Problem Getting Paid £50Grand-Plus

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Alyssa

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Hello,

I wondered whether anyone might have any thoughts, please, on my brother's situation? He set up a small company with a former colleague. They were subcontracted to do the electrics on a total building refurbishment being handled by another, bigger, company. My brother's company agreed a price for the work specified, but when they got on site, they kept being asked to do more and more work - I'm not sure if the work was being requested by the building's owner, or the company with the contract for the full refurbishment, but someone, somewhere, underestimated the amount of work they needed from my brother's company. For every bit of extra work they were asked to do, my brother and his colleague got approval (on paper/by email) from the local rep of the company that had contracted them - either the project manager or, I think, the company's QS. However, when my brother submitted a revised invoice, the company refused to pay, or offered only the amount agreed in the original contract, which was a fraction of what my brother's company had spent on doing the work (they ended up having to take on extra staff and, as the work was at the other end of the country, provide accomodation for them and everything, to get the project completed by the deadline agreed by the refurb company and the owner of the building). This all happened last year, and they've been rowing over the bill for months. My brother has seen a solicitor, and got him to write one letter, advising the bigger company that my brother's company would be taking them to court if they didn't pay up. That was months ago, and since then, my brother has been pratting around re-evaluating the work they did and trying to get an 'independent' QS to put a value on the work his company did, so they'll be prepared if or when the case goes to court. The added complication is that my brother is the person who has put up all the money (partly from loans and partly from an inheritance from my uncle), so his partner, who is about as reliable and trustworthy as a rotten rung on a ladder, probably doesn't give a toss about whether they get the money back or not, and he behaves accordingly, by, for example, never bothering to make time to see my brother to go through the revised bills.

I've told my brother he should just instruct the solicitor to write to the company and give them a deadline for the bill to be paid in its entirety, otherwise my brother will take them to court, as my brother has proof that all the additional work was requested and approved by the bigger company's agents on site. My brother, however, says he has to wait until the independent QS etc has reassessed and verified their work before starting legal proceedings (in a civil court), as the court would not be too impressed if my brother started the case then had to request an adjournment while he got together the paperwork to back up his claim.

If anyone has managed to read through all this without dying of boredom, I really would welcome your thoughts on the best way to proceed, please. All the stress is playing havoc with my family, especially my dad, who is distraught at the thought that the money that his much-loved brother worked so hard to get may be about to disappear into a big black hole.

Thanks for any advice you can give.

 
I think your brother is going about things the right way, all methodical like.. Anyway, one thing to be careful of, is, has the company you are preparing to sue actually got any assets?? If not you might just be spending money for nothing.

Hope it works out for you though.....

john....

 
Hum... your "brother" may need to put this down to expericence!

When a project has an agreed specification, each and EVERY time a change is requested there needs to be a cost associated and approval granted in writing, otherwise you end up out of pocket!

 
The problem here is whether the correct person has authorised this additional works. It's an internal political thing within large companies.

However a good solicitor should be able to determine the factual legal arguments to recover losses, however as with every crook there costs may out weigh the returns?

 
I got a gut feeling there could be a deeper problem than just getting the money back for the work....

The added complication is that my brother is the person who has put up all the money (partly from loans and partly from an inheritance from my uncle), so his partner, who is about as reliable and trustworthy as a rotten rung on a ladder, probably doesn't give a toss about whether they get the money back or not, and he behaves accordingly, by, for example, never bothering to make time to see my brother to go through the revised bills.
Why startup a business with someone who is not very reliable or trustworthy???

Buisness history is littered with cases of smaller sub-contractors going to the wall due to larger companies wrecking their cash-flow by either very late or non payment of contracts.

Often it is not the lack of work that kills a business it's cashflow problems...

and internal management admin etc..

Loads of small businesses fail with full order books and work in progress.... 

But banks or other finance institutions wont give any more credit to allow the daily business bills to be paid.

It is actually surprisingly easy to tender for and win contracts for work...

Its the completing on time and within your specified budget and getting payment thats the harder bit!

Has any money been paid yet for this work yet?

Has he been paid the original amount and just outstanding the extras?

As has been said the pivotal points

Was it just extra work authorised or extra work and costs?

Has the company actually got the assets to pay this bill?  

It could be just a big learning curve.!

 
Take any money on the table, then persue for additional works.

Solicitors fees should be covered by company insurance, you can also get assistance form the registration bodies like the NICEIC

 
Ha ha ha! Thanks for the responses so far - especially the ones about blowtorches, duct tape etc!

I thought maybe I should clarify some points, though:

The company my brother was working for is a big company - the job he was working on was a multi-million pound contract, and it was just one of many they have.

As far as I am aware, the people who authorised the extra work did have the authority to order the work. My brother suspects that it was one (or both) of them who messed up, by underestimating the size of the job, and now they're trying to save their skin by covering up the fact that my brother's company had to do far more work than they had budgeted for.

The solicitor seems to be fine, and would start legal proceedings - if only my brother would tell him to. I think my brother doesn't want to throw good money after bad, by paying the solicitor to do more than the very bare minimum of work, but I think a few hundred quid in extra legal fees would be a good investment if it meant getting 50 grand back in return, and asap. I suppose the main thrust of my request for advice was... should my brother get the solicitor involved now or piddle about a bit more before getting him involved?

As for the partner, well, my brother took up with him just after he had qualified and didn't have any experience, and therefore the confidence to  tackle jobs on his own. The partner is known by his family as Rick; it should be obvious what he's called by my  brother's family.

 
I'm a little confused to how it got to 50k, did he not invoice monthly based on a valuation of work completed to each month end, with payment 30 days from invoice date.

Also when receiving instruction to carry out further works did he receive an instruction or did he request a CVI (confirmation of verbal instruction).

Providing he has those and as said already the company is healthy he should have no problem, but without paperwork there are those out there that will take advantage of your failings.

 
Does your Brother have the standard all parts belong to me until fully paid?

Perhaps threatening to remove your goods would persuade the company to come good, especially if it involved other trades remedial work after accessing those goods 

 
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You can have clauses about parts still belonging to you, but the problems then arise when they have been incorporated into other parts, you cannot just go and remove "your" bits.... Not unless you want to get into BIG trouble that is..

I think it is a good idea for your brother to do all the preparatory work, a very good idea indeed so you have a solid case to present to the solicitor.

I have an idea that when your solicitor contacts the other party and tells them that you are going to seek a winding up order, they will just pay!!

I saw someone do it once to a very large nationwide construction firm.. They went from all big headed "you do what you like" to "what do we have to do??" in about half an hour!!!!!

Have a talk to an accountant too, they probably know more about this sort of thing in the real world than the solicitors....

john..

 
The Mighty Canoey  has said much as I was going to say .

Was your brother the main electrical contractor to the builder/ project company  or a sub-contractor to a larger electrical firm  I wonder ?

I have to say that many sparks , just starting out have gone through this as many of these apparently respectable main contractors will prey upon the small fry onsite who , although probably good sparkies , no begger all about business  especially the sharks within the construction industry.

I know this doesn't help your brother but I have to say it .             To allow a deficit of £50,000  to acrue is extremely bad management I have to say .

But I don't blame your brother as I've seen it occur many times ,  mostly because you have a main contractor experienced in the contractual side  versus a newly qualified sparks / plumber / heating eng / etc  who knows his job but thats all.

Basically you do what you quoted to do and what they accepted you would be doing . 

Any extras that arise you submitt a quote .... they accept in writing & issue  something like a VO say  ( Variation Order ) instructing you to carry on with it. 

If you don't get that ...... DON'T DO IT

If you don't get paid for the first extra AND  if you don't get your stage payments on time ....WALK ...or RUN .

Chances are  you won't get your final payment  ( so that needs to be as small as possible )  AND   don't imagine you will EVER get your retention payments !!!!      ( So build those into your original quote )

If theres a penalty clause on the contract , beware of the main contractor looking to pass that off onto you or the heating guys  .  Mech. services in other words ...  they will have a list of how many men you had onsite from day one .... how many times you held up progress ( supposedly)  all this can used against you . 

Back to your brother ........you can't let them rip you off for  £50,000  go  for their throats and rip out their corporate windpipe .

They tried a similar scam on me on a local Health Service job with us as sub- contractor to a builder but quoting to the Heath Service specification & drawings. 

I won't bore you with details but the design consultant was turning up onsite & ordering  our guys to do various extra works  amounting to some thousands of pounds .  

I told them to just do the original work & sent quotes into the main contractor for all this extra stuff .     They did not reply .  Something was going on !

We were summoned to the office of the Health Service Estates & Architect's dept  ...I had copies of all my our quotes  .... and had NOT been instructed to carry on with any of them  .   They ordered us to get more labour and get all this work done !!!!         Now I get on with most people but can be a stubborn bastard with people like this  and for them I'm afraid it was bang your corporate heads against a brick wall  because we were not being pushed around ...we would gladly finish what we quoted to do ...AND ...if someone would authorise it ....the extra work too .    It never happened. 

 
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