Best Practice – A Proportionate Way to try domestic building disputes?

The Sky’s the Limit Ltd v Mirza 2022 TCC Manchester, HH Stephen Davies

 [2022] EWHC 29 (TCC), BAIILI

The Mirza family contracted with TSTL to carry out some building works to a large family house.  The builder sued for circa £57,000.  Everything was disputed, each side appointed three expert witnesses plus solicitors and counsel, and despite a mediation they ended up in a five-day trial and a 40 page judgement.  Each side spent over £100,000 in costs, yet neither party received any money from the outcome. 

The judge clearly deplored this ruinously expensive process, and in his judgement he made a number of recommendations for how the parties to domestic building disputes could work together with the Court on Directions enabling the Court to try such cases for not more than £25,000 each.

He remarked that the outcome of the case “will likely be a financial disaster for one of the parties and....likely an expensive and ultimately unrewarding result for both.”

He went on to say that concrete steps are needed to address the challenge of finding a time and cost effective means of fairly resolving domestic building contract disputes are required. Based on his longstanding experience, he suggests that both the parties should attend the first Case Management Conference, where Directions should be given along the following lines:

1. Limited disclosure – i.e., documents relied upon and known adverse documents;
2. a single joint expert to be instructed in all cases.  This should be a building surveyor to address all items in issue, including liability and valuation, with questions to the expert strictly confined to clarification;
3. 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. 7. If no settlement is achieved then there should be further directions as follows:
4. limited witness statements, (limited to matters remaining in dispute, strictly complying with PD57AC and limited in length and/or number) ;
5. a 1 day trial, 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:
6.  a summary form of judgment, orally or in writing at the judge’s discretion, which would be as summary as the trial process.

Judicial Time: 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.

Costs: 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.

(NB, most of the Mediation costs would of course be the lawyers attending, not the Mediator himself/herself).

Summary Trial: This process 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. It would 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 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.

Cross Examination: 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.

So what happened?

As regards the actual dispute between the builders and the Mirza family, HH Judge Stephen Davies’ decision was that there was nothing further due to the claimant under the final account and, in the absence of a counterclaim, nothing due to the defendant either!