Legal Costs in Construction Claims

The Need to Keep Costs Proportionate in Construction Claims

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What proportion of the claim value should be spent on recovery?

We’ve taken on a lot of construction claims over the last three weeks and obviously our role is to provide claimants with the evidence that can be used to pursue a claim against their builder. Normally that entails creating a detailed cost and defect schedule since the civil courts like the defendant to be made aware of the exact nature and value of your claim. However, during initial discussions  with our clients we would always advise them to keep costs ‘proportionate’ since you are unlikely to recover costs that the court sees as disproportionate, but what exactly does ‘proportionate’ mean?

Before we get to that point we would make a simple but important observation… A number of years back I required a solicitor for a non-construction related matter and was interested to note that before they accepted me as a client they had me credit checked to ensure that they managed any risk with regard to potential non-payment of my invoice. Makes perfect sense doesn’t it? Similarly we would advise that the first course of action for anyone considering a claim against  their construction company is that you have them credit checked. I recently advised a client of this and we found out very quickly that the potential defendant  was potless. Without this simple check, many thousands of pounds may have been spent pursuing a claim that in all likelihood was never going to be recovered. Isn’t it ironic that a number of law firms have potential clients credit checked but fail to offer the same advice to that same client when considering potential claims against their constructor. Arming yourself with this information instantly allows you to make a more informed tactical decision as to how you pursue your claim. Moreover, once the value of the claim is fully understood and you’ve established legal liability, if you bring a claim and succeed, you can then place a charge on any unencumbered assets, until the debt is satisfied.

With regard to proportionality of costs the legal position on this is more complex than you might imagine and we sought opinion from the excellent firm of construction solicitors that we use and were provided with the following answer…

“This area of the law has changed since April 2013 when the Civil Procedure Rules (“CPR”) changed and solicitors and claimants are still finding their feet.

The new rule will is CPR 44.3(5) and reads:
“44.3(5) Costs incurred are proportionate if they bear a reasonable relationship to:
(a) the sums in issue in the proceedings;
(b) the value of any non-monetary relief in issued in the proceedings;
(c) the complexity of the litigation;
(d) any additional work generated by the conduct of the paying party; and
(e) any wider factors involved in the proceedings, such as reputation or public importance.”
Furthermore, the Overriding Objective has been amended to include reference to proportionate cost:
CPR 1.1
(1) These Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly and at proportionate cost.
(2) Dealing with a case justly and at proportionate cost includes, so far as is practicable –
(a) ensuring that the parties are on an equal footing;
(b) saving expense;
(c) dealing with the case in ways which are proportionate –
(i) to the amount of money involved;
(ii) to the importance of the case;
(iii) to the complexity of the issues; and
(iv) to the financial position of each party;
(d) ensuring that it is dealt with expeditiously and fairly;
(e) allotting to it an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases; and
(f) enforcing compliance with rules, practice directions and orders.

The new test, which effectively reversed the approach taken in Lownds, was summarized by Lord Neuberger as:
“Disproportionate costs, whether necessarily or reasonably incurred, should not be recoverable from the paying party. To put the point quite simply: necessity does not render costs proportionate.”

Presently there is little actual guidance as to how the test will operate in practice and case law will have to be developed in relation to this. However, in the cases that have offered guidance the courts have made clear that they expect parties to be sensible and compromise on small differences. If they do not they will not recover their costs of doing so. If the other party offers a compromise and it is refused, then even if the issue is won on liability you will probably end up paying their costs on the issues offered for compromise.

The only real steer I can give you is if you are paying more in costs against an item of claim than you are claiming, this is likely to be seen as disproportionate. On those items suggest a reasonable compromise on a “without prejudice save as to costs” basis and at least then you can show the court you have tried and that provides your best chance of recovery.

The new world is you can claim it but you may not get your costs. Further, if you are seen as unreasonable, you may end up wining an issue on liability, but having to pay the other side’s costs for it.   Consideration of costs must now be at the heart of deciding to engage in civil litigation. Gone are the days of “if I’m right, the other side will have to pay”. Of course those days never really did exist and a successful party would only usually recover 60 to 70% of their costs if they were successful, but things have now become more difficult and even if you win, if costs are not considered proportionate, you may recover far less or even nothing.”

As you’ll see, there is no simple answer to this question and we have entered an area of law that has not yet been fully tested. The key piece of advice that we would take from this is that you put consideration of costs at the heart of any decision to pursue civil litigation and as always, try everything reasonably possible to resolve matters outside the civil courts. Thankfully, that is precisely what happens with the majority of cases we take on.

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Ten Tips to Avoid Buying a Damp Property

Ten simple but valuable checks for potential homebuyers

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High external ground levels are a problem, but less so in cavity walled construction.

 

  1. Check external ground levels are not too high when compared to internal finished floor levels. If a physical damp proof course is installed then external finished floor levels should be a minimum of 150mm below internal finished floor Level. In older buildings, if no physical damp proof course is installed then this is not necessarily a problem, simply ensure that external finished floor levels are a minimum of 200mm below internal finished floor level.
  1. Make sure external masonry is not painted. Brickwork cannot dry out when it is coated with impermeable masonry paint. If it is painted then you should at least have the paint removed from the bottom three courses of brickwork. Similarly, you should generally avoid clear waterproofing products despite claims that they are ‘breathable.’ Cement render can cause similar problems and you should ensure that cementitious render is in sound condition and not bridging the damp proof course at lower level.

 

  1. Respect the buildings construction type. If it is an old building built with lime mortar then it should be repointed with lime mortar and not Portland cement. Understand that old buildings are meant to breathe if they are to dry out, and Portland cement prevents moisture evaporation and causes spalling of brickwork.
  1. Avoid buying any property that has an original rotten timber floor replaced with a retrofit concrete slab. Retrofit concrete slabs will often cause wall base damp by pushing moisture up the walls under hydrostatic pressure. Again, this is about understanding how the building was originally built.
  1. Measure the wall thickness at a door or window reveal, is it around 240mm or less including the plasterwork? If so then its likely to be solid walled and therefore more likely to suffer from penetrating damp or internal cold surface condensation issues. You may even discover some single skin brickwork, particularly on gable walls in very old buildings. Mortgage companies do not generally like to lend against these properties due to perceived structural and damp issues. Buying an old solid walled property does not mean you are buying a damp property but you should understand the implications.
  1. Find the incoming water main and see if it is Polyethylene pipe. An old building may still be on the lead water main and these are susceptible to leakage that may go undetected under the floor of the property for quite some time. Many of the worst damp problems we’ve encountered have been caused by leaking water mains.
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Rising Damp? Technically no, since this was caused by a leaking lead water main buried in the subfloor

  1. If the property is cavity walled, is cavity wall insulation installed? CWI can occasionally cause penetrating damp, particularly the blown fibre variety. However, when correctly specified and installed we still believe it is a worthwhile addition to most suitable properties.
  1. Check your airbricks! Timber floating floors should as a general rule of thumb have airbricks installed every 2 linear metres to ventilate the subfloor and prevent timber decay. These are a critical technical feature so don’t ignore them!
  1. Has the property been treated with retrofit chemical injection? You will know the obvious telltale signs such as a row of plastic plugs installed into the brickwork at low level but what you may not know is that this is a two-part system that includes the application of internal waterproof renovating plaster. This renovating plaster dams in the damp and often gives the appearance of a dry wall at surface when in fact the underlying wall can be saturated. These management systems are almost never required despite the volume sold, and can prevent walls from drying out so don’t kid yourself that these treatments are a good thing. They are a management solution rather than a cure and as such are destined to fail.
  1. Know that condensation damp is the biggest cause of dampness within properties. To combat this, ensure that the property is well insulated, has a fully controllable central heating system installed and has a means of controlled mechanical extraction installed in the kitchen and bathroom areas.
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How Guaranteed is My Construction Guarantee?

The Murky World of Construction Guarantees, Latent Defects & Contractual Claims
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Source: swiga.co.uk

I was prompted to write this blog after a client recently explained to me that her builder recently explained to her that in fact, he had no contractual obligation to correct her work and he was only there to prevent reputational damage.  It is fairly common for builders to make statements that their work is only guaranteed for 12 months and perhaps some of them genuinely believe this. Then on the periphery of any guarantees that are given directly by the builder there are all sorts of insurance policies and schemes that may afford the buyer further protection. The ten year NHBC build mark policy or the 25 year SWIGA guarantee for solid wall insulation systems are both examples of policies that are meant to provide the purchaser with additional peace of mind.

The SWIGA guarantee is particularly interesting and borne of the DECC’s requirement for the EWI industry to provide a 25 year guarantee before rolling out solid wall insulation to the mass market as part of Green Deal or ECO works. It is a requirement that ECO work has a 25 year guarantee. So what about homeowners who are privately funding their SWI installations? Surely they are afforded the same level of protection? Well actually no, it turns out that often they are not. A number of companies are delivering privately funded work without the benefit of the 25 year guarantee that is required for ECO funded work. Buyers may get the system suppliers 5 year guarantee on materials but are often told that the installer only guarantees work for 12 months. When it comes to solid wall insulation consumers are quite often confused by the contractual arrangements that exist between themselves, the installer, the supplier, the BBA and any other third party who may be providing the 25 year guarantee. They quite literally do not know who to turn to first when something goes wrong, particularly when they find that their installer is being unresponsive or obstructive in dealing with matters in a reasonable manner. I will focus on one case in particular because the principles could equally apply to any buyer of construction works. The buyer in this particular case bought a very expensive SWI system that failed within weeks of purchase. It was clear that the system had been poorly installed to such an extent that it would not have had BBA approval. They were then shocked to find that they did not have a SWIGA guarantee and the installer was not registered with SWIGA to install this product. Despite this fact, the installer had been heavily recommended by the system supplier. The system supplier rightly pointed out that they have no contractual relationship with the end user and that their relationship lies with the installer and even after admitting that the installation had non-standard components refused to intervene or take action with the installer for not installing a fully approved system, that in all likelihood will not now have BBA approval. If a complaint is made to SWIGA then they would generally direct the designer to carry out an investigation but in this case the installer is playing both poacher and gamekeeper and being very selective about which elements of failure are being investigated. They also refuse to answer a number of written detailed questions that have been put to them by the end user.  This can occasionally happen and perhaps potential defendants want to commit as little as possible to written record but I’m sure that the courts would see this as unreasonable behaviour.

 You should give your constructor or installer reasonable opportunity to understand the scope and nature of your claim and further opportunity to correct it and again, you may want to seek professional advice with regard to what constitutes a reasonable standard for remediation work. In this particular case, we do not feel that slapping extra base coat and topcoat over an existing silicone top coat in a system that is already exhibiting moisture blisters, is an acceptable or reasonable long term solution. Moreover, we feel sure that this ‘solution’ would not meet with BBA approval.

We are of the opinion that the installation is negligent and only complete removal and re-application of a system from scratch under heavily supervised conditions will solve this problem. In the event that the installer doesn’t agree and refuses to acknowledge the defects  then what are the options for this end user? A purchaser who now understandably wants the benefit of a 25 year year guarantee that is rolled out to the mass market.

Firstly, they have to accept that they don’t have a SWIGA guarantee and the lesson learned should be that private clients should insist on a 25 year guarantee before signing up for having solid walled insulation installed. You’ll find that there’ll be no arguments from the installer if business depends on it but I think it is a rather large loophole in the process and damaging to the industry that they would not afford the same level of protection to private buyers of these systems. We can discuss the value of different guarantees but these are expensive systems and I would recommend a 25 year guarantee, if for no other reason than to guard against contractor insolvency.

Secondly, the purchaser has a contract with the installer, if they do not have a written contract then terms are implied. Unless a contract is executed as a deed then it is a simple contract and any claims for breach of contract must be commenced within 6 years of the date from which the cause of action arises. (12 years when the contract has been executed as a deed)

Contractual claims normally relate to latent or patent defects, which generally give rise to claims under breach of contract. However…  it is not unusual for buyers to discover latent construction defects many years after time limitations have lapsed and where latent defects are found outside of the 6 year period for breach of contract, then clearly this presents a problem. However if you suffer damage arising from negligence then the cause of action arises when the claimant suffers damage (when the defect appears)  rather than when the breach of contract occurred. (Latent Damage Act 1986). The complexity comes from the fact that damage is suffered from the defect occurs, rather than when it is discovered by the client. Thankfully negligence claims are not time barred provided that the buyer instigates proceedings within 3 years of discovering the defect.  That may not be as rosy at it initially sounds since all negligence claims must be commenced within 15 years of the contractual breach. Still, I hope that  any buyer of construction services realises that the level of contractual protection extends well beyond the 12 month guarantee that many builders say or think they offer, potentially up to fifteen years for tortious claims.

Be warned that contractual rights do not transfer to subsequent building owners and any protection that would have been afforded to the original buyer under contractual terms and conditions will not apply and subsequent loss would be regarded by the courts as pure economic loss.

Whilst I advise all clients to explore all reasonable options to resolve disputes without referral to the courts, very occasionally court action is inevitable. Hope for the best and prepare for the worst is my advice, and with this in mind you should always keep meticulous records of all transactions and communications with your builder. The Civil Courts will always look to see that you have done everything that could reasonably be done to avoid court action and I would always advise that you try to keep legal and professional fee’s proportionate to the value of your claim since even if you are successful then any costs awarded are likely to be proportionate to the value of your claim. You are highly unlikely to recover £10k in costs on a claim also valued at £10k.

You will often need an independent professional report fully detailing the defects and the cause of those defects because the Latent Damage Act requires that you have “the knowledge required for bringing an action for damages in respect of the relevant damage” this means knowledge “of the material facts about the damage in respect of which damages are claimed,”  and you are also required to prove “that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence.”

If you have evidence that your EWI system was installed negligently and can prove it, as I believe the client does and can, in this particular case, then in fact they will have potential redress to the civil courts for another 15 years. A sobering thought for any other installer who insists that they have no contractual obligation to correct defective construction works. However, this is currently a fairly straight forward claim for damages under breach of contract and even the six year protection afforded will not be seriously tested since the system has already failed due to a high number of  patent and latent defects.

If we are required to intervene on these cases then we work with an excellent construction lawyer who is also a Chartered Quantity Surveyor, so that simplifies and shortens any technical discussions once the site investigation is completed, which can a real benefit in moving the issues forward quickly and cost effectively.

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Dealing with Construction Moisture

Why Construction Moisture Can Severely Delay a Development Programme.

Multi-Million Pound RC Framed Residential Development

We dealt with two issues this week relating to problems caused by construction moisture. A plaster beetle infestation and an investigation into the reasons why anhydrite floor screeds were not drying out within a multi-million pound residential development block in London. More on the plaster beetle infestation in a separate blog to follow quite soon.

Our client, was understandably concerned that pumped anhydrite floor screeds, which on some floors had been pumped in 6 weeks earlier, had failed to dry. The installation process for this particular screed required that the laitance be sanded from the surface of the floor once dry, this usually occurs at 3-7 days after installation, however any attempt at sanding the floor immediately resulted in a clogged rotary sanding pad.

Laitance occurs on the surface during settlement/compaction. During this compaction process, bleed water migrates to the screed surface. This brings with it fine particulates within the screed. Laitance is subsequently formed as a result of the evaporation of the bleed water, and once hardened can impede the drying process .

The advantages of laying a pumped anhydrite screed, as opposed to laying concrete is that you can generate quite significant savings on labour and time but only if optimum environmental conditions for drying the screed are present.

Other benefits of using  pumped calcium sulfate screeds are that they are self compacting, have very little shrinkage and rarely require movement joints. They are particularly suited to underfloor heating systems because they dissipate heat far better than a concrete floor slab would.

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Wall channel between anhydrite screeds to each room.

Pumped anhydrite screeds do not provide a wearing surface so are overlaid with a suitable wearing course; this may be a compatible smoothing compound, carpets, floor tiles or any other finished flooring. Many floor screed failures that we investigate concern buildings with underfloor heating systems and a latex wearing screed. There can be a number of complex issues involved relating to material compatibility and poor commissioning of the UFH system but this particular issue was far simpler to identify. The developer had long since overrun the usual 3-7 day drying and six weeks later some floors were still soft on the surface and therefore unsuitable for sanding to remove the surface laitance. In anhydrite screeds, the binder reacts with the water in order to produce gypsum crystals. Around 80% of the anhydrite is converted to gypsum and this reaction uses a large proportion of the mixing water but the remaining moisture is lost by evaporation.

The block, containing around 56 flats over 4 floors, had almost all windows and doors installed but no heating or MVHR system, which would be installed too late in the programme to be of any help. What we consistently found is incredibly high internal relative humidity of around 87% and therefore very little difference between ambient temperature (15 degrees centigrade)  and dew point temperature (13.6 degrees centigrade).

Floor temps below dew point temperature

Scanning for relative moisture content across slab.

Floor temperatures were consistently recorded as being below dew point temperature, therefore proving that condensation damp was constantly rewetting the anhydrite floor screeds. To rule out any other potential moisture sources we like to scan the whole floor for relative readings, which shows up any unusually high peaks in moisture that may suggest another source of moisture, but we found consistent levels of moisture across all floor slabs on each storey. We tested the floor slabs for total moisture content (TMC) over all levels using calcium carbide and found readings ranging from 0.2% TMC at first floor level to 2% TMC on other floors. You would ideally look for a TMC of 0.3%, but no more than 0.5%.

Interestingly, we were able to prove that the simple action of opening windows made very little difference to this problem by recording internal relative humidity two hours after opening windows in the block. This did nothing to reduce relative humidity and of course there was no difference between external and external temperatures so even ambient temperature remained the same.

There may sometimes be a case for installing dehumidifiers and maybe even supplementary heating but in this particular case we do not think that was the right strategy, since no internal doors or partitions had been installed and doors were often wedged open for trade activities. You need a sealed environment to stand any chance of success with a dehumidifier otherwise you are attempting to dry the world. In this particular case we recommended both positive pressure and negative pressure ventilation. We calculated the cubic volume of the block and recommended fan that would give us 12 air changes in the building over a 24 hour period. Fans would set up to force air in at one end of the building and extract air from the opposite end of the building. As a general principal, we do not believe that you should expect these high levels of construction moisture to take take care of themselves and a supplementary airflow is often needed if you are to keep your development programme on target. We make precise recommendations based on construction progress, material testing and environmental conditions found on site.

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Repointing Heritage Brickwork

Keeping Thin Joints Thin

Mortar joint width almost doubled due to poor repointing

Mortar joint width almost doubled due to poor repointing

We rarely see repointing done well in standard 10mm  mortar joints so imagine what we find when encountering thin joint construction or gauged brickwork with joints of around 1mm thick? We commonly find thin joint construction in old buildings and generally speaking, the thinner the mortar joint, the stronger the building. Buildings are either left with deep open joints in the belief that these buildings can’t be repointed or mortar specification is incorrect and looks like its been applied with a catapult. Poor application, incorrect tools and lack of specialist training are all problems but mortar specification is a primary consideration that is often overlooked.  Imagine trying to repoint a a 1mm mortar joint when aggregate size  is 1.5mm in diameter, the effect would be similar to trying to fit a square peg into a round hole.

Repointing Techniques

There are a number of techniques for repointing thin joint lime construction in old buildings but the primary consideration has to be the mortar mix. Aggregate size is critical and if you are to stand any chance of successfully repointing then you’d be wise to have the mortar analysed. There are a number of UK based lime companies who offer this service now.  If you are repointing a 1mm thick joint then the  sand diameter needs to be 0.5mm. This would produce an extremely fine lime mortar. Generally speaking, this would still be an NHL 3.5 lime mortar for most external masonry applications but consideration is given to BS8104, the British Standard for assessing building exposure; the mortar analysis service we use also supplies our mortar after blending it to match existing and provides a certificate of conformity. It costs nothing to send the mortar sample in, and as was said to us recently, “It’s as easy to get it right as get it wrong.”

Poor repointing

Thin joints smeared with poorly applied mortar.

 

Chimneystacks

We recently encountered a fully repointed chimneystack, all correctly done in hydraulic lime and to a reasonable standard. The only problem was that the mortar was not colour matched and was stark white when compared to the pale yellow colour seen in the original mortar, simple colour matching would have avoided this problem. Chimneystacks are one area where repointing needs doing particularly well due to high exposure and poor access for ongoing maintenance but repointing here is often no better than seen in other areas of external masonry. Here we have a beautiful ornate chimneystack constructed in 1877 but aesthetically, and no doubt structurally, damaged by poor quality, ill informed repointing work. Note the thicker joints where mortar has been smeared across rather than pressed into the thin joints.

Finding a true craftsman who can deal with high quality maintenance work to gauged brickwork or thin joint construction is incredibly difficult and when you do find one they are generally booked up for weeks or even months ahead. These skills are all but lost to the mainstream construction industry and I would prompt any builder with an interest  in heritage brickwork to sign up for one of Dr Gerard Lynch’s Courses, which can be found here… Heritage courses . Dr Lynch is one of the few remaining master craftsmen left in the UK and is thankfully passing on his skills.

Source: Practical Building Conservation. Vol.2

Specialised tools for dealing with heritage brickwork. Source: Practical Building Conservation. Vol.2

Gauged Brickwork

Gauged bricks or ‘rubbers’ are very soft bricks, hand cut and rubbed to size. Buildings constructed with gauged brickwork and built to incredibly high tolerances and joints are unlikely to exceed 3mm in width. Where mortar has eroded in gauged brickwork then it is often best not to repoint unless absolutely necessary since raking out mortar joints can damage the soft brick arris, thereby doing more harm than good. If repointing is absolutely necessary, for instance lets say that a brick has slipped in a brick arch, then this will need a specialised repair. You would use a fine hacksaw blade to to help ease the brick back into position prior to pegging it into position with slivers of lead. The joints are then temporarily sealed with 2 coats of liquid latex, which on drying is then injected with a fine lime mortar from a 50cc syringe. The recommended mortar will be lime putty normally mixed with refractory brick (Fire brick)  powder but in practice this can be extremely difficult to get hold of. Refractory brick powder or HTI powder, is a natural pozzolan that gives the lime putty its chemical set and is mainly comprised of silica and alumina. With regard to particle size, studies have shown that particles of 75 microns or less are pozzolanic, whilst particles of 300 microns or more act as porous particulates. You could have your own refractory brick powder made by having fire bricks crushed in a roller mill but we would generally use Argical M-1000, which is made from burnt clay and contains primarily silica and alumina; particle size is around 80 microns or less and you can find a data sheet for this product Here. The latex is peeled away from the joint once the mortar has set. Carpet tape can also be used as an aid to repointing thin joints; it is laid across the joint then split down the centre of the joint with a sharp craft knife. The folds are then pressed into the joint and this will aid you pressing fine lime mortar into the joint with damaging or spoiling the brick arrises. You would use extremely thin pointing irons for this work and sometimes they need to be purpose made. Assessing whether your contractor is capable of carrying out repairs to heritage brickwork may be a simple case of asking what’s in his tool bag because even many qualified brick layers will not carry these tools or understand the specialised requirements.

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Thin joint construction that will present a real challenge if professional results are to be obtained when repointed.

Preparation

As with most things good preparation is critical and only the most patient and exacting tradesmen are prepared to expend the time and commitment to ensure that joints are carefully hand raked to the required depth and cleaned, so be prepared to pay a premium. Joints should be washed out with clean water prior to repointing and should still be damp when repointing commences. This will reduce suction on the mortar and promote better adhesion in the joint. Generally speaking, joints should be raked out to a depth of at least two times the joint width. However, you will often find that this principle is fairly meaningless when dealing with thin joint construction since erosion often far exceeds this depth by the time repointing is required. Maintenance and repair of heritage brickwork is a large and extremely complex subject area that I can’t possibly cover within the limitations of this blog but if it is a subject area you’re interested in then I’d highly recommend reading Gauged Brickwork by Dr Gerard Lynch but volume 2 of Practical Building Conservation is a good starting point.

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