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Misery
So you buy a new house, find some flaws, get
nowhere with the builder and go to arbitration. At which point
your troubles really begin …
“It is unfortunate the parties cannot
resolve… how their dispute is to be resolved and that they now
come to court for a decision as to whether the arbitrator was
properly appointed”
I suspect the National House Builders Council
is not pleased to see its Buildmark protection scheme for house
buyers being picked over in court. Nor, I suspect, is the Crest
Nicholson Group pleased to see its name being picked over in the
judgment of Crest Nicholson (Eastern) vs Mr and
Mrs Western. As for the Westerns, well, who knows how
miserable they feel after buying their new home, finding
defects, then becoming caught up in legal technicalities and
losing?
The Westerns began an arbitration against
Crest Nicholson. Crest probably thought, blow this – there is no
arbitration clause, and even if there were, the arbitrator was
appointed by the wrong body.
That may be the case, but there are times in
the world of public relations and goodwill when fixating on a
technicality is, how shall we say, not worth the risk to your
reputation. If Crest Nicholson had added up all the management
time spent on this tiddler of a dispute with a customer, I bet
it would have realised it wasn’t worth it.
Three years ago Mr and Mrs Western bought a
Crest Nicholson house under construction at Wickham Bishops,
near Chelmsford. After they moved in, they reported a number of
alleged defects. It’s not clear to what extent Crest addressed
their complaints, but Mr & Mrs Western subsequently followed
NHBC procedures. The NHBC investigated, found Crest responsible
and called on Crest to fix the defects.
Now, you’d have thought Crest Nicholson might
simply do the work and send Mrs Western a bunch of flowers. It
didn’t. My guess is that Mr and Mrs Western wanted more than
flowers. Certainly, they wanted £7k for expert’s fees and it may
even be that they didn’t want anyone from Crest to darken their
doorstep. So, here we are three years on, no work done and heaps
of cash down the drain in coming to arbitration and the High
Court.
After the NHBC ordered Crest Nicholson to do
the work, the Westerns read the insurance information for the
NHBC’s Buildmark scheme and hit a snag: it’s not clear what the
Buildmark scheme is. Tricky, since the liability of the
housebuilder to its customer is governed by the scheme. So the
task then became to rummage through the NHBC claims charter,
together with the rules of builders and developers registered
with the NHBC, together with the Buildmark warranty and
insurance cover applicable to newly built converted properties
registered with NHBC from 1 October 2005. Daunting? Yes, but it
is the document has won a plain English award from the Plain
Language Commission, which runs the plain English campaign.
Tempting to use a plain English swear word isn’t it?
Anyway, this reading exercise came about
because Mr and Mrs Western had dug in and wanted to dispute the
matter. They read, or misread, the bumf and ordered up an
arbitrator from the RICS. Fee paid. The RICS appointed a
qualified, well-respected arbitrator. Now begins the technical
point-taking.
Arbitrators are trained to deal with
point-taking – it’s called managing the process. The point
immediately raised by Crest Nicholson’s lawyers is simple: there
is no arbitration clause in the NHBC Buildmark scheme, and if
there is, which is denied, the RICS has no authority to appoint.
Only the Chartered Institute of Arbitrators can. And for good
measure it makes no odds that the same arbitrator is on both
institutes’ lists of arbitrators. I bet the Westerns were
flummoxed and peeved and dug in even more about all this.
The arbitrator heard all the arguments about
whether he should clear off or not and judicially decided to
stay where he was. This was November last year. Crest Nicholson
dug in, too. It marched the arbitrator’s decision into the High
Court. Can you hear tills opening, meters running? I can. And do
you sniff the scent of management time, meetings, memos, letters
and lawyers dancing by? I do.
Mr Justice Akenhead’s 12-page judgment,
issued last week, argued that there was no arbitration clause.
True, the NHBC documents explain how useful it is to arbitrate
and point to the Chartered Institute of Arbitrators to appoint
an arbitrator, but there is no mention of the RICS. So even if
there was a right to arbitrate you must use the specified
appointing body. So the appointed arbitrator was not appointed
at all.
Meanwhile, work on the defects still isn’t
done, the legal costs are more than the defects are worth, and
the bulk of those are payable by the Westerns. “It is
unfortunate that the parties cannot resolve at least how their
dispute is to be resolved and that they now come to court for a
decision as to whether the arbitrator was properly appointed,”
said the judge. Well, quite.
Readers are invited to forward recent
judgments for reporting in this column (with full
acknowledgement) to: Tony Bingham, 3 Paper Buildings, Temple,
London EC4Y 7EU. DX: 37164 Biggleswade
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