Housing association slams ISG claims of £7.7m unpaid bill as ‘spurious’

The housing association which ISG has taken to the High Court over a claim it is owed £7.7m has described the contractor’s claims as “spurious to say the least”.

Home Group said it had “acted in good faith” but had “struggled throughout” with ISG on a residential scheme at the centre of the case that completed six years behind schedule.

The housing association, which owns 55,000 homes across England and Scotland, is offering to pay less than 10% of what ISG claims it is due for the works.

The case at the Technology and Construction Court comes as ISG is locked in talks over an impending sale to a South African businessman which was expected to have been announced weeks ago.

The contractor was appointed to build the 56-home development on Watford High Street in 2014. Although expected to take around 16 months to complete, the scheme only reached practical completion in 2022.

In February this year Home Group issued ISG a “final payment notice” stating that it owed the contractor just £718,000 for the works, a sum which is ISG disputes.

>> See also: ISG’s prospective new owner ‘meeting senior staff’ to outline plans for business

But Will Gardner, executive director of asset and development at Home Group, said the housing association’s price was “in accordance with the agreed contract terms” and its decision to offer the sum was a view “confirmed by the consultants and experts who have supported us on this difficult scheme”.

He added that ISG’s claims for a total of £7,732,481.67 plus interest of 15.25% were “weak and poorly evidenced”.

“We are very confident indeed that we will be able to successfully argue our case,” he said.

“This is a project that was scheduled to take 16 months to complete, but significantly overran. In fact, the development completed six years late.

“We struggled throughout with ISG’s apparent lack of commitment to deliver what we were entitled to. We have acted in good faith throughout this process and have paid a price that is correct and in accordance with the agreed contract terms. This view is confirmed by the consultants and experts who have supported us on this difficult scheme.

“ISG have continued to increase the amounts they suggest we owe despite the scheme completing well over two years ago. We feel their claims and rationale are spurious to say the least. We look forward to putting our case before the court.”

ISG has been contacted for comment.

The case is still live and is understood not to have been settled out of court, although proceedings have now been paused until 18 December because ISG failed to comply with pre-action protocol for engineering and construction disputes before issuing proceedings.

Pre-action protocol requires claimants to write to the defendant with clear details of the claim and why it is being made including a summary of the facts and how much money is being requested.

In a court order issued at the Technology and Construction Court by Justice O’Farrell on 26 July, the two parties are said to have “disagreed” on whether ISG was correct in starting proceedings without complying to the protocol but agreed that the case should be paused.

If the case is not settled outside of court, Home Group is required to file its defence by 29 January 2025.

The case is one of eight which troubled ISG has been involved in since the start of 2024.

The firm’s fit-out business is also the defendant in a breach of contract claim with publishing firm Pearson PLC, while its retail arm is involved in a dispute with facades contractor FK Construction Ltd.

Last October, ISG Construction was also the subject of a winding up petition, a legal action used by a creditor against a company which owes it £750 or more.

The status of ISG’s potential sale is currently unknown six weeks after the firm’s chairman Matt Roche said the deal would be announced “within days”.

It is understood the hold-up centres on red tape in the US, the base of ISG’s owner Cathexis, under the country’s so-called Know Your Client regulations.

The prospective new owners are understood to have held meetings with senior ISG staff to reassure them the impending sale is on track and to outline their plans for the business.