A little lesson in liability

I suppose builder pearce and high got fed up waiting for its £3919 and eventually issued a county court summons. The firm had finished the £35 000 extension to Mr and Mrs Baxter’s home near Oxford. The architect had issued a certificate of practical completion in November 1995 and certified the dribble of money. But the Baxters hung on to their cash. Meanwhile, the defects liability period was ticking away. It was a six-month period under the JCT Minor Works Contract. By 13 May 1996, the time was up.

Come October 1996, the Baxters fired a shot in reply to the builder’s summons. A crop of defects came out of the woodwork. They were listed in the defence and counterclaim. It never ceases to amaze me how many defects show up once the builder has a tantrum about money. Issue a summons and out trots all the faulty work. That doesn’t mean the work was previously tickety-boo; but if the builder hadn’t gone to law, the customer might have happily accepted the odds and sods that were below par. Anyway, our builder and his customer were digging in. I bet they didn’t expect to go all the way to the Court of Appeal. But they did.

The reason is that the builder had a snappy argument about the defects. He argued in front of the first judge that the Baxters left their complaint too late. He said that once the defects liability period expired, the customer could not complain.

The JCT document says: “Any defects, excessive shrinkages or other faults which appear within six months of the date of practical completion, and are due to materials or workmanship not in accordance with the contract or to frost occurring before practical completion, shall be made good by the contractor entirely at his own cost.” The judge agreed. The defects liability period ended in May, but the Baxters did not complain until October. So he gave judgment for Pearce & High and dismissed the Baxter broadside. He said: “It is a condition for the right to recover damages that the building owner has notified the building contractor of patent defects within the six months.” Not one bit satisfied with that result, the Baxters invested in the three-judge Court of Appeal. Lord Justice Evans gave the lead decision.

If the first court was right, this clause in the JCT Minor Works had a particular potency. All the more so because if there were a defect in the building works it would be a breach of contract, but the customer would lose the right to repairs for all time. That is serious. The Court of Appeal said “such a right cannot be excluded except by clear express words or by a clear and strong implication from the express words used [in the contract]”.

In a 1990 case called William Tomkinson vs St Michael’s Church, the judge said there was nothing in the wording of that same clause to suggest that it is intended to exclude an employer’s ordinary right to damages for breach of contract, including the right to recover the cost of remedying defective workmanship. The Court of Appeal agreed.

Is the firm liable once the defect period has expired? Yes. But clients can engage someone else and recover the expense

It explains that the six-month defect liability period is all about the right of the contractor to re-enter the property to put the defects right at his own expense. The employer must reasonably let him back in again. So, the defects liability period is there for the benefit of the contractor.

So what should an employer do? If defects show up in the defects period, he must invite the builder to come back and do the repair work, at his own expense. The Baxters boobed. They knew about the defects but ran out of time. This means that when they employ another builder to put things right, they can only claim what it would have cost Pearce & High to come back and do the work.

And is Pearce & High still liable once the defects period has expired? Yes. If something creeps out of the woodwork in month seven or later, which is confirmed as improper work or materials, the original builder is in breach of contract, but has no right to come back and be let in. The Baxters could engage someone else and recover the full expense.

So it seems that the longer the defects period is under minor works, the happier the builder? Not quite. It means waiting longer for his final lump of retention. Stings and tails come to mind.