In Vainker & Anor v Marbank Construction Ltd & Ors [2024], the Technology and Construction Court (TCC) found the defendants liable under the Defective Premises Act 1972 (DPA) in respect of certain defects at a residential property.
In reaching her decision, Mrs Justice Jefford DBE made a number of observations about factors that will be relevant when seeking to establish a breach of the duty in section 1 of the DPA. She also provided welcome judicial guidance on the question: can a net contribution clause be relied upon in respect of liability under the DPA?
Background facts
The claimants, Mr. and Mrs Vainker, had engaged SCd (the architect) to design and Marbank (the contractor) to construct a residential property in Twickenham. The claimants commenced proceedings in May 2020, alleging multiple defects in the property.
The parties agreed that any claims against the architect were time-barred both in contract and in tort. As a result, the focus of the claimants' claims against the architect was on establishing liability under the DPA.
Reminder: what is the duty owed under section 1 of the Defective Premises Act 1972?
Section 1(1) of the DPA imposes a duty on those "taking on work for or in connection with the provision of a dwelling" to see that the work is done in a workmanlike or professional manner, with proper materials, and "so that the dwelling will be fit for habitation when completed".
Before enactment of the Building Safety Act (BSA), the limitation period in which a potential claimant could bring a claim under section 1 of the DPA was six years from completion of a dwelling. The BSA extended this to a 30-year limitation period for dwellings completed before 28 June 2022, or 15 years for dwellings completed after 28 June 2022.
As we noted in our previous insight, in one of the most notable cases of 2023, URS v BDW, the Court of Appeal held that it was open to parties in ongoing litigation to seek amendments and potentially revive previously time-barred defects claims under the DPA. The Supreme Court has now granted URS permission to appeal (an appeal which is expected to be heard by a panel of seven justices - reflecting its importance and potential wide-ranging impact – in December 2024).
TCC decision in Vainker
The TCC decision contains a lengthy analysis of the facts and the expert evidence in respect of each of the alleged defects. The two largest defects by value, and for which the defendants were found liable, were:
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The brickwork defects
The Court found that there had been extensive brickwork defects caused by both the architect's failure to exercise reasonable care and skill as required under the contract, and the contractor's failure to carry out the works in a proper and workmanlike manner in compliance with the contract documents.
The contractual claim against the contractor in respect of the brickwork defects was not time-barred and the contractor was liable to pay damages to the claimants for breach of contract.
However, as noted above the claim against the architect was time-barred in both contract and tort. The key issue was therefore whether, as a result of any failure by the architect to carry out its work in a professional manner, the dwelling was "unfit for habitation at the time of completion".
The Court concluded that the defects were aesthetic and did not render the house unfit for habitation at the time of completion, noting that it is "unlikely that a defect that is only aesthetic or inconvenient would render a dwelling unfit for habitation". Consequently, there was no breach by the architect of its duty under s. 1 of the DPA.
Citing Rendlesham Estates plc v Barr Ltd., the judge also noted that:
- "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."
- although it is "appropriate to consider the aggregate effect of defects", minor or aesthetic defects which "do not contribute, and are not capable of contributing to, unfitness for habitation" should not be taken into consideration and "damages cannot be recovered in respect of such a defect merely because other defects render the dwelling unfit for habitation."
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The glass defects
Several years after completion of the works, two glass panels shattered and it was later discovered that the contractor had installed the incorrect type of glass and was responsible for further defects to the balustrade. The Court found that the contractor:
- had clearly failed to carry out the works as specified and was liable for damages for breach of contract; and
- would "similarly be liable under section 1 of the DPA as the risk posed by each of these defects rendered the House unfit for habitation".
The architect was liable for a failure in inspection, since by exercising reasonable care and skill, it ought to have observed the use of the incorrect glass at some point either during construction or on practical completion.
In this instance the architects' failure to notice that the incorrect type of glass had been installed rendered the property unfit for habitation because of the inherent risk posed to health and safety. Accordingly, the architect was found to have breached its duty under section 1 of the DPA.
Regarding the recoverable damages, the judge held that these 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.
The architect submitted, however, that it was entitled to rely on a net contribution clause in the contract terms agreed between itself and the claimants, and that its responsibility for the wrong glass should be no more than 20%.
What is a net contribution clause?
The example seen in this case – where both the contractor made an error and installed the wrong glass, and the architect failed to notice, contrary to its duties of inspection, that the wrong glass had been installed – helpfully illustrates how a net contribution clause operates. In such a scenario, the principle of joint and several liability allows the innocent party to recover 100% of its losses from any one of the parties that is responsible for causing the loss (even if others are also responsible for the loss).
A net contribution clause creates an exception to the principle of joint and several liability. It limits the damages payable by a defaulting party to a "fair and reasonable" or "just and equitable" proportion of the total loss.
In this case, the contract between the claimants and the architect incorporated the standard terms of RIBA's Architect's Appointment 2010. These contain (at clause 7.3) a net contribution clause which provides that:
“… the liability of the Architect shall not exceed such sum as it is just and equitable for the Architect to pay having regard to the extent of the Architect’s responsibility for the loss and/or damage in question…"
The architect claimed that it could rely on this clause in respect not only of liability in contract, but also in respect of liability in tort and under the DPA.
Can a net contribution clause exclude or restrict liability under the DPA?
The claimants disagreed, and submitted that the architect could not rely upon Clause 7.3 to restrict its liability under the DPA. They argued this on the basis of section 6(3) of the DPA which provides that:
- “(3) 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.”
The Court accepted the claimants' submission, and found that:
- in the absence of the net contribution clause in Clause 7.3, the architect's liability under the DPA would be for the whole of the recoverable damages;
- clause 7.3 seeks to limit that liability to a lesser amount – and that is a restriction on the architect's liability arising out of the DPA;
- accordingly, the net contribution clause "falls foul of section 6(3) and cannot be relied upon by [the architect] in respect of liability under the DPA".
Key takeaways
This is one of only a handful of decisions considering claims under the Defective Premises Act 1972 (DPA) since enactment of the Building Safety Act 2022 (BSA) in April 2022. As noted in our previous insights, the extension of the limitation period under the DPA from six to 30 years (as well as the widening of its scope) is one of the most well-documented changes effected by the BSA.
Whilst the extended scope and limitation periods of the DPA were not in issue in this case and were not therefore considered by the Court, the judgment is a helpful reminder of what needs to be made out for a claim under section 1 of the DPA to succeed.
Those handling defects claims, particularly on projects where limitation periods under contract have already expired, but where exposure to liability under the DPA has now re-appeared as a result of the extended limitation period, may wish to take note.
In particular, following this decision, professionals facing historical defects claims should be aware that they are unlikely to be able to rely on net contribution clauses in respect of liability under the DPA.
If you have any questions about the issues raised in this article, please get in touch with Sue Ryan or Sean Garbutt.