Problem: Main contractor deducting payment from invoice. What are my options?
I am the Managing Director of a small roofing company and would appreciate some advice in relation to a debt we have at the moment.
We provided two quotations to a main contractor. One quote for roofing works and one quote for jet washing the existing brickwork and repainting the building externally. We received an order for each of our quotations, subsequently carried out the works and then submitted separate applications/invoices for payment.
At 30 days we chased the monies at which point the main contractor said it was not happy with the works. We subsequently got an independent specialist and he confirmed that there was little we could do to remove the naturally occurring stains that were present on the brickwork. We then tried a new method at great cost to ourselves and it did improve the look of the building. The end client went round and agreed.
So now after several more weeks of us pestering for payment, the main contractor has said it is deducting £4,000 from the cleaning and painting invoice because it said that the end result of the cleaning is not what we promised. Our quotation did not say anywhere that we would get the building spotless – in fact, we were asked to do the jet washing at the last minute, as after all, we are a roofing company!
Once the monies are received, I plan to take the outstanding balance to the small claims court. How do I word the letter before action? The main contractor did not let us know whatsoever in writing or email until the day our accountant called to chase the funds. Any help would be appreciated.
Response: Options as to how you can proceed in attempting to settle the dispute
I am unaware of the terms and conditions that exist between you and the main contractor, although you will have a few options as to how you can proceed in attempting to settle the dispute.
Firstly, you have the option of referring the matter to adjudication., even if your contract with the main contractor does not include adjudication, because, being a construction contract, the Housing Grants, Construction and Regeneration Act 1996, as amended by the Local Democracy, Economic Development and Construction Act 2009 (“Construction Act”), will be implied into the contract which allows you the right to refer any dispute or difference you may have to adjudication. However, the amount in dispute will probably not make adjudication attractive as you will need to make an application to a recognised ANB (adjudicator nominating body), which will include a non-recoverable application fee, plus no matter how good you may think your case is, if you are unsuccessful you will be responsible for paying the adjudicator’s fees and expenses.
If you decide against adjudication, you will then need to see whether the contract refers to arbitration [in lieu of litigation] as a method of resolving disputes and if so, whether arbitration is mandatory. If there is no arbitration clause or arbitration is not mandatory, litigating the dispute will be another option.
However, whether it is arbitration or litigation, before issuing a Notice of Arbitration or a Claim Form, you will need to draft and send to the main contractor a Letter of Claim. A Letter of Claim is a requirement under the Civil Procedure Rules Pre-Action Protocol [for construction and engineering disputes], and sets out a claimant’s case. I suggest that you refer to the government justice website at justice.gov.uk/courts /procedure-rules/civil/protocol where you will find the list of protocols all of which will detail precisely what a Letter of Claim should include.
By following the Protocol, including drafting a persuasive Letter of Claim, there is a good chance that the matter can be settled prior to issuing any formal proceedings and thus avoiding incurring costs. The chances of settling during the Protocol is further enhanced by the Protocol requirement at paragraph 5 insofar that “the parties should normally meet”, the aim of which is to allow the parties to explore if the issues in contention can be resolved without recourse to litigation.
© Michael Gerard 2016
The advice provided is intended to be of a general guide only and should not be viewed as providing a definitive legal analysis.