A Mayo businessman faces a legal bill of up to €200,000 in a dispute over a builder's account for just under €17,000.

The 12-year saga was finally settled in 1998 after a 15-day arbitration, two High Court hearings and a Supreme Court appeal.

Internet entrepreneur Stoffel Vogelaar has already paid €56,200 to two barristers and €39,000 to his solicitor.

The arbitrator was paid €20,400 and expert witnesses received €22,100. Total fees paid to date amount to €138,000.

When builder Danny Callaghan of Mulranny, Co Mayo, began building the house at Liscarney, Westport, in March 1991, Vogelaar asked him to include several extras. "We were given verbal estimates for these but, although we kept asking, we never got anything in writing," he said.

In November 1991, Vogelaar paid a £17,000 bill for extras. Three months later, a second bill arrived for over £62,000. Vogelaar offered £20,000 in full settlement but, when Callaghan rejected the offer, the parties agreed to go to arbitration.

They chose as arbitrator Padraig Murray, a former president of the Royal Institute of Architects in Ireland (RIAI).

Callaghan claimed that Vogelaar and his wife Ann owed him £119,335, while the Vogelaars initially counter-claimed that the builder owed them £32,981 because of faults in the house. After six days of the hearing, they amended their claim to match Callaghan's.

Murray took 15 days to hear submissions, "an extremely protracted arbitration, out of all proportion to the sums involved," according to the Supreme Court. The Vogelaars received his decision in May 1995 after paying half his £28,935 fee.

Murray ruled that the Vogelaars owed Callaghan £13,270 for extras. Since this was less than the £20,000 they had already offered in settlement, the builder should have been ordered to pay the costs of the arbitration, but Murray ordered the couple to pay both sides' costs.

The Vogelaars asked the High Court to overturn the decision and, in April 1996, Mr Justice Henry Barron found in their favour. He ruled: "To allow the award to stand with the direction as to costs would be to indicate a severe injustice." He directed the arbitrator to make "such award as he considers to be proper, having regard to that factor".

According to the Supreme Court, the arbitrator then embarked on a further "lengthy and really quite unnecessary hearing". In March 1997, Murray told the parties that they could collect the amended award from his office on payment of an additional fee of £1,597.

"He had already been paid for more than 41 days of his time at £614 per day including Vat," said Vogelaar. "No further fee should be payable for correcting an award which the High Court called `fundamentally flawed'."

In the revised award, Murray said the couple had been responsible for extending the hearing because they changed the amount of their counter-claim. He ordered the Vogelaars to pay nine-fifteenths of the builder's costs.

The Vogelaars went back to the High Court and, in July 1997, Mr Justice Philip O'Sullivan set aside Murray's revised award. The judge made Callaghan responsible for all the costs to date, except for the arbitrator's fee, which both sides had to share.

Callaghan appealed to the Supreme Court but, in July 1998, Mr Justice Ronan Keane rejected the appeal. "As lawyers would understand it, the builder had lost the case because, if he had accepted the offer as he should have done, there would have been no need for any arbitration at all," said Keane.

He added that the arbitrator should have followed "the clear and unequivocal finding of the High Court", but had created a further problem with his second award because he had not properly understood the High Court ruling.

"It cannot be consistent with justice that [Vogelaar] should end up paying a significant part of the other party's costs of the arbitration which effectively wipes out -- and more than wipes out -- the limited order for costs in his favour," said Keane.

Callaghan was made responsible for 6/15 of the main arbitration costs and the entire costs of the second arbitration hearing, as well as the costs of the first High Court hearing. Costs of the second High Court hearing and the Supreme Court appeal have yet to be decided.

Vogelaar said: "I have finally been offered £72,500 by Callaghan as full settlement for my award of about £100,000 for part of my costs, plus interest. However, I am holding out for the complete amount, as I feel that the time for compromise is now long past."

Total costs for what the Supreme Court called "a long and protracted saga" could be up to €200,000. The builder has paid part of the costs, which are being held by Vogelaar's solicitor, former Fianna Fáil TD Seamus Hughes who is state solicitor for Mayo. The Vogelaars are now seeking an order for the sale of ten acres of land beside Mulranny golf course, on which Callaghan has two houses.

"The case reveals serious problems with arbitration in Ireland," said Vogelaar. "In particular, it shows that arbitrators without a legal background might not have the knowledge necessary to do their job properly."

Seamus Hughes said: "Mr Vogelaar has paid substantial sums as a payment on account by this firm for a protracted arbitration, two High Court cases and a Supreme Court appeal. To date, no fees have been charged in respect of the Circuit Court order for sale case.

"Mr Callaghan has paid on account €63,500, which is retained in client account earning interest pending the determination of the present Circuit Court proceedings.

"There are substantial costs outstanding to this firm in respect of the High Court action determined by Mr Justice Barron and also in respect of the Supreme Court appeal and for which detailed bills of costs drawn by the firm of Connolly Lowe have been furnished to Mr Vogelaar for his consideration and payment."

Calls to Danny Callaghan were unanswered. Padraig Murray did not return calls.