He states: “Private clients can pay very large sums of money to contractors in advance of building work; in one case, a very naïve employer paid over £50,000 to a contractor for building materials in advance of any work being carried out. It was therefore less than surprising that the contractor swiftly departed the UK by Business Class without doing any work…”.
He reveals more to why disputes arise during construction projects, and what to do if your contractor is taking a little too long to complete your desired project.
The contractor, employer and designer/contract administrator can all be the subject of neglect in the context of their duties and responsibilities.
Can you share reasons to why disputes may arise during construction projects?
Construction disputes are frequently encountered and account for about 30% of expert witness instructions and are caused by failures on the part of either employer/client and the contractor. Contractor sourced disputes usually stem from cost trimming to achieve an unrealistic competitive bid. Once a contract is under-priced, the contractor is always struggling to make ends meet. This often triggers shortcomings in workmanship and delay or alternatively, disputes caused by over-zealous contractors’ claim for loss and expense or additional works. The client employer, however, can also be the source of construction disputes: shortcomings in technical information; deficient technical detail; imprecise specifications flawed construction design data and/or late instructions; client design changes; etc., can generate disputes. Many employers do not seek appropriate professional advice before commencing a building project and may misconceive the extent of building work and the associated complexities applicable to their objectives. A relatively modest expenditure on professional input at key stages could resolve so many disputes that often end in tears. Frequently there are no contract documents at all. The contract was verbal and here, the contractual terms need to be filtered from witness statements or other documents; this is seldom easy as the reliability of witness evidence can be called into question and ultimately has to be accepted by a court.
Can you expand on what accounts towards negligence (neglect) in construction disputes?
The contractor, employer and designer/contract administrator can all be the subject of neglect in the context of their duties and responsibilities. The contractor is required to complete the works in accordance with the contract and the documents integral to the same. If the contract is silent on workmanship standards and detail, reasonably implied terms may apply. These include normal good building practice, compliance with statute, compliance with manufacturer’s instructions, achieving wind and weathertightness, fit for purpose achievement, Consumers Act 2015, compliance, etc. An employer can also neglect to deal with various issues and can be guilty of late payment caused impecuniosity/funding problems. A building contractor cannot run a building project on thin air and when payment does not arrive on time or is inadequate in quantum, this can often impede the contractor’s progress. The employer is also required to provide instructions and selections on materials and if this is neglected, the contractor will be delayed. Many employers do not appreciate that a delay to a contract may cause the contractor to sustain a direct and/or indirect financial loss. Neglect on the part of a contract administrator or designer is regarded as (plainly) negligence. The normal test applied is whether the service provided meets with that of a reasonably competent professional of the same discipline undertaking the same instruction. Mistakes and a dilatory service on the part of the contract administrator or construction designer can generate disputes. Negligence of consultants employed can include designs that just don’t work, don’t fit or don’t comply with the Building Regulations can often cause a construction dispute.
A contractual default is in theory actionable if the aggrieved party sustains a loss.
What actions can parties take when projects are taking longer than estimated?
Many employers are intolerant of a project running late. In many instances, a project may be completed late without the employer suffering financial loss or significant detriment. Employers who are intolerant of a small degree of lateness in the completion of building works may be the authors of their own misfortune. Premature termination of a contractor’s employment can often cause a greater delay to the completion of a project. But many projects run excessively late because of the contractor’s failure to properly organise the works and deploy sufficient resources to the same. The employer often may have no other option that to terminate the contractor’s employment and seek redress for losses sustained consequential to the contractual breach. The above presupposes that the contract contains time of the essence conditions for completion. In many instances, I examine simple exchange of letter contracts that contain no contractual completion date. In these circumstances, I am instructed as an expert witness to define what may be reasonable in specific circumstances. Formal JCT contracts, for example, contain liquidated damages terms which may be enforced by the employer if there is no entitlement for an extension of time, but only if the employer genuinely sustains a loss.
Building surveyors are often at the sharp end of disputes, providing the initial reports and evidence on the extent of any contractual default applicable.
From the above, when is it actionable in Court, when projects go unfinished post the estimated complete date?
A contractual default is in theory actionable if the aggrieved party sustains a loss. Provided the loss is sufficient to necessitate a claim, the matter may be litigated, provided it is economic to do so and where the evidence needed to commence litigation is sufficiently robust. Small domestic work claims for less than £10,000 can be processed through the Small Claims Court and may involve the use of a single joint expert witness on account of cost limitations. More substantial claims may follow the County Court Fast Track system or the Technology and Construction branch of the High Court for the largest and most complex disputes; experienced legal representation and skilled expert witnesses will be required in these cases.
Moreover, when should companies be concerned; i.e., when do you recommend they seek legal advice?
Building surveyors are often at the sharp end of disputes, providing the initial reports and evidence on the extent of any contractual default applicable. A standard form of building contract defines arbitration or adjudication as dispute resolution mechanisms. Adjudication in particular is swift. Arbitration in my experience can be just as long winded and as costly as litigation. An experienced construction lawyer will be able to advise on the best methods of dispute resolution, often involving mediation which is surprisingly successful in resolving a high proportion of construction disputes, thereby avoiding a costly trial. A skilled solicitor with good experience in construction is, of course, invaluable and will provide the appropriate guidance to their client. Expert witness evidence is also crucial. This should be accurate, well researched and balanced.
Regarding damage in construction: does insurance pose any benefits?
Insurance can provide a safeguard in the event of damage arising from building works. This may cover damage to the building fabric being the subject of building works or alternatively, neighbouring property. Relying solely on contractor’s insurance is ill-advised as the skill/abilities and financial status of the contractor are paramount. An insurance claim can only be made if the policy holder elects to lodge a claim. If the contractor has breached insurance conditions, insurance cover can be completely vitiated. Insurance therefore is helpful but no substitute for good contractor selection and competent contract administration.
Simon Levy Associates
Link House, 49 Theobald Street,
Borehamwood, Herts, WD6 4RT [UK]
Tel: 020 82076100
Email: sl@simonlevy.net
Web: www.simonlevy.net
Simon's Story
“My parents suggested that I should be a surveyor. As a troublesome adolescent, I normally ignored all their advice, but on this occasion, I listened. After exams and a partially completed degree course in structural engineering, and a strenuous education, I became a Chartered Surveyor employed by an architectural firm, in London’s West End. I enjoyed this post and quickly worked my way up to an associate. But there were broader horizons available and I decided to start my own surveying practice, working from my spare bedroom at home. Work progressively increased to an extent that enabled me to open offices in Borehamwood, Hertfordshire which has been my principal office since 1988.
“I am thus now the sole principal of Simon Levy Associates but am assisted by my excellent associate Raphael Saltman MRICS and other hard-working staff.
“My principal areas of professional work include full building surveys, schedules of dilapidation, party wall administration, boundary demarcation, construction specification/design, contract administration, building defect diagnosis, project management and other similar professional activities; these provide an excellent founding to expert witness services. One cannot be an expert in a professional discipline without practising that discipline at grass roots level. Now I extensively provide expert witness evidence in construction disputes, landlord and tenant disrepair disputes, party wall and boundary disputes.”
