Over the past decade, I have worked on some very large legal cases in the construction industry. Whilst I have to protect client confidentiality, I wanted to share one particular experience that helped my client avoid insolvency but involved them writing off more than £2m.
I was asked to advise on a series of major issues relating to a large development. The project timeline had moved significantly, the budget had ballooned and the employer was refusing to make any further payments to the contractor.
The contractor, my client, was owed more than £4m and was in no mood for diplomacy. On the face of it, the contractor’s claim for the £4m was legitimate. So, they were right to be angered by this issue. I was asked to review the case in detail before taking the matter forward.
As a barrister, my role is not only to represent my client, I have to appraise the claim to give them a likelihood of success. I reviewed all the documents provided, including emails which supported my client’s case.
When you unpick a project, from the outside looking in, much of the nuance is often lost. You rely solely on what is communicated in writing. That creates the picture on which an adjudicator or judge would decide the case.
In this case, it was clear, alongside the emails and written communications, references were made to verbal conversations. Whilst the details of the verbal conversations were not on record, there are emails supporting the fact that conversations took place without a record of what was discussed.
On the face of it, the contractor had not informed the client of the need to re-programme the construction work. There was no written communication about the programming changes. My client had many verbal conversations, however, it was never recorded, so as the production plan unravelled, the chain of evidence supporting the increased costs existed, but the cause of the cost increases was left in ambiguity.
As we investigated, it became clear that the claim for £4m of unpaid work was legitimate, a lawyer for their employer would also investigate the matter, as I did. While they could not defend the position of the unpaid work, it could create a counterclaim regarding the programming of the work and a delay which added more than £6m to the project budget.
Whilst not going into too much detail to protect my client, this further highlights the risks of verbal agreements and how they will be perceived retrospectively. Verbal agreements can be disputed and a court has to judge, based on the balance of probabilities. The evidence of verbal communications existed, but the external perception of those communications didn’t support my client’s position and my client did nothing to question the assertions at the time. The email comments were brushed off as someone covering themselves in front of their employer. If true, the covering of themselves, not only worked for the employer but would work for the court.
You cannot rely on evidence that cannot be presented. In this case, evidence existed to support the claim of the contractor, but no evidence existed to support their defence of the counterclaim. In court, it could easily be viewed as negligent planning by the contractor. I advised my client, based on the evidence, that the risk of a counterclaim was very high and if they pursued it, they would likely succeed. It was estimated that the counterclaim would be in the region of £6m.
We agreed to a reduced payment of £2m to my client with an agreement to draw a line under the matter.
I cannot emphasise enough how important closing the gaps in communication is, particularly in the current choppy times. The economic environment does not lend itself to supporting a smooth, dispute-free construction sector.
Remember, if you are faced with a construction dispute, Mercantile Barristers will be happy to assist. Do use the enquiry form below to contact us to discuss your matter further.