Miniloft.com - Berlin's unique apartment hotel

The unique apartment hotel in Berlin's center

Prologue

Empty promises :: Designing a hotel in Berlin The work involved in designing a good building does not compare to the mammoth task of getting it built. Building is a bit like trying to get a menagerie of wild animals to pull a large block of stone across the desert. We had over twenty different firms on our site; co-ordinating them was not always simple.

Many of the companies on site were top notch, and were a pleasure to work with. However, our relationship with others deteriorated as we struggled to have the building constructed in the way we had envisioned. The forces of chaos at work can be strong especially when something goes wrong. Like a ship in a storm discovering it is off course and in danger of being thrown onto the rocks, the whole project can be threatened with immediate disaster. During the fourteen months of construction, we overcame several such crises, but the most extreme and ongoing crisis was the Battle of the façade.

The façade itself is a technical achievement, and getting it built the way we designed it was a major accomplishment. However the company that built it left us with a complex mess that provided enough twists and turns for a mystery novel. This blog is a brief account of the principal issues involved in that encounter

Even now, six years after finishing the building, we are still dealing with the aftermath of this conflict. As I write two workmen are outside my office window trying once again to find a mysterious leak that has plagued us for years; and our lawyers are filing criminal charges relating to the mess left behind by the company that built our façade.

Chapter 1: Enthusiastic beginnings

It was difficult to find willing companies capable of building our small but complex façade. We sent the documents to more than two dozen firms from all across Germany, and in the end received three offers that varied wildly in price. After several meetings, we negotiated a contract with Gebr. Gieseler GmbH. Their proprietor was very enthusiastic about the project, and his firm also seemed to be the most competent of the three bidders. It was a large company, whose reported annual revenue was almost 60 times the budget of our façade. In addition they had submitted the lowest bid. We felt fortunate and in good hands

The relationship began professionally, and they showed expertise in their field as we worked together to sort out the details of exactly how the façade should be built. It was a complicated façade with several technical innovations, and custom details that we had designed to give the building its unique look. You can read more about the design of the south façade, and the west façade in previous articles.

Chapter 2: Costly delays

Because of the high costs involved in building, a delay in completion is very costly. Our contracts contained severe penalties for delays caused by builders. Unfortunately these penalties are notoriously difficult to enforce, even though they are standard practice.

Our building site was so small, that the threat of our penalties was insignificant compared to that of the larger building sites where Gebr. Gieseler was working. We were also far too understanding when they came to us with their excuses.

By the time they had finished, Gebr. Gieseler was six months behind schedule on a job theyhad promised to finish in ten weeks!

Although part of the problem was because Gebr. Gieseler had underestimated the complexity of the project, most of the delays were caused by a toxic mix of poor communication, incompetency, and bad luck. They blamed the problems on a difficult relationship with the subcontractor that they had engaged a to do all the work on site. However as we saw later when it all unwound, this was by no means the only reason for the delays.

Theft!

Trouble began in earnest when late one night the material that had just been delivered for the façade was stolen by metal thieves, who presumably sold the custom made aluminum profiles for scrap. In one night we were set back the six weeks it would take to reproduce them.

Shortly after that, we noticed that the freshly installed windows did not open on one floor, because Gebr. Gieseler had mis-measured the height of the ceiling. This caused even more delay.

Injury was added to insult when one of the workers fell from a ladder just before Christmas. Fortunately he survived, but spent six weeks in hospital recovering from severe head injuries and two broken arms.

Our letters threatening them with contractual penalties did not speed up their work. The minilofts were already rented out for the end of May, we had to get the building finished!

At the end of March we engaged our lawyer to add weight to our threats. All of a sudden their pace picked up, but we still had no idea what kind of hot water they were actually in until much later.

Chapter 3 – Bait and Switch

The most serious problem with the façade itself was created by Gebr. Gieseler substituting a different product for the sunshades that we had specified.

Such substitutions are common, and often carry benefits for all involved. Their main argument was that the glass system was backed by St. Gobain, Germany's largest glass manufacturing conglomerate, and that they came with a solid guarantee behind them. We also liked the aesthetic of the new shades, and agreed to their proposal.

What they did not tell us at the time was that their proposed solution was substantially cheaper than the product we had hired them to install.

Unfortunately the argument they used to persuade us to accept the change has turned out to be incorrect. Over 30% of the glass panels were defective, and St. Gobain refused to honour their guarantee.

Chapter 4: Broken

When Gebr. Gieseler finished their work, we were left with a façade with a long list of defects. Because of these defects we had withheld a large portion of the money we had agreed to pay them.

We classified the defects into two categories: defective sunshades, and the small defects. The small defects included things like a leak in our office, missing door knobs, and faulty motors. Most of these have been fixed up by now.

The defective sunshades are not a small problem. About a quarter of our sun shades are immobile – stuck up, down or somewhere in between. Fortunately this doesn't impair the space. The windows still open and shut, keep the rain and wind out, and the warmth in. A few shades are stuck in an awkwardly crooked position, like a scar on a beautiful face.

Chapter 5: Arbitration

Eventually the lawyers of both sides reached an agreement, which entailed a price reduction for the substituted windows, and the delays. The remaining outstanding payments for the façade would go into a trustee account managed by Gebr. Gieseler's lawyer, Michael Zorn. This money would be paid out to Gebr. Gieseler in two steps. Herr Zorn would transfer the first tranche of 15,000 euros immediately. The other 35,000 euros was to remain in the trustee account until all the defects had been repaired.

Initially we felt quite satisfied with this solution. Most of the small problems were sorted out very quickly.

Gebr. Gieseler kept promising us that they would repair the sun shades as soon as they had clarified the complex legal issues with their glass suppliers.

After half a year of frustration we again began using our lawyers to apply pressure. Unfortunately this did not work. Although they came several times to try and repair a leak in the glass roof, Gebr. Gieseler made absolutely no progress on the main issues.

Chapter 6: Belly up

Then in December 2006 the foreman informed us that they were going bankrupt.

Immediately all of their unusual behavior was explicable. The long delays, sudden changes of sub contractors, and foggy excuses were their way of juggling their commitments to keep themselves afloat for as long as possible.

Shortly thereafter, their subcontractors began trying to get us to pay them for their outstanding bills. As far as I could gather, none of their subcontractors or suppliers received payment for their work.

Gebr. Gieseler was probably already in serious trouble when they bid for our contract. The sunshade switch was probably motivated even more by contractual terms than a lower price.Probably St. Gobain was willing to deliver without prepayment.

It also explained the erratic behavior of the subcontractors on site, who began understaffing and eventually stopped work because they were not being properly paid.

All the promises they made about repairing the sun shades were simply tactics to delay any consequences as long as possible.

The documents I received from the bankruptcy manager do indicate that a solution was negotiated, but it was never executed, perhaps because Gebr. Gieseler did not have enough liquidity to implement it.

When a company in Germany enters bankruptcy, it is very difficult to get them to fulfill contractual obligations. There are however certain situations when it is possible.

Chapter 7: Red-tape bondage

The trustee lawyer Herr Zorn maintained that he was suing St. Gobain, in cooperation with Herr Müller, the Insolvency Administrator. After the law suit was resolved they would then repair the façade together with Gebr. Gieseler Service GmbH, a branch of Gebr. Giesler which had survived the insolvency.

Whenever I called up either Herr Zorn or Herr Müller, each blamed the other for the lack of progress. Over several years I tried to coerce these two lawyers into action. German insolvency law does not provide much leverage to put pressure on the proceedings.

After four years, the Insolvency Administrator finally agreed to transfer the legal rights to us, and release the money that should have been left on the trustee account.

This meant that we could sue St. Gobain for damages caused by the defective windows, and request that Herr Zorn return to us the 35,000 euros entrusted to him.

Chapter 8: An aborted victory

This felt like a victory, until we tried to make good on the next steps. Our lawyers advised us against suing St. Gobain because the legal claims were very tenuous, and the chances of a decisive victory were small.

We tried to pursue an out of court settlement with St. Gobain, but they steadfastly refused to make any effort to repair their defective product. This shocked me – a large reputable German firm that was unwilling to stand by its own guarantee. That was nothing compared to the shock that hit me when we tried to recover the money on the trustee account.

Chapter 9: Criminal lawyer

A trustee account is an account administered by a lawyer. It must be kept in a separate bank account designated for that purpose. The lawyer is accountable to both parties who are involved, and has no legal right whatsoever to the money in these accounts. These types of accounts are used when financial claims are not entirely clear. It provides a guarantee to both parties in a negotiation, that the money is there, and when the disputes are finally settled, then the money goes to its rightful owner.

In our case the money was there so that Gebr. Gieseler could be confident that when they finished repairing our façade they would be paid their dues. It was there also to ensure that they would finish the repair work, and not a penny of it would be paid until all the defects had been fixed.

It turns out that during the five years since we transferred the money to Herr Zorn's trustee account, the insolvency administrator had never received any account statements from Herr Zorn, despite requesting these several times.

When we requested that the money be returned to us, Herr Zorn began a campaign of delays, excuses, and absurd legal arguments as to why we had no right to the outstanding sum.

Not providing an account statement of a trustee account is a criminal act in Germany. Using money on a trustee account for anything outside the trustee agreement is also a criminal act.

A lawyer convicted of such an act would be disbarred, and liable to to receive a criminal sentence.

After almost six months of threats, Herr Zorn promised to pay us the outstanding sum. Two months later he finally transferred 20,000 euros to our bank account, a little more than half of what he owed us, without taking into account all the legal fees his behaviour had already incurred.

Now, almost a year after that first payment, Herr Zorn still refuses to pay the remainder. We have filed a complaint to his bar association, and submitted criminal charges against him. It remains to be seen if we will ever get our money back.

Nobody I told this story to could quite believe it. Oddly enough a Germantrustee account has no insurance beyond the word of the lawyer who is looking after it. There is no outside body like the bar association, or the government, which will step in and guarantee it. This is probably not the first time an event like this this has happened.

The actions of a single lawyer have seriously undermined my own trust in such guarantees. After our experiences with the banks, and the bureaucracy, yet another pillar of society has crumbled before my eyes.

Epilogue

Writing a story can bring a degree of closure to a traumatic event. Although our building still bears the scars of one company's deplorable and desperate acts, the building still stands – shining despite it all.

The battle scars bear witness to our struggle. As my brother in law says “Nobody in a bar picks a fight with a guy with a scarred face.”

No one messes with us anymore!

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