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When the terms of a house building contract exclude any liability for losses incurred by the client on account of defective works, the client has no redress under a general duty of care.
This was the decision of the Court of Appeal in a recent case concerning the construction of a property in Prestbury in Cheshire. The property was built by PE Jones (Contractors) Ltd. for its client, Mr James Robinson. On completion of the works, it was sold to him.
During the construction of the property, Mr Robinson decided that he would like an additional gas fire flue built into a second room (the original contract included only one gas fire flue). This was agreed under the contract and the contractors constructed a second chimney flue and Mr Robinson arranged directly with British Gas for the supply and installation of a second fire. The work progressed to completion in April 1992.
It wasn’t until September 2004 that a British Gas service engineer discovered that the second gas flue was defective, which resulted in both gas fires being disconnected for safety reasons. A subsequent surveyor’s report indicated that the flues had not been constructed in accordance with good building practice nor with the Building Regulations in force at the time of construction. The required remedial work was estimated to cost around £35,000.
When attempts to resolve Mr Robinson’s claim for a refund of the cost of the remedial work failed, he issued a claim in the Manchester County Court. The claim was later transferred to the Technology and Construction Court, where it was rejected on the grounds that it was out of time under the contract.
On appeal, it was argued that the trial judge was wrong in rejecting the claim and that the builder owed a duty of care to its client resulting in a liability for the economic loss suffered by the house owner. The appeal, along with the original claim, sought to rely on the Unfair Contract Terms Act 1977. Although the building contract included terms excluding liability after a specified period of time, it was argued that such terms could not exclude a general duty of care.
The Court of Appeal rejected Mr Robinson’s arguments, however, and dismissed his claim for damages against the builder. The contract terms agreed between them were such that he could not invoke the law of tort in order to impose liabilities upon the builder which were inconsistent with the contract.
Building contracts are normally governed by the National House-Building Council’s (NHBC) standard forms of agreement,” says Jeremy Walker, DFA Law’s Head of Litigation. “It is vital that expert advice is sought on the implications of any contract, including one that uses the standard NHBC terms, prior to entering into any building agreement.”