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Jo C.
Jo C., Barrister
Category: Law
Satisfied Customers: 69369
Experience:  Over 5 years in practice
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Hi there, yet another sleepless night worrying. I completed

Customer Question

Hi there, yet another sleepless night worrying. I completed a £350 k construction job as a Ltd company Director Main contractor 18 months ago and my client says I have been overpaid by £ 10k plus vat. I said I will pay back all funds immediately provided they prove how they say this has occurred.
The works were subject to a JCT contract. The payment protocol was based upon a monthly valuation by the PM, agreement by the Client, checks by the Clients Bank Manager and permission granted for me to invoice.
They have continued to not show how this has occurred despite a project manager (PM)/contract administrator being present. I was told mid contract by the PM that I must have 2 subbies added to my contract(chosen by him and persons known to him and the client).I did not commission these subbies, meet them prior to the appointment, been invoiced directly by them or paid them. I believe that these 2 subbies must have invoiced the client directly and then HE paid them resulting in the said overpayment. The Client and PM refuse to show me their invoices/statements/cheque book stubs and I am now being pursued for £ 12k plus costs plus 8% interest. Totals to date circa £ 14k and counting.
To add insult to injury I am charged with being obstructive and unhelpful which cant be farther from the truth. I have continually offered to pay on clear written proof. Proof that is required as there are many associated problems with overpayment such as VAT, declaration of earnings etc....
I have suffered costs in dealing with this matter in terms of countless meetings, correspondence, accountancy costs to substantiate my position of approx £3.5k

The client has continually taken to bury his head in the sand and refused mediation through my Buy With Confidence membership at trading Standards at Brighton Council.

I have met with his chosen surveyor to discuss and help but the Client and the PM are really the ones who have had ALL financial control and I feel it is they who spent the money whilst not following the correct protocol for procurement of and payment of subcontractors. I feel I am being held responsible for the financial mis-mangement of others and am incurring huge costs as a result.

If you need more info please let me know

Regards, XXXXX
Submitted: 2 years ago.
Category: Law
Expert:  Jo C. replied 2 years ago.
Hi.

Thank you for your question. My name is Jo and I will try to help with this.

Sorry for the delay.

So, in short, they say you have been overpaid?

Whats your question about this?
Customer: replied 2 years ago.

Hi Jo,


I am sorry if I have not been clear.


 


I am happy to pay any funds back that are owed subject to the client providing clear evidence of this alleged overpayment.


 


I believe that their poor accounting system and project management has caused this and as I have now experienced my own costs of £3.5k, am I within my rights to remove these from the£ 10k plus vat amount? Or, do I need to counter claim ?


 


If they are at fault,is it fair for the client to pay his own surveyor and legal costs?


 


Is their 8% interest that the client is charging fair and reasonable? It seems much higher than the Bank of England base rate or can others troubles permitted to be turned in to money making opportunities above and beyond the sums involved?


 


In short, I have not been able to control any of the project finances as I was not Project Manager and it appears that the Client paid subbies incorrectly without my prior agreement, we are now in this situation. i believe their errors may have caused me considerable additional costs that I am not willing to pay.


I would however be happy to pay had I been able to affect any of the payment procedure and I was at fault.


 


Hope that helps,


 


Drew

Expert:  Jo C. replied 2 years ago.
Yes, I've read the facts.

What is your question about this?
Customer: replied 2 years ago.
Hi Jo.
My questions are as above.

As I feel that the Client and Pm have caused the overpayment, am I entitled to ignore their costs and pay back the £10k plus vat, less my costs?

Drew
Expert:  Jo C. replied 2 years ago.

Thanks for the information.

I am sorry but I cannot give you good news then. I’m afraid you are in difficulty here.

If you have been overpaid then the starting point is that they are entitled to be repaid in full for the amount of the overpayment. The fact that they have been inefficient is not defence I'm afraid.

In any event, quite frankly, you will struggle to convince a court that you have incurred £3,500 of costs just to consider the issue of an overpayment I'm afraid.

There is a doctrine in law that allows you to argue that you should not have to repay if you genuinely had no way of knowing about the overpayment and have changed your position as a result of the overpayment but that is a very high test. Generally speaking courts do not like to see people out of pocket.

I'm sorry this isn't the answer you wanted but it is the position that you face and I have a duty to inform you truthfully.

Hope this helps. Please let me know if you need more information.

Jo
Customer: replied 2 years ago.

Hi Jo,


 


you mention the doctrine of law that i should not repay an overpayment had I not known genuinely of it happening. This is precisely what happened.


 


I can prove this by the fact that I have not in fact paid the 2 subbies that have resulted in the overpayment. They were paid by the client. The PM did not allow for this double payment and reflect it correctly in his final account.


 


I have had to chase both sub contract parties even to gain copies of the invoices.


 


One of the sub contractors even refused to provide invoice copies to me as it believed the invoices were confidential and that they considered that their contract was not with me but held with the project manager!


 


May I ask what you mean by " the overpayment has changed my position"?


 


Your help is proving to hold considerable value to me and is appreciated.


 


Drew

Expert:  Jo C. replied 2 years ago.
To be wholly honest a court is not likely to accept that especially if you are a business. It usually is successfully argued with things like benefit over payments where people have been overpaid without them having any idea and spent the money with no realistic means of repaying. Generally speaking business customers tend to be required to be more sophisticated.

You have to show that you've changed your position - spent the money and have no means of repayment for instance.
Customer: replied 2 years ago.

Hi Jo,


thanks for getting back to me.


 


I have always allowed for paying back the £ 10 k plus but not without actual proof of this being provided to me.


I am not in a position to pay back any clients who simply demand it without evidence.


 


Am I within my rights to ask for proof of receipts and invoices that amount to the £10k so as to create a full audit trail?


This after all would be asked of me should HMRC wish to make even a standard or more in depth Tax or VAT inspection. They will want to see the day in the life of any purchase or sale, particulary a large one!


 


I wish to prove to the client that (once they have shown me the paper evidence), that yes, they may have been inefficient in their procedures and as such I am not obliged to pay their costs with interest and that they will have to pay my professional accountancy costs of £714. Is that reasonable? I would have been £ 714 better off had the clients not been inefficient.


 


Thanks


 


Drew

Expert:  Jo C. replied 2 years ago.
It is reasonable that you want sight of some evidence that you owe this money.

I don't think they will get their costs plus interest unless they can prove that you were culpable in some way but I'm afraid a court is going to be very reluctant to order your accountancy costs. The problem is that if you had an accountant it gets a but hard to argue that you shouldn't have know you were being overpaid to the tune of £10k

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