Property - case management directions including mandated mediation
Before : |
Advocate David Michael Cadin, Master of the Royal Court |
Between |
Carroo Construction Limited |
Plaintiff |
And |
Michael Peroh |
Defendant |
The Plaintiff through its Director Mr Horgan.
Mr M. Peroh in person
judgment
the MaSTER:
1. This judgment sets out my reasoning in relation to case management directions given following a directions hearing on 12 May 2025. It is provided to assist the parties and to progress this litigation.
2. These proceedings concern a claim that was instituted before the Petty Debts Court in October 2023 by Carroo Construction Limited, acting in person through its director, Mr Horgan (the -Plaintiff-) seeking the amount of £8,338 allegedly outstanding under a final invoice raised just after Mr Peroh (the -Defendant-) had asked it to leave site.
3. By his Answer, the Defendant denied that the monies were due. He pleaded that:
(i) the Plaintiff charged the Defendant for the costs of preparing an estimate for the works;
(ii) that estimate by the Plaintiff's quantity surveyor gave an estimate of between £70,000 and £85,000 for all the works;
(iii) he repeatedly told the Plaintiff that the maximum budget for the project was £100,000;
(iv) notwithstanding that the Defendant had paid the Plaintiff over £200,000 by the time he asked the Plaintiff to leave site, the -house was far from complete- and the Plaintiff's own estimate of the remaining costs to complete the project was in the region of a further £98,000;
(v) although this was a -cost-plus- contract, the Plaintiff had repeatedly failed to supply the underlying invoices necessary to justify its costs.
4. The Defendant also brought a counterclaim on the basis that:
(i) the Plaintiff had overcharged the Defendant by some £126,771 and in this regard, he relied upon an expert report from a Mr Friel dated 18 November 2023;
(ii) the Plaintiff's mismanagement of the contract and the overcharging had caused the Defendant to take out additional finance in the sum of £21,908 and to incur additional rent in the sum of £28,098.
(iii) the Defendant and his family had suffered distress as a result of the Plaintiff's conduct.
5. On 29 November 2023, the matter was referred to the Royal Court by the Petty Debts Court and directions were given on 12 December 2023 requiring the Plaintiff to file an Answer to the Defendant's Counterclaim, thereafter staying the proceedings for ADR, and in the event that ADR was unsuccessful, requiring the parties to give discovery and inspection and for the Plaintiff to file an expert report in response. ADR was unsuccessful.
6. Discovery was problematic in that neither party's list of documents was entirely satisfactory and each issued a summons for specific discovery, and an associated unless order, against the other. Accordingly, I gave directions on 27 August 2024 identifying exactly what fell within the scope of discovery and what had to be disclosed to the other party. Compliance with those directions was unnecessarily complicated in that the Plaintiff, acting through Mr Horgan, decided to upload all of his unindexed, individual documents to Case Centre and then refused to provide the documents separately to the Defendant.
7. I therefore directed on 16 October 2024 that the parties provided updated affidavits of discovery addressing the criticism that had been made of each of them by the other, and that -insofar as not already provided, the parties shall give inspection to the other of all documents disclosed-. My expectation was that this should and would produce a common set of material documents in the possession of both parties. I also gave them both permission to rely upon the evidence of a quantity surveyor and for the filing of individual and joint reports. The experts filed their reports in December 2024:
(i) Mr Friel, the quantity surveyor instructed by the Defendant, noted that 67% of the relevant timesheets were missing and in the absence of that material, he could only conclude that the Defendant had been overcharged by £113,249.
(ii) Mr Jones of Henro Consulting Limited, the Quantity Surveyor instructed by the Plaintiff concluded that the -invoices have been fairly compiled in accordance with the terms and conditions of the contract, the correct discounts, overheads and profit percentages and the correct labour rates have been applied.- He also identified that the correct amount of the Plaintiff's claim should have been £10,483.
8. The experts met in February 2025 and according to the joint report:
-6. Although the missing timesheets were provided via email on 04/01/25. These could not be reviewed [by Mr Friel] as part of the meeting resulting in a difference of more than 90k. The reason provided is that the timesheets provided on 04/01/25 were not accompanied by an Affidavit...-
9. The matter came back before me for directions on 18 February 2025. The Court was not impressed with Mr Friel's failure to review all of the records that were available.
10. Notwithstanding that the Court had previously given unequivocal guidance that discovery was not to be conducted through the Case Centre bundling system, Mr Horgan for the Plaintiff filed a further affidavit of discovery on 10 February 2025 stating that:
-In October 2024 whilst clearing a spare room for visiting family I discovered an old computer that was replaced in January 2024...[From it] I recovered deleted scanned copies of the timesheets for the previous years. These documents have been downloaded to the Royal Courts Main Bundle and have been accessible to both parties since October 2024-.
11. Mr Peroh had a number of questions about the fact that this computer had been recently located and about the material apparently found on it. In particular, he wished to inspect the metadata of the documents but in answer to specific questions from the Court, and as is recorded in the Act of Court dated 18 February 2025:
-Mr Horgan confirm[ed] to the Court that the computer referred to in his supplemental affidavit of discovery sworn on 10 February 2025 was found by him in October 2024 and disposed of on a date, currently unknown, before February 2025;-
12. I therefore directed that Mr Friel should provide an updated report having considered all of the relevant documents and that the experts should then meet to produce a further joint report, which they did by way of a document dated 17 April 2025. That report is still impenetrable and of limited assistance in progressing this litigation:
(i) Rather than simply referring to the competing contentions of the experts and their reasons for taking one position rather than another, it also contains direct statements from the Plaintiff in response to the views of the experts. Quite how or why it contains such statements is wholly unclear.
(ii) Rather than proceeding on the basis of a common understanding and a common suite of documents, Mr Friel notes that:
-The plaintiff submitted materials to the court. The defendant considers that only partial disclosure of some of the materials was provided. Your QS has reviewed only the materials directly disclosed to the plaintiff.- (sic - this should be a reference to the Defendant)
(iii) It notes, without comment or otherwise indicating whether there is agreement of disagreement between the parties, that:
-2.00...[Mr Friel] has identified £18,317.00 of invoices where hours have been claimed but no handwritten timesheets have been provided...
[Mr Jones] have located timesheets on the court bundle (Appendix B1 all pre- October 2024) to support £9,131.00 of the £18,317.00 identified, leaving £9,186.00 of hours claimed without handwritten invoices.-
(iv) It fails to narrow the ground even in relation to matters which should not be overly contentious such as the total sum paid by the Defendant to the Plaintiff.
(v) The experts' conclusion appears to relate to matters of disclosure rather than expert opinion:
-Whilst some of the labour timesheets have been presented, there is still a difference of opinion in what is discoverable. The defendant has a higher figure for missing invoices and with the claimed overcharges etc. the dispute has reduced but the defendant is still claiming in excess of 70k. Including the other timesheets and the difference in opinion on the "Window Store" invoices, the plaintiff is saying the defendants claim should be reduced to circa 45k
The Plaintiff states that all the supporting materials have been submitted and that the invoiced amounts are valid. YOURQS maintains that a number of timesheets and supporting invoices remain undiscovered or unverified...
B1 - [Mr Friel] SUMMARY OF ITEMS STILL IN DISPUTE £71,402.31
B2 - AS ABOVE BUT ADJUSTED WITH COMMENTS FROM [Mr Jones] £44.723.69
Difference between the above is down to timesheets Your QS are claiming have not been discovered correctly and Window Store invoices-
13. The proceedings came before me for directions following the filing of the joint report:
(i) Mr Horgan filed a skeleton argument seeking to prevent the Defendant relying on Mr Friel's report on the grounds of bias, amongst other things;
(ii) Mr Peroh filed a skeleton argument seeking permission:
(a) to adduce evidence from a forensic scientist who is apparently to opine on the handwriting on several timesheets to show that they were in fact completed by the Plaintiff's foreman rather than the employee named on the timesheet;
(b) to amend the Answer and Counterclaim to allege a recurring pattern of misbehaviour on the part of the Plaintiff through inflated billing across a variety of projects and billing in respect of works which had not been carried out;
(c) to join Mr Horgan as a defendant in his own right for deceit and/or negligent misstatement.
14. Neither party filed a summons in support of their respective application.
15. Doing the best I can with the joint report, it would appear that:
(i) As against invoices totalling £231,199.32, the Defendant has paid either £236,141.13 (per Mr Friel in Appendix B1) or £224,248.50 (per Mr Jones in Appendix B2).
(ii) The Plaintiff submits that invoices from the Window & Door Store (a business owned by Mr Horgan) in the sum of £12,487.26 should be included, whereas the Defendant submits that they should not.
(iii) There is a possible overcharge calculated as follows:
|
Omissions |
Plaintiff's Position per B2 |
Materials |
£30,677.16 |
This is incorrectly added up. It should be £25,209.35. The Defendant says they were not delivered, the Plaintiff says that they were. This will be a matter for the Court to resolve on evidence. |
Tools removed from site |
£726.00 |
The Defendant says they were charged to him and removed by the Plaintiff; the Plaintiff says that they were left. This will be a matter for the Court to resolve on evidence. |
Asbestos Invoice |
£327.75 |
Agreed deduction |
Electric Blackout roller |
£294.30 |
Agreed deduction |
Missing Invoices charged out |
£4,002.08 |
These are available in whole or in part |
Miscellaneous overcharges |
£426.60 |
Agreed deduction |
Overcharges on labour |
£8,289.50 |
This will be a matter for the Court to resolve on evidence. |
Missing timesheets |
£18,317.00 |
Although B2 refers to a figure of £8,551.50, this is different to the figure of missing timesheets referred to in the body of the joint report (£9,186.00). It appears to be agreed that there are missing timesheets for about £9,000 which will have to be resolved by the Court. |
Additional discrepancy |
|
£252.00 |
(iv) The Plaintiff submits that at most, these calculations lead to a potential overcharge of £44,723.69 whereas the Defendant claims an overcharge of £71,402.31. Neither calculation is particularly clear.
16. Many of these issues should be capable of resolution between the experts. However, as to the matters which will fall to be determined by the Royal Court, the evidence may not be straightforward:
(i) The joint expert's report dated 17 April 2025, includes the following in relation to the Plaintiff's method of charging:
-The response from the plaintiff is as follows -
LABOUR CHARGES & EMPLOYEES TIMESHEETS In accordance with our Health & Safety procedure, the Plaintiff's site foreman keeps an accurate daily record of who was on site, for how long and what they were concerned with, each and every day. The Plaintiff's employee submits a timesheet Monday morning, for the preceding week. The timesheets are cross referenced with the foreman's site diary. The foreman's site diary, being an accurate daily record, takes priority over the employee's timesheet and time is added for periods when to an employee worked though his entitled breaks or if an employee went to the suppliers before or after work.
This added time seem to be the time that YOURQS refers to as "overcharges' and this 'misunderstanding' should be corrected.-
(ii) Nowhere has the Plaintiff previously mentioned or disclosed a site diary and/or invoicing in accordance with the foreman's site diary as opposed to the labourers' timesheets. Indeed, in his Supplemental Affidavit of Discovery dated 26 September 2024, Mr Horgan deposed that:
-Handwritten Timesheets
4. It is the standard working practice of the Plaintiff to enter all information contained within handwritten timesheets submitted by the Plaintiff's employees into Quickbooks immediately upon receipt. Once that information is recorded within the Quickbooks system, the original handwritten timesheets are discarded on the basis that a contemporaneous record of the information that they contain has been preserved within the Quickbooks system.
5. The Plaintiff followed this standard working practice throughout the course of the project which it undertook on behalf of the Defendant and, as such, any original handwritten timesheets were disposed of, or otherwise destroyed, shortly after the information contained within them was recorded in Quickbooks and, in any event, at a time when litigation was not reasonably in contemplation.-
(iii) On being asked by the Court as to whether the diary had been disclosed to the Defendant, Mr Horgan stated that the site diary was disposed of at the time as -litigation was not in contemplation-. That will be a matter for the Royal Court to determine in due course given that the contract works were carried out between July 2022 and September 2023, in August 2023 the Defendant asked the Plaintiff to cease work and by the end of September 2023, a dispute had arisen about payment of the Plaintiff's final invoice.
(iv) Similarly, the Royal Court may wish to take into account Mr Horgan's disposal of the computer referred to in paragraph 11 above.
(v) That assessment by the Royal Court may become more complicated were the Court to allow Mr Peroh's intimated application to adduce handwriting evidence as it is unclear to me how either of the above passages would sit with the foreman completing the timesheets. However, I stress that at this stage no formal application has been made nor has the Court formed any view, provisional or otherwise, about such an application or the veracity of the allegation.
17. Both parties are acting in person and to date, have struggled to meet the expectations of the Court and/or the requirements of the Royal Court Rules 2004 (-RCR-). Whilst past performance in litigation is no guarantee of future performance, I think that the parties will continue to struggle to meet the ever-increasing expectations of the Royal Court as this case progresses towards a trial. Once again, I would urge the parties to obtain legal representation.
18. The Court is disappointed to note that the parties and/or their experts are still playing procedural games in relation to discovery:
(i) Mr Horgan seeks to hide behind the apparent failure of Mr Peroh to serve a Notice to Inspect pursuant to RCR 6/17(4) as an excuse for not having provided him with copies of all of the relevant documents, notwithstanding that my Order dated 16 October 2024 required the parties to give inspection of the documents disclosed;
(ii) The Court has repeatedly and vociferously decried the use by the parties of the Court's bundling system as a means to conduct discovery, yet once again Mr Horgan seeks to assert that because a document was once uploaded to Case Centre, that is sufficient to meet any of his obligations for discovery and/or inspection;
(iii) Despite the efforts the Court has made to ensure a common document universe, the Defendant's expert still appears to be applying some form of Nelsonian blindness to the available material.
19. Neither expert has provided the Court with the assistance required and as matters stand, it is difficult, if not impossible, to see the wood from the trees in terms of what is, and is not, in dispute and/or how it might be determined by the Royal Court.
20. Far from seeking to resolve matters, or at the very least, narrow the issues, both parties appear to be intent on escalating this litigation to a point far beyond the amount in issue. That sum in issue is the one thing which is decreasing and notwithstanding the opacity of the calculations, the claim comprises:
(i) a claim by the Plaintiff for £10,483; and
(ii) a counterclaim by the Defendant for overpayment in a sum between £44,723.69, and £71,402.31.
21. In my judgment:
(i) the net sum in issue is only marginally above the threshold for the Petty Debts Court, and that must inform consideration of the Overriding Objective;
(ii) the financial issues should have been narrowed, if not resolved entirely, by the involvement of the quantity surveyors;
(iii) the issues between the parties should not be as complex as they are trying to make them;
(iv) once the experts have discharged their obligations properly, the Royal Court will be left to determine certain, limited factual matters together with the manner and timing of performance under this contract. Should the Royal Court find that there had been a breach of that contract, it would then consider the recoverability of the costs of additional finance, additional rental payments and distress.
22. Unfortunately, it does not appear that the parties yet appreciate, or share, the Court's view as to the route through their issues to a resolution in accordance with the Overriding Objective and further directions are required if this matter is to proceed to trial. Given that these proceedings have been extant since November 2023 and that only limited progress has been made towards a trial, any directions must be focussed on achieving expedition and clarity against a backdrop of likely sanctions for non-compliance.
23. The fact that the parties attempted, unsuccessfully, to mediate their differences in the Petty Debts Court and on transfer to the Royal Court, does not mean that mediation will not succeed. From experience, mediation can often resolve the most intractable of disputes particularly where, as here, the parties now have greater insight into the cases they are pursuing and the challenges presented by litigation.
24. In Patel & Ors v JTC Trust Company Limited & Ors [2025] JRC 088, the Court held that:
-36. In my judgment, the reasoning in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 applies with equal vigour in Jersey and there is no reason why the Court could not, if so minded and in accordance with the Overriding Objective and in particular Royal Court Rules 2004 1/6(6)(e), order parties to participate in alternative dispute resolution. However, the fact that the Court has the power to order parties to attend ADR, does not mean that that is its only power; the Court can also take a party's failure to engage in ADR into account when determining costs.-
25. In answer to direct questions from the Court, Mr Peroh indicated that he was willing to participate in mediation. In contrast, Mr Horgan stated that whilst he had no objection to attending mediation, he was -not willing to negotiate...because everything [he is] claiming is rightly due.- Given the matters set out above, it seems to me entirely possible that the Royal Court might disagree.
26. From the Court's perspective, Mr Horgan's apparent intransigence and opposition to negotiation will be taken into account when it determines the costs of this litigation. Put simply, even were the Plaintiff to succeed at trial, it may be deprived of its costs.
27. A direction requiring the parties to mediate might cause the parties to incur additional costs for a process with which the Plaintiff will not engage and/or with which it will not engage in good faith. However, a skilled mediator can often overcome apparent intransigence and in my judgment, mediation by an appropriately qualified mediator with the parties' quantity surveyors in attendance presents the best opportunity of the parties resolving their issues expeditiously and in a cost-effective manner. Given the matters set out above, I think it appropriate to direct the parties to engage a professional mediator to mediate this dispute, at their own cost to be shared equally, with their quantity surveyors in attendance. I will therefore stay the proceedings for 28 days to facilitate such a mediation.
28. I would hope that the parties will be able to agree on the identity of a mediator, and to do so within 7 days of hand down of this judgment, but in the event that agreement is not possible, I direct that at the end of that period of 7 days, the parties each put forward the names of 2 suitable mediators with their respective credentials, availability and costs and the Court will make a direction as to which of the proposed mediators should conduct the mediation.
29. The Court sincerely hopes that mediation might produce a resolution. If it does not, I direct that:
(i) the parties work together to create at their own expense a complete, common bundle of relevant paginated documents within 14 days of the expiry of the stay; such documents must not be uploaded to Case Centre without a specific order of the Court to that effect;
(ii) once that common bundle has been prepared and provided to the experts, they should meet again to refine and/or clarify their conclusions, succinctly and clearly. They should also identify those areas:
(a) outside of their knowledge or expertise; and/or
(b) where additional factual evidence will be required for them to revisit their respective opinions.
(iii) the updated joint written report should be provided to the parties within 21 days of receipt of the common bundle;
(iv) for the avoidance of doubt, the Plaintiff's comments on the experts' report should not be included within the joint report. If the Plaintiff wishes to provide relevant evidence, he can do through his witness statement and if he wishes to provide relevant and appropriate comment, he can do so in the course of his submissions;
(v) within 6 weeks of receipt of the joint report, the parties should provide witness statements on their own behalf and for any witnesses whose evidence they wish to adduce. Subject to any further order of the Court, those statements will stand as their evidence in chief at trial herein. To assist the Royal Court, where necessary, such statements should be cross-referenced to the common bundle prepared under paragraph (a) above;
(vi) in the event that any party wishes to pursue their intimated applications, or indeed, any further applications, they should issue the appropriate summons and pay the relevant Court fee, within 14 days of the expiry of the stay;
(vii) otherwise the matter will come back before me 2 weeks after statements have been filed for consideration
30. This matter came before me by way of a directions hearing and for the assistance of the parties, the usual order would be for costs in the cause, such that whoever prevails at trial recovers their costs.
31. To the extent that either party wishes to seek a different order, they should notify Mrs Harries so that she might arrange a hearing for consequential orders dealing with the costs of the directions hearing, and the costs of that consequential hearing.
Authorities
Royal Court Rules 2004.
Patel & Ors v JTC Trust Company Limited & Ors [2025] JRC 088.