A Better Way to Resolve Disputes
First published in the Newcastle Journal – 7th December 2002
Unfortunately the scenario was distressingly common. The property owner engaged a builder to carry out alterations and extensions to his home. Skimpy drawings were prepared by a non-professional, before a rough and ready estimate was given by the building contractor. The works were carried out, but came to an early end when the property owner refused to pay any more money.
The builder claimed he had done all of the work shown on the skimpy drawings and the finishing off work was all extras. The property owner considered that the builder should have included the extra works as part of the original estimate, as any fool could see it was impossible to finish the job without them.
An impasse had been reached. The builder wouldn’t carry out any more work until he had received payment for what he had done. The property owner, feeling that the builder would disappear once he had received his money, refused to release any more funds.
Both sides bring in the cavalry, their experts and solicitors. Persuaded by their advice, both sides pursue an action through to the courts.
The dispute was over some £5,000.00. The litigation costs were nearer £10,000.00. By the time they reached the courts they weren’t arguing over the amount outstanding, but the costs they had incurred to get this far.
The hearing lasted a couple of days and the costs escalated again. The judgement was more of one from Solomon than a judgement based upon truth and justice, or at least that is what both parties said at the end. The whole dispute took the best part of two years to resolve. The stress on both parties built up to an unbelievable peak during the court hearing. Both parties felt they had lost when the judgement came.
It doesn’t have to be like that. Indeed, there is a possibility of resolving these disputes by an alternative method that doesn’t incur massive costs and hopefully produces a win for both sides.
The solution is ‘mediation’. Yes I know that is what ACAS is trying with the firemen’s dispute, but the same techniques can be used to resolve your property disputes.
The courts are now recommending that the parties try mediation before they ever reach the litigation stage. Some courts are insisting that you give it a try before they will even allow the case to be listed.
The mediator calls together both parties and helps them to come to an agreement on to how to resolve the dispute. Unlike the courts, this resolution could be by completing the works and holding money in a secure account as opposed to simply adjudging one party pays the other £x.
The principle benefit is cost because it can be done before the cost of the cavalry becomes up too high. The other benefits are the whole thing is totally confidential and it can bring the dispute to a speedy and acceptable conclusion. You don’t have to drag your dirty linen through the courts in order to bring the matter to an end. After all, with our scenario, the property owner only wants the job finished to his standard, the builder would actually like to finish it to a good standard but he needs to be sure he will be paid for it.
The final decision is reached only with the agreement of both parties. The mediator does not impose a decision on the parties. That way, both parties feel as though they have won, in that they with the help of the mediator, negotiated the settlement. That way neither party should feel they have lost.
The mediation system is extremely popular in the United States. It is quickly taking hold here and is certainly an area that should be considered by any contractor or property owner, should they reach a dispute in their building works.
If you are looking for a mediator, there is a local North East consortium of surveyors, solicitors, engineers and accountants called NDR that was set up purely to provide mediators. NDR will nominate a mediator for you and get the ball rolling. They are certainly worth a try, even if you are one of the 10% of cases that don’t manage to settle their dispute, far better for you to be one of the 90% who do reach an agreement, save yourself fees and untold stress.
The hitch can be that both parties have to agree to go to mediation. If they can’t agree to resolve their dispute in the first place they probably won’t agree to go to mediation. However, I believe that once you have been to court with a dispute you will give anything a try before you go back again. It’s the twice bitten ones that will have sense and use it. The first timers might like to follow their wise example.
Resolving disputes doesn’t have to cost the earth
Article by Peter Fall published in the Newcastle Journal 27th October 2012
I suppose compared to building the Olympic Park or Wembley Stadium it wasn’t a big job, it wasn’t even a middle sized job but at £40k it was certainly major works to the house owner and probably the builder too.
It all started off ok. The builder and his team started when they said they would and pulled the house apart ready for the alterations and improvements. The first few weeks passed full of hope for the client and the builder. The first interim payment was invoiced and paid on time and, squinting through one eye, the job was starting to take shape, except it was probably at this point when it started to go wrong.
The client noticed there were fewer operatives on site each day and then there were some days when nobody turned up at all. When challenged the builder complained about being held back by long delivery times for some of the materials the client had specified after the job started, the special windows, the radiators and so on. But the client felt there were plenty of other jobs the builder could be doing. And so it went on. The planned completion date came and went and the only thing that was consistent was the builder’s monthly interim invoice.
It all came to a head when the builder submitted an interim invoice that took the total above the original quotation of £40k but the works were nowhere near finished. The client didn’t pay, the builder walked off site and the vultures gathered in the trees at the entrance gates.
This is the point where both sides feel very aggrieved and they’ll see the other side ‘in hell’ before they pay up or finish off the works. They rush off to their respective lawyers and look for them to resolve the problem. Unfortunately this is also the point where both sides costs escalate at a rate they didn’t think was possible and they’re still nowhere near solving the problem. It’s a bit like playing poker they keep adding more money to the pot thinking that they will win so what they have put into the pot is returned to them. But it doesn’t because even if they do win, they won’t recover all they paid in. At best it may be 70%.
It doesn’t have to be like this. The one thing I can guarantee is neither side really wants to go to court and be cross examined by a barrister, they just want the dispute sorted out fairly and economically. The other thing I can guarantee is neither side fully understands the other side’s case until they have to face up to it. On that basis the sooner the client and the builder get together in the same room, talk it through and negotiate a settlement, the sooner this problem will be resolved and the lower the costs will be. This negotiation of a settlement by the parties with the help of an independent intermediary, is known as an ‘Alternative Dispute Resolution’ process, often referred to in legal circles as ADR. You might have heard it referred to as ‘Mediation’. Mediation isn’t one side showing a weakness, on the contrary they are showing confidence in their ability to keep control of the dispute and get it resolved on terms acceptable to them.
Strangely the courts are keen to push parties to ADR processes rather than waiting for them to come into court and have a slanging match before a Judge. This is not some Government inspired cost cutting exercise to reduce the court’s workload but a genuine attempt to get problems sorted out quickly and cheaply, leaving the courts to deal with issues of law rather than commercial problems.
When the parties are at the forefront of resolving the dispute, you can guarantee it only gets sorted when both are happy, otherwise it doesn’t get sorted. Our client and builder did resolve their problem and both were happy or at least happier than they had been previously! Best of all they could get on with their normal lives and stop being pawns in the courts process.
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