Read this before suing your builder

One of the (rather unpleasant) clichés of life as a lawyer is that economic hardship can be good for business. During boom times, lawyers who specialise in running disputes supposedly twiddle their thumbs as deal after deal is drafted and negotiated. Everyone is too busy trying to do the next deal to worry about what might have gone wrong in the last one. When the deals dry up, or so the thinking goes, people start re-examining the bottom line and dispute work takes off.

The truth is rather more mundane, but it's against that background that I offer the cautionary tale of Mr and Mrs Western. In 2005, they bought a new house in Essex. It had problems - about £20,000 worth. Because it was a brand new house, the Westerns had the benefit of insurance from the National House Builders Council - the NHBC. This contains a dispute resolution procedure which Mr and Mrs Western followed. They won, which is how we know the cost of putting things right.

However, the Westerns had also employed a building surveyor to help them with their case. His fees came to £7,000 and the Westerns wanted to be compensated for that expense. The builder was more than happy to fix the dodgy work, it just didn't want to pay the £7k as well.

Here's where things started to go wrong for the Westerns. They tried what they thought was the proper next step and appointed an arbitrator to decide things. The builder disagreed - both sides in a dispute need to agree to arbitration and the builder denied ever reaching any agreement. The dispute revolved around the precise wording of the NHBC documents. Ultimately, it went all the way to the High Court for a judge to decide whether or not the arbitration should proceed.

The judge agreed with the builder. In his judgment last month he found against the Westerns and ordered them to pay just over half of the builder's costs of taking the case to court (these came to £4k).

To make matters worse, the judgment explains that the builder had not actually been back to the Westerns' house in the meantime. They had refused him entry until the question of the surveyor's fees was resolved.

So, over a period of about two years, Mrs and Mrs Western have lived in a duff house, been through three different dispute resolution processes and, despite their underlying case being strong (the house has faults which the builder has agreed to put right), are over £11,000 out of pocket (they will have their own solicitor's costs on top of the surveyor's fees and the £4k paid to the builder).

Litigation is a risky business. It's great when it works; and more often than not a nightmare when it doesn't. The Westerns must be wondering what they have let themselves in for.