator