When the Defective Premises Act may help...and when it may not

In the recent case of Vainker & Anor v Marbank Construction Ltd & Ors [2024] EWHC 667 (TCC) the Technology and Construction Court (TCC) highlighted the powerful and potentially helpful action of the Defective Premises Act 1972 (DPA) for claims involving residential dwellings in certain circumstances, as expanded by the Building Safety Act 2022 (BSA).

The court also considered other interesting points of note in relation to claims for defective workmanship and professional negligence.

Background

The factual matrix of the case is complex and long-winded, but to summarise some of the key facts:

• The case concerned the construction of a residential property which was owned by the claimants, Mr and Mrs Vainker.
• The property was constructed by the first defendant, Marbank Construction Ltd (Marbank) which was engaged by Mr and Mrs Vainker under a JCT Standard Building Contract (2011) dated 26 March 2013 and signed under seal (thereby attracting a 12-year liability period).
• The property was designed by the third defendant, SCd Architects Ltd (SCd) which did not have a signed contract in place with Mr and Mrs Vainker for its services. However, the court held that on the facts, a simple contract was formed on the basis of the RIBA standard terms in October 2011 (attracting a 6-year liability period).
• The works on the property began in 2013 and practical completion was certified in May 2014.
• During the build, complaints were made about the state of the brickwork and water ingress, and these complaints (together with an extensive snagging list) continued post-practical completion.
• Proceedings commenced in May 2020. Mr and Mrs Vainker brought claims against the defendants in respect of defective workmanship and professional negligence by way of claims against both parties for breach of contract, tort and breach of section 1 of the DPA.

Issues

Limitation

As noted above the liability periods for Markbank and SCd were different, in light of the different contracts in place between each of them and Mr and Mrs Vainker. The result was that contractual and tortious claims against SCd were out of time, therefore much of the case focused on bringing a claim against SCd under the DPA.

Proportionality

The claim involved consideration of the proportionality of the proposal to replace the defective (and potentially dangerous) balustrades, as opposed to the much cheaper option of installing a handrail.

Net contribution

SCd sought to rely on a net contribution clause included in the RIBA terms, in relation to its liability under the DPA.

The DPA

Section 1(1) of the DPA imposes a duty on those taking on work in relation to a new dwelling or conversion “to see that the work which he takes on is done in a workmanlike or, as the case may be, professional manner, with proper materials and so that as regards that work the dwelling will be fit for habitation when completed”.

So, in order to bring a successful claim under the DPA, two particular key points are that the dwelling is not just defective, but is unfit for habitation and the time at which this is relevant is the time of completion. This goes further than a claim for breach of contract or professional negligence. But the DPA has an extended time period for claims (as amended by the BSA), being 15 years for claims that accrued after 28 June 2022 or 30 years retrospectively for claims that accrued before 28 June 2022.

This extended time period of limitation meant that while claims against SCd for breach of contract and/or tort were out of time, a successful claim under the DPA could still be in time.

Jefford J highlighted a number of relevant aspects of previous authorities dealing with defects under the DPA as relevant to this scenario, namely:

1. In considering whether the property was, at the time of completion, fit for habitation, it is relevant to take into account that it was intended to be not only a new build, but a modern house in design.
2. It is unlikely that a defect that is only aesthetic or inconvenience would render a dwelling unfit for habitation.
3. There may be a breach of the duty in respect of a defect which means that the condition of the dwelling is likely to deteriorate over time and render the dwelling unfit for habitation when it does so. In that case the dwelling can be said to be unfit for habitation at the time of completion.
4. It is appropriate to consider the aggregate effect of defects. However, minor or aesthetic defects which do not contribute and are not capable of contributing to, unfitness for habitation cannot be relevant in this consideration.

Key points within the court’s judgment

The judgment in this case is long and is fact dependant. However, a number of key points were considered which are of more general interest to those dealing with defects claims under the DPA, taking the above aspects into consideration. For example:

• The defects must render the property unfit for habitation – In circumstances where contractual and tortious claims against SCd were time-barred, parts of the claim against SCd under the DPA also failed where the failures did not render the house unfit for habitation at the time of completion. Also, the fact that the brickwork was not aesthetically pleasing did not amount to a breach of the DPA, but using incorrect glass for balustrades without a handrail did breach the DPA, as it rendered the house unsafe/unfit for habitation.
• The measure of damages – SCd was found liable for failing to notice the issues with the staircase balustrade installed by Marbank. This rendered the house unfit for habitation because it posed a health and safety risk. Further the court rejected the suggestions that replacing the balustrades was disproportionate because installing a handrail would alleviate the health and safety issue and render the house fit for habitation and held that "the recoverable damage should…be the cost of making the dwelling fit for habitation in the way it would have been had the services been supplied in a professional manner". This took into account the modern design of the house.
• Net contribution – SCd relied upon a net contribution clause in the RIBA contract terms and argued that its responsibility for using the incorrect glass should be no more than 20%. However, the court noted that DPA Section 6(3) states that: "Any term of an agreement which purports to exclude or restrict, or has the effect of excluding or restricting, the operation of any of the provisions of this Act, or any liability arising by virtue of any such provision, shall be void." (emphasis added). Therefore, SCd was unable to rely on this clause in relation to its liability under the DPA.
• Failure to mitigate – the court rejected the defendants’ criticism of the claimant that once Mrs Vainker was offered remedial solutions (in however general terms) she was either obliged to accept one of those specific solutions or the burden passed to her to ascertain whether they were appropriate. The court found that the fact that Mrs Vainker wanted "the full picture" before making a decision was not a failure to mitigate.

The court also commented more generally on the way that the case was pleaded and noted that enabling SCd to identify what or was not part of the pleaded case was not an academic exercise. With allegations of professional negligence, SCd was entitled to know what the alleged breaches were and respond to those specific breaches, rather than attempt to hit a moving target.

The judgment further dealt with Marbank’s counterclaim for alleged underpayment for the works, which involved consideration of the final certificate regime under the JCT contract and the basis on which Markbank could claim for variations that were not formally confirmed in a contract administrator’s instructions. Here the court held that in each instance where there was no formal contract administrator’s instruction, consideration needed to be given as to whether there was sufficient written instruction generally in relation to that variation. Where Marbank could not adduce any evidence of a written instruction, then there was no basis for a claim under the contract.

Key takeaways

1. The DPA may provide claimants with an option to pursue claims for defective workmanship and/or professional negligence against contractors or consultants which are otherwise out of time for contractual or tortious claims, in relation to dwellings where it can be shown that the consequential defects rendered the dwelling unfit for habitation at the time of completion.
2. The correct measure of damages may not simply be the cost of making the dwelling fit for habitation, but will depend on other factors.
3. Net contribution clauses cannot be relied upon to limit liability under the DPA.
4. The contractor was unable to claim for variations under the JCT Standard Building Contract 2011 where it was unable to adduce any evidence of a written instruction.

In summary, claimants should make claims for defects in a timely manner, but options may be available if earlier limitation dates are missed under the DPA for dwellings which are unfit for habitation at the time of completion.