You build your multimillion-pound dream home, but there are some defects. So you leave it empty for five years, then tear it down and sue everyone in sight, apart from the builder, which has gone bust. Do you win?
When Anita Roddick wanted to open a second Body Shop, the bank turned her down. Acquaintance Ian McGlinn stepped in with the needed £4,000. When he stepped out, his shares sold for more than £100m. Now what do you do with all that money? St Aubin in Jersey took his fancy. He had Maison D’Or designed and built as his luxury pad. But just as completion neared in January 2002, one or two snags were spotted. The House of Gold sat empty and unused until 2007, when it was demolished. It would take £3.7m to rebuild!
A seven-week trial has just finished; Mr McGlinn sued his contractor, his architect, his structural engineer and his quantity surveyor cum project manager. Heaven only knows what the legal costs were for five firms of solicitors and seven barristers for seven weeks.
So, it’s all about defects. Tricky for the tribunal, mind you: the house was now rubble. True, there were photographs, videos, and evidence of inspections. But it wasn’t a case of cracks, damage and leaks; it was more a general level of dissatisfaction from Mr McGlinn. “In general terms,” said the judge “it seems clear that this was – if nothing else – a generally sound and secure structure.” And yet by now it was flattened, and the builder was in administration. He had long since left the project because of a dispute about unpaid sums. So, said the judge, for years the house stood empty, unheated and unventilated.
The first inquiry into defects read like a builder’s snagging list. But it grew into a much more extensive defects schedule; most of it related to bad workmanship allegations against the builder. Then the works were “opened up” for inspection, including the stripping of the roof; this involved the removal of a mere 10,000 slates. The judge thought that was exceptional. It seems £687,000 was spent in order to decide if £870,000 should be spent on remedial works. The upshot was that Mr McGlinn decided to demolish Maison D’Or. That was a decision shrouded in mystery, said the judge.
The upshot was that Mr McGlinn decided to demolish Maison D’Or. It was a decision shrouded in mystery, said the judge
All that apart, the position of the employer is ordinarily to require the builder to put right or pay for the putting right of the defective works. But when the builder is no longer in business, the employer tends to ask why his architect didn’t do anything.
The architect owes a duty of care to the employer. To that extent, this particular case is ever so useful for the architect’s obligations about “inspection”. In short, “tailored inspection” is the duty. But the architect’s duty is not a guarantee that he will reveal or prevent defective work. Here I recommend every architect to read this 163-page judgment, and in particular the 57 items of defect. Of these, 22 should have been picked up by the architect.
Next scrutinised were the duties of the engineer. The answer keeps coming back to how reasonable it was to spot the defect and bring it to the attention of the builder. It is as though the employer lost a chance to get the true culprit to put right the work. So the cause of the loss once the builder goes out of business is the professional adviser.
Next came the QS/project manager. The first problem is what is meant by “project manager”? Nothing was set in writing about this role. Confusing as well to have an architect and an engineer each of whom inject project management skills as an ordinary part of their work. Anyway the attempts to blame the QS/project manager failed, but watch out all you so called project managers – fingers get pointed when the builder culprit can’t be found anymore.
So, what of compensation to Mr McGlinn? What is the measure of loss? The architect ought to have detected and brought to the builder’s attention 22 items. The court said the compensation to Mr McGlinn was the cost of repair. The fact that he had chosen to demolish was not claimable. All that comes to £439,000. As against the engineer, it is £135,000. Had the builder played a part in this trial he “would almost certainly have been liable for many more individual items than the architect and engineer put together”. As for who pays the huge legal costs in all this litigation remains to be seen … there is another trial deciding all that right now.
Tony Bingham is a barrister and arbitrator. Read his regular blog at www.building.co.uk/blogs