Answer every cross-claim line by line before you agree the balance
The administrator or liquidator will deduct every cross-claim it can from your account, and answering them line by line is how you cut them back. A cross-claim is anything the main contractor could have claimed from you, such as defects, the cost of finishing your work or back-charges.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
Why it matters
Every pound deducted from your account is a pound the administrator or liquidator does not pay a dividend on. So cross-claims tend to arrive big and late, some for the first time in the reply to your claim. As one total, they look like an argument you cannot win. Line by line, they usually break down into three kinds. Some are genuine. Some belong to other trades or to damage after you left. And some are charges the subcontract never allowed the main contractor to make. Conceding the genuine ones early makes your answer to the rest believable.
How to do it
- Ask for the cross-claims itemised, with the evidence the administrator or liquidator relies on for each, rather than as one figure.
- Check each line against the subcontract: whether the main contractor could charge it, and whether any notice the subcontract requires was ever given.
- Check each line against your own records: handover photographs, sign-off sheets, the scope schedule and the site diary.
- Concede the lines that are genuine, priced at what they would really cost to put right.
- Answer the rest in one written reply, line by line, with the evidence attached, and claim the balance that is left.
Example
Illustrative example. The scenario and figures are invented.
The facts
A partitioning subcontractor claims £64,000 in its main contractor's liquidation. The reply sets £22,000 of defects and back-charges against it, as a single figure.
What happens
- The subcontractor asks for the £22,000 itemised, and eleven lines come back.
- Four lines, £7,000, are genuine defects and are conceded.
- Five lines, £11,000, are damage after sign-off, as the handover photographs show. Two lines, £4,000, are back-charges the subcontract allowed only after written notice, and none was given.
- The reply goes back line by line with the photographs and the clause attached.
The cross-claims in figures
| Lines | Amount | Answer |
|---|---|---|
| Four genuine defects | £7,000 | Conceded |
| Five items of later damage | £11,000 | Disputed with photographs |
| Two back-charges without notice | £4,000 | Disputed under the clause |
The outcome
The liquidator agrees the claim at £57,000, not the £42,000 its first reply would have left.
To have this done for you, see our Insolvency Claim service.