Run a small construction co. - client won't pay final invoice. - help RE: Small claims please ***Resolved***

[Kwabena]

Hi all,

 

I hope this is in the right forum...apologies if not! 

 

I run a small construction company and have a client who isn't paying their final invoice. 

 

Without going into to much detail they don't really have any grounds to do this other than not wanting to pay and trying to find excuses not to.

 

How do I go about starting a small claims action against them...never done this before!

 

Thanks

[BankFodder]

It would probably be helpful if you gave us more information such as the value of the claim, and outline of the work which is carried out and an outline of the arguments on each side .

Also a timeline of events

 

[Kwabena]

Thanks for the reply @BankFodder

 

Built an extension for them on a daywork basis and have been invoicing weekly up until this point. Work is all to a good standard and signed off by building control.  Communication has been bad on this job and they have only wanted to communicate via email throughout rather than speaking every day like most client..to the point where I was having to email them from my phone in their garden while they are sat in the house.

I think this lack of ongoing dialogue has led them to become suspicious of whatever I do which is extremely unfair as I have worked hard to give them a good service.  

 

The final invoice is for approx £3,000 which is half labour and half materials (I have invoices for all materials).

 

I have been on the job for approx 3 months and every other invoice has been paid up to this point

 

Do you need any more information?

[BankFodder]

Bringing a small claim in the County Court is pretty straightforward. We have lots of guides here if you follow the various links although some of the steps might be a bit out of date because things have changed and we don't have the resources to keep up all the time.

 

However we can take you through it all.

 

There is no point in bringing a claim if you're not going to win and that means that although the steps are straightforward, preparation is very important. Also, once you have judgement in your favour, there is a further step which is enforcing the judgement.

 

Many people think that you get a judgement in your favour and you walk out of the court with a cheque in your hands.

 

I understand from you that you have been working on this project for three months. You have been putting in a weekly invoice which has been paid promptly without any problems at all.

For some reason or other these people prefer not to engage with you directly but prefer that everything is conducted by email even when you are both on the property.

 

On one hand it seems to be very strange behaviour. On the other hand, maybe they were anxious to have a paper trail in case anything went wrong.

You make a very reasonable point that maybe the lack of face-to-face engagement has resulted in some distance and lack of trust between you. If that is what has happened then of course it's a shame.

On the other hand, the fact that there is now a trail of written exchanges should be very helpful to you.

 

You say that everything went well until the final week when you put in your bill for £3000. Surely there has been some kind of exchange in relation to this.

You have put in the bill, they have made some comments in response – no?

Did you simply put in the bill and they haven't responded and haven't paid and aren't replying to your messages?

 

I think it's very important to understand precisely why they don't want to pay you any more.

 

Had you given them some ballpark figure at the outset of the project which has now been exceeded?

 

Was the weekly bill always £3000 – Or has it varied?

[mantis shrimp]

https://www.gov.uk/make-court-claim-for-money

 

That is a link to the government's site where you can start your claim. Are you sure that there will not be any form of counterclaim by your customer? 

Edited March 5, 2022 by mantis shrimp

[Kwabena]

Thanks both for your replies.  so yeah just to summerize and answer some points raised

 

Every other invoice has been paid but I have felt the relationship going downhill for a while now.  The emails from them have got shorter and then for the last few I sent as we we're getting finished I didn't recieve any replies.

 

Originally I did quote for this but the job had so many unknowns on it that we decided it may be better on day rate.  I don't have access to the total costs at the moment but I would expect it to be more than the original quote.  The job grew massively though as we found a lot of problems during demolition,  and there was also much more work to rebuild it as originally we were going to re-use some of the old structure but this couldn't stay.  There was never really a guide for dayrate as we both understood that this job was full of unknowns

 

When I put my final invoice in they didn't respond.  After two weeks I sent them an email asking if there was a problem and I got a reply explaining the reasons for holding back the money. One example is that I add 10% to any materials I supply to cover my bookeeping costs.  They say they will not pay this as I had to do school runs sometimes and so they feel they are owed some money for that.  In my original email (from before the job started) detailing my charges etc I mentioned I have school runs occasionally and I still charge a full day (I do alot of work in the evenings/wknds to do with the running of this job to make up for it), I had also mentioned the 10% charge on materials and they had agreed to both and not bought it up until now.

 

The rest of the reasons are all pretty much bassless like this and I have historic emails from them contradicting their reasons  for not paying

 

It really does seem to be a case of not wanting to pay and looking for any reason not to.  The only reason I can think of that they can argue is that the quote is less than the total cost of the job is,  but like I say the job is completely different now to the original quote...and once daywork was agreed the quote is irrelevent anyway.

 

 

 

[BankFodder]

What is the total value of the job including the £3000?
What was the original quote – which I understand was abandoned with the agreement of both of you?

Have they made any comments as to the quality of the job – in particular the last phase.

What's the arrangement in terms of materials? Were you to buy the materials or were they to be the purchasers and they would be billed separately?

 

Also I don't think you have told us how long it has been since you finish the job and submitted your final invoice – and so how long the payment has been outstanding.

[Kwabena]

The original quote was around £80,000 plus vat,  I have no idea what the current total is.  They have been invoiced for approx £35,000 by me including labour, materials I have supplied and hire equipment that went through my account

 

No comments as to the quality of the job

 

Arrangement with materials was that I would get quotes and let them know what we needed.  Any materials that wen't through my account would have 10% added to tehm but I would give them every opportunity to pay direct and avoid this.  Materials that went through my account added up to about £3,500 but I'm only adding 10% to about £1,600 worth

 

I put in the final invoice and have been off the job about 3 weeks now

 

Not sure if this is relevent but the job isn't finished yet.  The agreement was that we would get the structure up and get it wind and watertight.  Once this was done we would get them loads of quotes for plasterers, plumbers etc and they were welcome to deal with trades direct or use us to help out with anything/everything.

[BankFodder]

I don't understand this

 

18 minutes ago, Kwabena said:

The original quote was around £80,000 plus vat,  I have no idea what the current total is.  They have been invoiced for approx £35,000 by me including labour, materials I have supplied and hire equipment that went through my account

 

I don't understand the discrepancy between a provisional accreditation of £80,000 and the fact that you have only invoice for £35,000 which presumably includes the unpaid figure.

 

I also don't understand this

20 minutes ago, Kwabena said:

  Any materials that wen't through my account would have 10% added to tehm but I would give them every opportunity to pay direct and avoid this.  Materials that went through my account added up to about £3,500 but I'm only adding 10% to about £1,600 worth

 

 

Yes it is important that the job isn't finished. It may not be a breach on your part – but it is certainly significant and it may give them a basis for complaint.

Why isn't the job finished? Is this because of the position that you are taking because you haven't been paid against your last invoice?

 

What is your guess as to the value of the outstanding work?

In terms of the materials, they appear to be objecting to you marking up by 10%. I'm trying to understand whether the deal was that they would effectively be the purchasers of the materials – in which case they would reasonably expect to get them at cost (10% to cover your own expenses is fine) – or whether you with the purchaser of the materials and supplied them to your customers in which case I don't see any problem in adding quite a large markup.

 

We need to get a clear picture here before you start launching into action. I'm worried by your statement that you have no idea of the current total. You need to be completely in control of your own figures – especially if you are moving into formal conflict on this

 

[Kwabena]

I think I didn't explain myself to well...originally I had quoted for this work to include everything and that quote was around £80,000 plus vat. 

 

Once we moved onto the option of doing daywork they have been paying all other trades and most of the materials direct to supplier/tradespeople so the £35,000 I have received just includes labour for me and my team and whatever materials/equipment has been supplied through my trade accounts.  Everything else has been paid directly by them which is why I don't know the full amount this job is costing

 

There's no breach in terms of the job being complete...we specialise in doing the structural work and getting the job to a stage where other trades take over to finish the internal stuff.  It was always the agreement that we would get it to this stage,  set them up with all the trades they need and then they will deal directly with them to get the job completed.

 

just to clarify the total cost of the job up to this point will be more than £35,000.  This is just the amount I have received for services/materials provided directly by myself

 

[BankFodder]

So in fact the job is complete. You have completed everything that was envisaged by your contract.

Also from what you say, it seems to me that you were the supplier of the materials needed because they were purchased by using your trade accounts and you then went on to supply them to your customer.

On that basis I can't see any problem with adding a markup and it seems to me that you have simply added 10% to represent some actual costs to yourself that you haven't sought to make any profit from the materials by reselling them to your customer.
The 10% mark up to represent your accounting costs was apparently documented in your exchange of emails and either agreed to specifically or at least not objected to. Is this correct?

 

 

 

I'm afraid that you are complicating things by adjusting what you say all the time.

I now understand that they have paid you £35,000 and that there is £3000 outstanding – is this correct?

[Kwabena]

Everything that I was originally booked in to do has been done to a good standard.  The extension itself isn't completed but it was always the agreement that others would finish this.

 

I supplied just some of the materials...about £3,500 worth.  The majority of the materials were supplied by the client who payed the suppliers directly

 

The 10% was  doesn't even cover my bookkeeping fees for the time I have been on this job! I emailed them before the job started with our daily rates, and a few more details including the 10% mark up.  The reply from them said "thanks for the email,  which makes sense"

 

 

[BankFodder]

Okay, final questions before we decide on a plan, have you had any exchanges about this last payment – and if so could you reproduce them here please?

[Kwabena]

So once I sent the invoice and didn't hear back from them for two weeks I sent another email chasing.  They came back with an email stating reasons they didn't want to pay.  I replied going through their points one at a time and explaining why I disagree.

 

I haven't heard from them since and that was close to a week ago.

 

I can reproduce them here, was worried about putting it into a public forum though...

[BankFodder]

There is nothing wrong with putting it up on a public forum. As long as you are honest and straight dealing – what do you have to hide?

If you want help then you will have to give us the information we need

[Kwabena]

ok fair enough...I'm just about to go out for a few hours.  I'll post it up here later.

Thanks for your help so far,  i really appreciate the time you are taking with it

[Kwabena]

Here is the reply to my email chasing up payment

 

 

Quote

 

Hope you had a good break.  

 

Further to receiving the last invoice for the work at *********, we will be retaining the monies until a few issues are clear and have been concluded.  

 

Firstly, the drain and pump has not been installed and there is the risk that the groundworks installed so far have not been completed correctly.  The contractors that have been on site have expressed the same concern.  We’ll know more once it is fitted.  

 

Secondly, there is the cost of fitting the drain.  Because it was not fitted at the time that the other groundworks were completed we've incurred an additional cost.  The equipment hire costs are being quoted at c£500 to c£600 for the same items that were on-site.  

 

Hopefully this will be resolved over the next few weeks, at which point we will come back to you.  

 

In addition, there are a few issues highlighted below which will mean the final amount will be reduced:

• For the book keeping charge that has been included won’t be covered by us, this is because we have paid a day rate that and the time taken to make the payments is covered by the reduced hours on site due to childcare arrangements.
• For the kitchen lights we’ll purchase the replacement lights and bulbs and take the cost of this from the final amount paid.  
• There is an excess of steel from Buildbase left on site and we are happy for you to return this to them for your account to be credited.  We’ve checked the cost on Buildbase and will reduce this from the final amount paid.  The steel is located at the side of the house (where it was left underneath the pallets), please let us know if or when you'll pick it up.  
• Similarly there are unopened materials which could have been returned, so again we’ll reduce the final price and for the cash float there is £10 unaccounted for, so we’ll also take this from the final amount.  

So in summary, payment of the last invoice (at a reduced sum) will be held until the remaining works are completed.  This is because the contractors met on site are not confident that the work has been completed as required and because of the additional costs incurred.  

 

I’d suggest we communicate by email until this is resolved.  

 

A camera has been left on site which you are free to come and collect.  Please inform us when you'll be picking this up.  Please note, the images from the camera on the extension’s build can’t be used. 

 

Regards 

 

 

[Kwabena]

And my reply to that message...

 

Thanks for your response, I'll try to address these items in order

 

Drainage

 

At the moment you have a pipe coming out of the wall capped at the end, there's not a great deal that can wrong with it.  What are the specific concerns you or the contractor have with this?  By rights if there's anything wrong with it you  need to give me the opportunity to put it right as a first resort but I just can't see what this would be.

 

The drain couldn't be dug out when we had a digger onsite as we were still discussing what drain you wanted (see email dated 6th Jan) after the digger was off hired so this isn't a surprise.  I'm not liable for any future costs associated with this project.

 

Bookkeeping charge/school run

 

This was all agreed beforehand, you can find it in the email chain dated 14th October and are two completely separate items.  As agreed, I still charge for a day when I have the school run but this is mitigated by the time spent in the evenings and weekends running the job and organising items, deliveries, trades etc.  As you can see from the amount of email contact we have had over the course of the job and the days/times they were sent this is not an insignificant amount of time.

 

The bookkeeping charge was also agreed and is a reasonable charge for items which go through my account, most builders add more than 10% and I have always offered for you to pay direct if required to avoid this. Just for information since the start of this job I have had to pay my bookkeeper approx £400 so it doesn't even cover it.  I even took the charge away from the larger items like concrete and digger hire

 

Kitchen lights

 

The kitchen lights were set aside at the back of the garden for re-use and I don't know what happened to them...I'm not 100% sure I'm liable but as a gesture of goodwill I was always willing to replace them.  I seem to remember there were 7 lights so I'm happy to provide like for like replacements or refund the money at trade prices.  The bookkeeping charge I offered to remove more than covered this so it's up to you which you take?

 

Steel/materials left on site

 

There is some steel left over...I think the lengths that are there have been cut so can't be returned. Even if they could be returned you asked for all leftover materials to be left on site so this is what we did (apart from the insulation and Hardieplank which we returned as agreed) so you are welcome to return whatever you want but they are nothing to do with me anymore and I won't accept any deductions  for these items

 

Camera

I'll get Gav to remove

 

In summary

 

It's not up to you to arbitrarily hold money, deduct money or change the terms of the agreement when it suits you,  that's not how these things work.  If you have any issues related to what the invoice is for then please let me know and we can discuss,  otherwise I would expect you to pay the final amount owed.

 

 

I'm sorry that you seem to be disappointed with what we have done,  we came onto this job and worked throughout with good intentions and at all times tried to do the best for you.  I had hoped for us all to work as a team but the lack of communication from you has been staggering, speaking to each other regularly would have made things so much easier. It seems to me like this lack of communication has ended up with you thinking that we are working against you and being suspicious of everything we do,  and if that is true then it is just so unfair as that has never been the case.

 

I'm happy to keep this on emails if you would prefer but I still think even now it would be better to come over and have a chat about it.  So much easier to get our points across and understand what the other person is trying to say face to face

 

[BankFodder]

Thank you. So there are some disputes as to the quality of the work.

I notice that they talk about withholding money until a few issues have been sorted out et cetera.
In other words they aren't proposing to withhold the money permanently.

Of course they aren't being very helpful in not responding to your most recent email.

I don't fully understand what is being disputed here.

If all of the points that they are disputing were upheld, how much do you think that might be worth?

In other words, they are withholding £3000 but presumably the things they are complaining about would be a lot cheaper to fix.

I'm trying to find out how much is actually in dispute here

[Kwabena]

And no communication since I sent my reply a week ago

[BankFodder]

????

[Kwabena]

So is it ok for them to hold money back based on random reasons that as far as I can tell are nothing to do with me? I thought that I could just take them to small claims for everything...do you think that's not the case.

The only thing I can see that may sound like it is relevent is what they are saying about the drain but the reality is there is nothing wrong with it.  I have left them with a drainage run coming out from the new extension which needs to be connected up once the external drains are put in (by others)..its pretty standard stuff and there is nothing wrong with it.  

It's hard  to say what they are disputing as they haven't given any ore detail than I have given you, and have stopped communicating.

[BankFodder]

No they won't be allowed to hold money back based on random reasons which is why I have asked you to tell us about the value of the work which they are apparently disputing.

Please will you try and address the questions.

We are trying to give you the best advice possible but we need information. We are trying to protect your interests that if you don't help us then we can't help you

[Kwabena]

What question is it you think I'm not addressing?  I thought I had answered  everything but happy to cover anything I've missed.  The outstanding amount to be paid from the final invoice is approx £3,000 which includes vat

[BankFodder]

4 hours ago, BankFodder said:

If all of the points that they are disputing were upheld, how much do you think that might be worth?

In other words, they are withholding £3000 but presumably the things they are complaining about would be a lot cheaper to fix.

I'm trying to find out how much is actually in dispute here