Building works – Breach of contract – Liability – First defendant council arranging for building works to claimants’ property – Claimants alleging second defendant builders not carrying out work to proper standard – Claimants issuing proceedings against defendants for breach of contract – First defendants seeking indemnity from second defendant under CPR part 20 – Whether first defendants being liable – Whether second defendant breaching contract with first defendants – Whether monies allegedly retained by second defendant returnable to first defendants – Claim allowed in part
The claimants owned a property in Aberfan, comprising two ground floor lock-up shops and a first floor flat. The first defendant council was the local housing authority for the area. The first defendants arranged for building works to be carried out to the claimants’ property pursuant to a group repair scheme. The works were carried out by the second defendant building contractor. The claimants complained that the works had been done badly and that they had thereby suffered loss and damage. The claimants brought an action for damages against the first defendants for alleged breaches of contract.
At the hearing of a preliminary issue, the court held that there had been a relevant contract between the parties under which the first defendants had been obliged to use reasonable skill and care in the provision of the service of arranging for works to be carried out to the property and had been further obliged to provide that service within a reasonable period of time: [2012] EWHC 3446 (Ch); [2012] PLSCS 265.
Following judgment on the preliminary issue, the claimants amended their particulars of claim. They continued to refer to the defects which they said existed in the property and contended that the existence of those defects was the result of the first defendants’ failure to use reasonable skill and care in arranging for the relevant work to be carried out. The first defendants denied any such breach and counterclaimed for the sum of £5,604.38, which was said to be due from the claimants under their contract with the second defendant builder. In addition, the first defendants asserted, by way of a CPR, part 20 claim, that any liability which the first defendants were held to have to the claimants was the result of a breach by the second defendant of its contract with the first defendant.
Held: The claim was allowed in part.
(1) The scheme consent form under which the works had been carried out referred to works being done to put the property into reasonable repair. When the court was asked to apply the ordinary meaning of a phrase like “reasonable repair” to a particular property, it was right to take into account the age, condition and locality of that property. The use of the word “reasonable” in the phrase “reasonable repair” introduced a matter of degree or judgment as to what would suffice as “reasonable” repair. A building would be in reasonable repair even where there were items that could be made better than they currently were. An obligation to repair did not require that the premises be put into perfect or pristine condition: Proudfoot v Hart (1890) 25 QBD 42 applied. Woodfall on Landlord and Tenant, paragraphs 13.031 and 13.044 referred to.
(2) It had not been envisaged that the first defendants would do the work themselves but that they would enter into a building contract with a contractor to do the work. It must also have been envisaged that the first defendants would have power to inspect and approve the works done and to indicate if they were not satisfied by the standard of those works. It was sometimes the case that an employer with a claim for bad workmanship against a contractor made the same claim automatically against the inspecting officer on the assumption that, if there was a defect, the inspector had to have been negligent or in breach of contract for missing the defect during construction. In the case of an architect’s duty to inspect ongoing building work, that had been held to be a misconceived approach. In the present case which concerned a duty to use skill and care in arranging building work, that general approach was applicable. A local authority did not guarantee that the way it went about arranging the building works would reveal or prevent all defective work. There was no assumption that, if there was a defect, the local authority must have been negligent or in breach of contract in relation to that matter: McGlinn v Waltham Contractors Ltd [2007] EWHC 149 (TCC); [2008] Bus LR 233 followed.
On the evidence in the present case, the first defendants should have arranged for the work to be done better or should have required additional work to be done in nine out of the 12 defects identified and the claimant were entitled to recover as damages the reasonable costs of remedying those defects. The first defendants were entitled to be paid the sum in the counterclaim under their agreement with the claimants, although that sum could be set off against the damages awarded to the claimants.
(3) Based on the court’s findings of fact, the first defendants had established that each of the items specified was a breach of the building contract between the first and second defendants. All but one of those items were snagging items within the building contract. The second defendant had the benefit of a clause allowing it to carry out remedial work in respect of the items complained of. It would usually be cheaper for a builder to deal with snagging items itself as compared with the employer bringing in another contractor with the builder paying the charges made by the other contractor. The sums payable by the second defendant to the first defendants in relation to those items were to be assessed by reference to the cost to the second defendant of returning to remedy those matters: Pearce & High Ltd v Baxter (1999) 66 Con LR 110 applied.
(4) The retention issue had to be considered at a later hearing, since the evidence before the court did not allow a finding to be made at this point in the proceedings.
David Hughes (instructed by Hughes James Solicitors, of Cardiff) appeared for the claimants; Michael Brace (instructed by Silver Shemmings LLP) appeared for the first defendants; Andrew Kearney (instructed by Morgan Cole LLP) appeared for the Part 20 second defendant.
Eileen O’Grady, barrister
