What can I do about a non-paying customer who is making false damage claims?

Non-paying customer now claiming damage

Problem:  I run a small building company and most of my work is for the domestic market – extensions, alterations, improvements etc.  A few months back I completed an extension for a customer who has yet to settle the final account.

I have chased payment on quite a few occasions without success.  So, on the recommendation of a friend, I wrote a stern letter giving the customer 7 days to pay otherwise I would commence proceedings.  I have now received a solicitor’s letter stating that I had damaged the customer’s driveway and the cost to repair the damage is more than what I am owed.  This is a false accusation.  When I completed the work for the customer, everything was fine and there were no complaints.  What is the best way I can move this forward and obtain payment?

Response: You have not said how much you are owed as this will have an influence on your strategy.  For example, if the amount is more than £750, you could consider issuing a statutory demand (although given there is a dispute, this approach is not recommended), whilst if the amount owing is below £10,000, then it will fall into the small claims thus your risk of incurring legal fees should you not be successful at court is nominal.

However, my recommendation is to issue a Letter of Claim pursuant to the CPR Pre-Action Conduct (on your search engine, search for ‘Pre-Action Conduct and Protocols’).  Once your customer / your customer’s solicitor has received the Letter of Claim, he will have a limited amount of time to respond, and this is where you can flush out information in order to see whether the damage claim is fake or not – this will involve you requesting the following:

  • Evidence of the alleged damage, which could be by way of photos;
  • proof of the alleged cost incurred – this will include the invoice from the company that was employed to carry out the repair and proof of payment; and
  • proof of what caused the damage.

However, your ‘trump’ card will be what proof your customer has that he mitigated the cost incurred.  Therefore, even if your customer can prove that you caused the damage, your customer is under an obligation to mitigate the cost, and the only way he can do this is to show that you were given an opportunity to make good.  If you were not, and your customer simply instructed a third party to carry out the repair, then your position is that you are only liable for the amount that it would have cost you to repair, which would be considerably less than using a third party.

© Michael Gerard 2020

The advice provided is intended to be of a general guide only and should not be viewed as providing a definitive legal analysis.

Author background

Michael is a Solicitor, Chartered Builder & Registered Construction Adjudicator, and is a director at Michael Gerard Law Limited, a solicitors practice regulated by the SRA.