I awarded a design-and-build contract to a local builder for an extension to my house. I stated expressly that the foundations had to be at least 2 m deep. The contractor agreed this in the contract, but limited liability for any defects to do with the foundations to £10,000. The foundations were put in at 1 m. Since the extension has been finished, it has suffered settlement problems, causing cracks to appear. Worse still, water has leaked in, damaging my new kitchen furniture. Can I claim from the builder for the underpinning and the damage?
We are assuming that you have contracted on the basis of JCT 98 with Contractor's Design.
This provides that the contractor must carry out the works in accordance with the terms of the contract, which includes the depth of foundation specified. If there is any defect in the design, the contractor will have the same liability as an architect or designer would have.
If the works do not comply with the contract, this is a breach – and your remedy is to seek damages from the contractor. The general principle applying to recovery of damages is that you can claim those damages flowing from the contractor's breach that it would have been reasonably foreseeable to expect.
It is reasonably foreseeable that installing foundations less than the specified depth could cause damage to the extension and its contents.
Assuming that you have already paid the contractor in full, you will have to make a claim for the amount required to remedy the defects and damage to the kitchen furniture. As you have agreed a cap of £10,000 on the contractor's liability for defects relating to the foundations, this would be the maximum you could recover.
I work for a subcontractor and have recently received a notice from a main contractor who has deducted £27,000 from my payment. The basis of their notice was that I delayed the project for five weeks. They never issued a programme for the works or a copy of the main contract programme. They did agree time periods for elements of the works but did not link these in any critical analysis.
Can they deduct money on a global basis with no delay notices being issued?
Clause 5.1.1 of the DOM/2 subcontract states that the subcontractor shall comply with all the provisions of the main contract. In addition, article 1.1 states that the subcontractor shall be deemed to have notice of all the provisions of the main contract. It is therefore likely that any programme for the works that is incorporated as a term of the main contract will be binding on the subcontractor.
We assume the present situation does not fall under clause 12 of the subcontract and that your company has not failed to complete the works on time as prescribed by the subcontract. If our assumption is correct, clause 13.4 is relevant.
Clause 13.4 provides that if the regular progress of the works is materially affected by the subcontractor, the agreed amount of any expense may be deducted from monies due – provided that the contractor's application is made as soon as it has become apparent that the regular progress of the works is likely to be affected.
This clause is subject to clause 21.3, which provides that the contractor must give notice of any deductions not later than five days before the final date for payment to the subcontractor.
If the contractor's notice was late, it may be in breach of clause 21.3 and/or clause 13.4. Not providing you with sufficient details and agreeing the amount of the deduction may also put the contractor in breach. If the contractor is in breach, it is unlikely that any damages will be suffered by the subcontractor.
We suggest you request the details of the contractor's alleged loss. You may then be able to ascertain whether the deduction is reasonable. If it is not, and the contractor's notice has been given late without reason, it may be worth adjudicating under clause 38A of the subcontract in an attempt to have the £27,000 paid to your company.
The price of neglectThree months after I bought my house, I was informed by my neighbour that there was a crack in our party wall, which she claimed was caused by the failure of the previous owner – my vendor – to maintain the property. I am now waiting for a report from a surveyor. But my question is, how would the liability for any remedial work be divided? Would the previous owner be at fault, would my surveyor be to blame for not informing me of the crack, or am I stuck with the bill? And if the last is true, what are my chances of getting my insurance company to pay?
Much will depend on the report you receive from your party wall surveyor. They will be able to advise you on liability, depending on the nature of the problem. In answer to your points, it is unlikely that you will have a claim against the previous owner. You may well be able to split the cost with the neighbour on the other side of the party wall. You may have a claim against the surveyor who carried out a survey of the house before you purchased. You will have to show that they did not carry out the survey to a standard expected of a reasonably competent surveyor. It is worth looking at your buildings insurance policy, although this is unlikely to cover the cost of repairing damage caused by neglect or failure to maintain over a period of years.