13 March 2008 | Jake Kanter
Window supplier Southern Glass Services (SGS) has received a repayment from Barratt Homes, after the housebuilder deducted 3 per cent from the price of its agreed contract.
An independent adjudicator ruled Barratt Homes had "no right" to impose the price cut. SGS received œ19,000 plus interest.
The Southampton-based glazier was represented by the dispute resolution firm PJ English Associates (PJEA). The firm recommended SGS take the case to adjudication, to give the supplier access to a fair and quick out-of-court hearing.
Peter English, managing director of PJEA, said: "Barratt didn't defend itself, it knew it had no contractual right to impose the reductions."
In a statement Barratt Homes said the case was unique and confirmed it would continue to do business with SGS without deducting costs.
In January, SM
reported the angry reaction of suppliers to a group of housebuilders, including Barratt Homes, making mandatory cuts on their suppliers' existing and future contracts (News, 31 January
English believes the problem is widespread in the sector: "The big boys in the construction industry tend to treat suppliers as if they're muck on their shoes."
Suzannah Nichol, chief executive of the National Specialist Contractors Council (NSCC), agreed: "I think it's highly unlikely that this is an isolated example, but I'd be delighted to be proved wrong."
English argued SGS' success could lead other suppliers to challenge such moves. A sentiment shared by Nichol. "SGS has done the hard work in sticking its head out and standing up to Barratt Homes. There is absolutely nothing stopping other suppliers from following. Housebuilder bullying tactics have no place in the construction industry," she said.
The glazing firm was unwilling to comment to SM
on the action taken against Barratt Homes, but it has told the NSCC that other suppliers should claim back their money if it has been unlawfully deducted.
But Rupert Choat, construction partner at law firm CMS Cameron McKenna, said building firms had weighed the potential brand damage and legal battles with suppliers caused by reducing prices on contracts, against possible savings: "It seems developers are willing to bear the odd bruise. They are not silly, they know any damage would be mostly limited to their reputation and if many more impose reductions on suppliers, the more normal it becomes."
He agreed other suppliers might follow SGS and take action, but thinks the case is more of a warning rather than the setting of a new precedent.