So you buy a new house, find some flaws, get nowhere with the builder and go to arbitration. At which point your troubles really begin …
I suspect the National House Builders Council is not pleased to see its Buildmark protection scheme for house buyers being picked over in court. Nor, I suspect, is the Crest Nicholson Group pleased to see its name being picked over in the judgment of Crest Nicholson (Eastern) vs Mr and Mrs Western. As for the Westerns, well, who knows how miserable they feel after buying their new home, finding defects, then becoming caught up in legal technicalities and losing?
The Westerns began an arbitration against Crest Nicholson. Crest probably thought, blow this – there is no arbitration clause, and even if there were, the arbitrator was appointed by the wrong body.
That may be the case, but there are times in the world of public relations and goodwill when fixating on a technicality is, how shall we say, not worth the risk to your reputation. If Crest Nicholson had added up all the management time spent on this tiddler of a dispute with a customer, I bet it would have realised it wasn’t worth it.
Three years ago Mr and Mrs Western bought a Crest Nicholson house under construction at Wickham Bishops, near Chelmsford. After they moved in, they reported a number of alleged defects. It’s not clear to what extent Crest addressed their complaints, but Mr & Mrs Western subsequently followed NHBC procedures. The NHBC investigated, found Crest responsible and called on Crest to fix the defects.
Now, you’d have thought Crest Nicholson might simply do the work and send Mrs Western a bunch of flowers. It didn’t. My guess is that Mr and Mrs Western wanted more than flowers. Certainly, they wanted £7k for expert’s fees and it may even be that they didn’t want anyone from Crest to darken their doorstep. So, here we are three years on, no work done and heaps of cash down the drain in coming to arbitration and the High Court.
After the NHBC ordered Crest Nicholson to do the work, the Westerns read the insurance information for the NHBC’s Buildmark scheme and hit a snag: it’s not clear what the Buildmark scheme is. Tricky, since the liability of the housebuilder to its customer is governed by the scheme. So the task then became to rummage through the NHBC claims charter, together with the rules of builders and developers registered with the NHBC, together with the Buildmark warranty and insurance cover applicable to newly built converted properties registered with NHBC from 1 October 2005. Daunting? Yes, but it is the document has won a plain English award from the Plain Language Commission, which runs the plain English campaign. Tempting to use a plain English swear word isn’t it?
It is unfortunate the parties cannot resolve… how their dispute is to be resolved and that they now come to court for a decision as to whether the arbitrator was properly appointed
Anyway, this reading exercise came about because Mr and Mrs Western had dug in and wanted to dispute the matter. They read, or misread, the bumf and ordered up an arbitrator from the RICS. Fee paid. The RICS appointed a qualified, well-respected arbitrator. Now begins the technical point-taking.
Arbitrators are trained to deal with point-taking – it’s called managing the process. The point immediately raised by Crest Nicholson’s lawyers is simple: there is no arbitration clause in the NHBC Buildmark scheme, and if there is, which is denied, the RICS has no authority to appoint. Only the Chartered Institute of Arbitrators can. And for good measure it makes no odds that the same arbitrator is on both institutes’ lists of arbitrators. I bet the Westerns were flummoxed and peeved and dug in even more about all this.
The arbitrator heard all the arguments about whether he should clear off or not and judicially decided to stay where he was. This was November last year. Crest Nicholson dug in, too. It marched the arbitrator’s decision into the High Court. Can you hear tills opening, meters running? I can. And do you sniff the scent of management time, meetings, memos, letters and lawyers dancing by? I do.
Mr Justice Akenhead’s 12-page judgment, issued last week, argued that there was no arbitration clause. True, the NHBC documents explain how useful it is to arbitrate and point to the Chartered Institute of Arbitrators to appoint an arbitrator, but there is no mention of the RICS. So even if there was a right to arbitrate you must use the specified appointing body. So the appointed arbitrator was not appointed at all.
Meanwhile, work on the defects still isn’t done, the legal costs are more than the defects are worth, and the bulk of those are payable by the Westerns. “It is unfortunate that the parties cannot resolve at least how their dispute is to be resolved and that they now come to court for a decision as to whether the arbitrator was properly appointed,” said the judge. Well, quite.
Tony Bingham is a barrister and arbitrator