Unfortunately a lot of home renovation or building projects end in a dispute. They can be very costly to pursue as demonstrated in a recent case in Manchester.
In The Sky’s the Limit Transformations Ltd v Mirza [2022] EWHC 29 (TCC) (10 January 2022) the judge recommended mediation in such cases. In this case the judge awarded NOTHING to either party after a 5 day trial, meaning that the proceedings had been completely futile!
This was a claim arising out of a building contract for alterations to a residential property known as Redthorne, Princess Road, Lostock, Bolton entered into between the claimant building contractor and the defendant houseowner. The building contract came to an end in April 2017 in acrimonious circumstances before the works had been completed. In December 2019 the claimant issued proceedings claiming payment for outstanding invoices and damages for loss of profit on the remaining works. The defendant defended on the basis that nothing was due, taking into account such matters as the true entitlement to payment in respect of the work done, the 
cost
of completing the works and the cost of remedying alleged defects.
The trial proceeded and took place over 5 days. The first day was given to the claimant’s factual evidence, the second to the defendant’s factual evidence, the third to the evidence, given concurrently, of the mechanical engineers, electrical engineers and building surveyors, the fourth to the evidence, also given concurrently, of the quantity surveyors, and the fifth to oral closing submissions.
The judge commented that it was a fairly challenging timetable to run on a traditional basis, given the volume of evidence and disputed issues. Leaving aside contract formation and terms and termination there were a large number of disputes regarding variations, unfinished and defective works (the Scott Schedule runs to 160 items).
The judge awarded noticing to either party and set out his views as to the use of mediation in such cases. The judge’s comments are worthwhile quoting in full:
It is a great shame that the parties have been unable to resolve their dispute out of court, given the amount of time, effort, stress and cost the whole process has taken for the individuals concerned. It is of course the function of the court to resolve disputes where the parties are unable to do so. However, I am acutely aware that, as so often occurs in this type of case, the outcome will likely be a financial disaster for one of the parties and, even if not, likely an expensive and ultimately unrewarding result for both.
In my view concrete steps to address the challenge of finding a time and costeffective means of fairly resolving domestic property renovation building contract disputes are required. Based on what is now my relatively longstanding experience, both as advocate and as a TCC Circuit Judge, in case managing and trying such cases, I would suggest that one option well worth considering in such cases would be for directions to be given at the first CCMC[1] along the following lines: (a) disclosure limited to documents relied upon and to known adverse documents; (b) a single joint expert building surveyor to be instructed in all cases[2] to address all items in issue, both liability and valuation, with questions to the expert strictly for the purposes of clarification only; (c) a stay for mediation on receipt of the report and questions. If the parties are not willing to mediate and the judge does not consider it appropriate to order mediation, then there should be an order for compulsory early neutral evaluation before another TCC Judge.
If no settlement is achieved then there should be further directions as follows: (d) witness statements, limited to matters remaining in dispute, strictly complying with PD57AC and limited in length and/or number ; (e) a trial, which should not normally exceed 1 day in length, at which: (i) each party would have produced in advance detailed written opening submissions; (ii) no oral openings would be permitted; (iii) no more than 1 hour each for cross examination of each party’s witnesses on their key evidence would be permitted; (iv) the single joint expert would attend remotely to answer questions from the judge and parties for no more than 1 hour in total; (v) there should be 1 hour each for oral closing submissions, followed by: (f) a judgment, orally or in writing at the judge’s discretion, which would be as summary as the trial process. To make the trial workable and fair the judge would probably require a half day pre-reading time and up to a full day judgment time, ideally the day before and the day after the trial respectively, with the latter being used either to produce a written judgment or to give an oral judgment in the afternoon following a morning of judgment preparation.
In terms of costs budgeting, the approved costs going forwards should not normally exceed £25,000 per party, broken down as to £2,500 for disclosure; £5,000 for expert evidence (which would include the party’s half share of the expert’s fee); £5,000 for mediation (including a half share of the mediator’s fee); £2,500 for witness statements; and £10,000 for trial preparation, trial and post judgment matters.
Whilst this process would not enable a judge to produce anything like the sort of judgment I have produced in this case in terms of length and detail, it would enable the judge to produce a judgment after a fair and open, but summary, trial process in which the key issues were ventilated and which, importantly, was reasonably speedy and reasonably inexpensive. I am not suggesting that an order for directions along the above lines would be appropriate in every case[3] or that it would be a panacea in every case. In particular, it would not address the problem of disproportionate costs being incurred pre-action (although if the judge considered that such costs were disproportionate and was prepared to record as much in the costs management order that might also assist in concentrating minds). However, it would at least allow the parties a better chance to settle with the benefit of independent expert opinion before being plunged into trial. It would also provide a better chance to avoid financial disaster if the case had to go to trial. Most importantly, it would be fair since, based again on my experience of such cases, it is unlikely that a more intensive – and thus more lengthy and expensive – trial process would produce a result significantly different to the result produced through this procedure. In particular, if a party or a witness is thoroughly unreliable or dishonest, that will usually become apparent within a fairly short time, measured in minutes rather than hours, of focussed cross-examination and, more often than not, such findings are unlikely and cases more often turn on the contemporaneous documents, which are usually not seriously in dispute, and the expert evidence which, if given by an independent single joint expert, ought not to be capable of significant challenge.
Returning however to the present case, in short, my decision is that there is nothing further due to the claimant under the final account and, in the absence of a counterclaim, nothing due to the defendant either.
So in order to save costs in such cases the judge considered that they should be limited and that mediation should be tried.
To instruct a mediator in a dispute like this please do get in touch.