The second page contains another thumping criticism. It describes how the pivotal role in the disastrous outcome of the building project was a trainee surveyor. The court described his manner as "overbearing, offensive and extremely unhelpful". He had just completed his exams and was "overconfident and unprepared to accept that he was a trainee surveyor running single-handed an unduly complex contract without experience of such contracts".
The case, Mrs Kathleen Saigol vs Cranley Mansion Ltd and others, came to the Court of Appeal three weeks ago. One year before, Judge Thornton handed down a judgment that required the defendants to pay Mrs Saigol £739 903 plus her legal costs, a staggering £1.6m. The defendants appealed to stop this. They failed.
Cranley Mansions is in South Kensington. It has seven flats on six floors. Flat 6, at the top, was on a long lease to Kathleen Saigol. It was a very nice, large flat with fine views across west London, worth about £500 000 in 1988. At that time, she was a television producer and lived in the flat with her two sons. On advice, good advice, she decided to refurbish the flat for about £254 000. It would increase the value of her home by a sum considerably greater the building work.
The contract, with Cosmur Construction (London), was let on the usual JCT80. The supervising officer was Congreve Horner & Co, managing agent for Cranley Mansions Ltd.
Mrs Saigol would borrow 80% of the cost of the work from Dunbar bank and pay 20% herself. The usual cash flow arrangements would apply, which would be a draft payment certificate by Congreve as supervising officer, examined and approved by the person responsible for the specification; then Dunbar's own surveyor would inspect and report prior to the release of the money. But this system went adrift. The supervising officer didn't get approval from the specifier and, instead, made out a certificate and sent it to Dunbar for payment. This was trouble in store.
She may have appeared to be the customer from hell, but that’s not true. She just wasn’t “commercial”
Now began some "ordinary" building problems. The surveyor said that while the work was being done, the Saigol family should move out. But Mrs Saigol refused to vacate. Eventually, she had to go because dry rot was discovered and the place was uninhabitable. Cranley paid for alternative accommodation. Once out, she didn't want to go back. Then the work got delayed. This became contentious. Then a practical completion certificate was issued; Mrs Saigol said it was wrong and that liquidated damages were due, so she didn't pay her share of the certified sum.
Relationships broke down completely. Cosmur ceased work, then the supervising officer admitted practical completion hadn't taken place. Then came lists of incomplete work, then came the sheets of defective works, then came criticism of the designers and recriminations. Everyone put the blame on Mrs Saigol. But the truth was that, no matter how difficult she was or had been, she was absolutely right about the overvalued certificates. They were quite, quite wrong.
But writs had flown. Cranley issued forfeiture proceedings on the flat for failure to pay money allegedly due. Cranley paid off Cosmur, thinking the certificates were right. Dunbar bank sued Mrs Saigol, too. She was up to her neck in proceedings. Her savings disappeared with all the costs, she lost the flat, went broke and had all those years of nightmares. And at the heart of it was a pathetic error of contract administration by the issue of two wrong certificates.
The suspicion here is that the building people (builder, designer, supervising officers, surveyors) were not on the same wavelength as Mrs Saigol. She was not a commercial or professional customer, she was a "domestic" customer. This was her home, her pad, her territory, and attitudes are different. She may have appeared to be the customer from hell, but that's not true. She just wasn't "commercial". Kid gloves needed.
Tony Bingham is a barrister and arbitrator specialising in construction. You can write to him at 3 Paper Buildings, Temple, London, EC4 7EY, or e-mail him on email@example.com