Structurally Unsound Composite Floor Joists

Floor Fails to Take the Load in Bovis New Build

 

Typical composite I Beam

Typical composite I Beam

We carried out an inspection of a Bovis new build last week that was less than 2 years old and in buildings of this age you don’t expect to find structurally unsound composite floor joists in the floor but that is precisely what we did find.

Visual Defects

We noted a number of defects to the first floor all centred on the landing area between three bedroom access doors and the airing cupboard.

We noted a large run out to the base of a bedroom door but checking the door showed it to be square, whereas the floor to the landing area was sloped significantly.

Significant slope to floor

Significant slope to floor

Moreover, we noted large gaps to the base of the bedroom door frames, which were so large that we could see where the nails in the sole plate had pulled from the floor as the floor had sank.

We then found that the dividing wall between the bedroom and airing cupboard could actually be rocked from side to side, and of course this movement explained why a number of cracks had opened up to skirting boards and door architraves.

 

Floor defects point to simple conclusion

We’ve inspected properties on this site before so we are intimately familiar with the construction and poor build quality so we know that the floors are constructed using composite I beams, which are then overlaid with tongue and grooved chipboard.

Floor separating from stud wall

Floor separating from stud wall

 

 

 

 

 

 

 

 

 

 

 

 

Insecure stud walling

Insecure stud walling

Failure of Composite Floor Joists

In this particular case  the range of defects led to one very obvious and significant conclusion, the floor was failing under the weight of the Megaflo hot water cylinder in the airing cupboard. The cylinder was not sat on a plinth and we are of the opinion that the floor was not strengthened in any way to take the significant  weight of this live load, which could be in the region of 350Kg’s.

 

As expected we also noted that the kitchen ceiling below was showing evidence of bowing under the live load and we have to wonder how many more properties on this new development will suffer from the same problem?

Floor sinking under the load of the Megaflo cylinder

Floor sinking under the load of the Megaflo cylinder

 

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The worst brickwork we’ve ever seen?: A new contender.

Declining Standards in New Build Highlighted by the worst brickwork we’ve ever seen.

Norwich New Build

Norwich New Build

Back in July we were called to carry out a snagging inspection to a David Wilson Homes site in Norwich, which had the worst brickwork we’ve ever seen. Our clients had signed up to buy a new build ‘off plan’ but started to have grave concerns relating to the quality of their potential new home as they watched the build progress. Our initial discussion related to the fact that the brickwork colour was mismatched and that the developer had employed someone to tint the bricks to match; when I arrived on site to carry out the snagging inspection the specialist was at work  painting individual bricks with a pot of red tint solution and a paint brush, a quite laborious task as you can imagine.

We’d agreed to inspect before the build was complete because our discussions with the client, and indeed pictures sent to us, gave enough cause for concern that this was necessary.  The following image slider will give you a feel for the quality of the work and the sheer volume of defects we encountered. Please view the slider on full screen to fully appreciate the illustrated defects.

Would you have bought this house?

Norwich new build
OLYMPUS DIGITAL CAMERA
Bridged polyethylene DPC
Oversailing brickwork
Cracked bricks
Failed mortar joint
Poor pointing
Cracked bed joint
Poor standard of pointing
Protruding perp weeps
Poor setting out
Perps out of alignment
Overly wide mortar perp
Inconsistent mortar joints
walls out of plumb
Smeared pointing work
OLYMPUS DIGITAL CAMERA

Significant Defects

As you can see the defects were significant and we commented in our report that we found it difficult to believe that this brickwork was completed by a fully qualified brick layer. Of particular concern was the incredibly poor setting out, failed mortar bed joints, inconsistency in width and depth of mortar joints and last but not least, walls that were significantly out of plumb, well beyond the 8mm maximum allowable NHBC tolerance. As often happens in these cases it was relayed back to us from our client that the developer didn’t agree with our report and that a site manager of 20 years experience knows more than us and his view is that the brickwork was perfectly acceptable. I thought it may be useful to balance the Chartered professionals view with a second opinion  from a master bricklayer and obtained the following commentary from an acquaintance who is also a master bricklayer…

The master bricklayers view

“My name is Bill XXXXXX and I have been a brick layer for the last 30 years.  I have City and Guilds  NVQ level 3 in brick laying  and NVQ level  6  in site management. I’ve been asked by Joe Malone  for my opinion  about the workmanship of Plot XXX in Norwich.

There seems to be wide and inconsistent perpendiculars and significant variation in bed joints.

The pointing is of a very low and poor standard i.e. holes and not perps not ’top and tailed correctly’

Weep holes are protruding out of the brick work and should be flush.

Also bricks have been laid upside down allowing moisture to catch on the face leading to premature failure through ‘spalling’ aka frost damage.

The walls are significantly out of plumb. Variation in plumb should on good brick work be a maximum of 4l mm out of plumb one way or another. Brick courses seem to wander. Chipped bricks have been used rather than discarded. The Brick work is over sailing be 10mm in places below the DPC

There are large gaps around some windows which implies poor setting out.

Some bricks are cracked and should have been discarded. Two failed bed joints are apparent.

The brick work has not been washed or cleaned down.

The mortar colour varies implying it has not been ‘gauged’ and makes the building look patchy.

The damp course is protruding through the mortar.

Back straps for the garage have been missed. Roof ridge work is poorly finished and there appears to be no mechanical fixings

The brick work does not appear to be ‘fair faced’

In all a very poor standard of work has been delivered with a significant amount of snagging already required.

On a site managed by our company this work would be condemned and the brick layers replaced or forced to do the work again to our own companies’ standard.”

The only point on which we don’t agree with on this second opinion is with regard to the DPC being pointed over. DPC’s should not be pointed over, they should be exposed and clearly visible and if they are not then they are bridged.

The worst Brickwork

Our clients reached something of stalemate with their developer, because they were insisting that sections of the building were taken down and rebuilt, whilst the developer was offering minor remedial works that fell well short of dealing with the significant defects in this build. Their complaint was ultimately elevated to the managing director of David Wilson Homes and our client eventually informed us of the following outcome, “We have decided not to proceed with the purchase of the house. I think we always knew this was the outcome deep down. I have received a reply letter from the MD of David Wilson East division offering to rescind the contract and contribute towards ‘reasonable’ conveyance costs.”

When we last spoke our clients were looking to purchase an old traditional property and we completely understand why, moreover, we believe that they made absolutely the right decision to withdraw from this contract. A brave and sensible decision, especially when you consider that many clients purchase with their heart rather than their head.

 

 

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EXTERNAL WALL INSULATION: The Defects are Often Built in. Part 2

The First Visual Signs of Premature Failure Explained

Underlying Rockwool Insulation Slabs Now Visible

Underlying Rockwool Insulation Slabs Now Visible

Some time back we blogged about a Midlands high rise EWI scheme that we’d monitored and noted that defects were being built in. Interestingly we have now noted very obvious visual signs of premature wall cladding failure. In fact we recently investigated a failed EWI scheme that exhibited a number of visual problems that were also noted on this scheme. When you consider that it generally costs circa £1m to install EWI to a high rise block then system failures become extremely expensive to remedy. In this particular case I drove past the building today and immediately noted early visual signs of system failure, in particular, what we call ‘thin coat failure.’ The white finished render should be ‘in plane’ and present a smooth finish across the whole facade but in this particular case you can now see that the underlying Rockwool insulation slabs in the Alsecco system are clearly visible; so what causes this and what are the implications?

Pillowing & Mattressing

We have previously written about the effects of pillowing and mattressing but this is something generally seen in Phenolic insulation boards, it isn’t a problem you see in Rockwool slabs.  Please read http://buildingdefectanalysis.co.uk/solid-wall-insulation-ewi/a-case-of-pillowing-or-mattressing/ for more information.

Technical Issues

Since we had initially commented that insufficient hammer fixings were being installed to the Rockwool slabs then we also believe that there is risk of structural failure at the interface between the Rockwool slab and the underlying substrate. However, experience tells us that the visual evidence suggest something far simpler… The render base coat has probably been applied far too thinly.  It is a problem that we are commonly seeing and we’re unsure if this is a result of the construction bean counters short ordering materials or whether it is simply down to poor site quality management?  The problem with overly thin render coats stretches well beyond the obvious aesthetic problem and raises two key technical issues.

  1. An overly thin render coat does not have the same impact resistance.
  2. An overly thin render coat is more permeable and hence far more susceptible to penetrating damp and subsequent saturation of the underlying insulation.
Another elevation with underlying Rockwool slab insulation clearly visible.

Another elevation with underlying Rockwool slab insulation clearly visible.

Thin Coat Failure

So we believe that this system is suffering from thin coat failure and has failed prematurely on both aesthetic and technical grounds and we predict significant technical problems in the near future. The only subjective discussion is with regard to the degree of failure exhibited.

You may wonder why these thin render coat failures are not immediately obvious on works completion and we think that is down to simple curing and shrinkage of the render, which can occur over a number of months; this project was only completed in October 2015 but visual system failures had to be evident months before we observed them. As the render coat shrinks back, it thins to reveal the underlying insulation boards, usually first noticeable when sunlight hits the elevation concerned.

Solution to Failure?

So, is there a remedy for this? If caught early enough before water penetrates and saturates the insulation, is there a quick fix? Sadly no. The problem is that whilst it may seem reasonable to offer additional coats to increase the render thickness, this  system would no longer have BBA approval. The reason for this is simple… You would be applying further base coat over an existing topcoat but the system was never tested with base coat applied over topcoat and therefore would no longer be BBA approved. We have written correspondence from the BBA stating precisely that fact.

Poor installation of Rockwool slabs.

Poor installation of Rockwool slabs.

It is easier to contextualise this system failure when comparing the underlying defects noted as the system was being installed and here we can see the poorly installed rectangular insulation slabs that are now showing through the render coat.

In our opinion both Rockwool slabs and EPS boards offer greater flexibility and potential for at least partial recovery of the EWI system but even retaining the insulation needs careful consideration based on a detailed investigation and recovery of site evidence.

 

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Building Defects: A legal perspective

Guest Blog Introduction and Biography

In March of this year both myself and Sarah Fox attended the RICS East Midlands CPD conference as guest speakers. I’d not met Sarah at this point and was lucky enough to attend her talk on letters of intent. Quite simply it was possibly the best talk on contract law that I’d ever attended and I was so impressed with Sarah’s knowledge of contract law that I asked if she’d write a guest blog.

Sarah Fox is a construction contracts strategist and author of a series of 500-word construction contracts. She wants the industry to adopt contracts that they can read, understand and use. She uses coaching, talks and workshops to help professionals to write simple contracts and understand complex ones. Her keynote is “Never sign on the dotted line” and you can find out more at http://www.500words.co.uk

Patent and Latent Defects

“Defects will occur in buildings. It is one of the great certainties in construction, the equivalent of death and taxes in life more generally” [1]

Borescope used to locate a latent defect.

Borescope used to locate a latent defect.

Generally a defect is “anything which renders the [works] unfit for the use for which it is intended, when used in a reasonable way and with reasonable care.” [2]

There are two types of defect: patent and latent. Patent defects are defects that are visible or capable of being discovered (observed and observable). Latent defects are not reasonably discoverable and often come to come to light after completion and even after the defects period.

Any client needs to ensure that the works meet the required contractual standards for goods, design and workmanship. This can be done in a number of phases:

During Construction

The contract administrator must identify visible defects and exercise her powers before completion and ensures that issues relating to quality and defects do not wait until the defects period. Depending on the terms of the building contract, the contract administrator may have:

  • the power to issue instructions to require the removal from site of work or materials not in accordance with the contract (JCT 2011 DB clause 3.13.1)[3] or other instructions as appropriate (JCT clause 3.14);
  • the power to require the contractor to open up or test various elements of the works (JCT clause 3.12);
  • a duty not to include in interim certificates the value of works not in accordance with the contract (JCT clause 4.14.1.1);
  • a right for the employer to terminate the contractor’s employment for failure to rectify defects as instructed, provided the works are materially affected (JCT clause 8.4.3);
  • the duty to confirm whether the works are completed to her satisfaction (MF/1 rev 5 clause 13.2);
  • the ability to confirm the performance of the works through testing before and after completion (MF/1 clauses 23, 28 and 35).

Obvious or ‘patent’ defects should prevent the issue of the certificate of completion. Accordingly, the date of completion, all work should conform to the requirements of the contract.

During Defects Period

Patent defect found on new development site.

Patent defect found on new development site.

Building contracts ‘encourage’ the contractor to return to the project and make defects right by allowing the employer to withhold some of the money due to the contractor until the end of the defects period, either a stage payment or retention. In Pearce & High v Baxter, the court said (with some reservations) that the JCT Minor Works wording “can be regarded as giving the contractor a right to make good defects at his own expense, and a licence to enter the property for that purpose.” [4]

After Defects Period

Once the defects period has come to an end, the client can bring a claim for breach of contract for any defects which become patent during the limitation period. The client’s claim is for damages to put it in the position it would have been in if the contractor had carried out the contract properly.

The difficulty is measuring what is an appropriate amount of damages.

 

Referencing

[1]           Article by Harrison Consult quoting Professor Anthony Lavers.

[2]                 Yarmouth v France (1887) 19 QBD 647. See also Tate v Latham [1987] 1 QB 502 where a defect meant the absence of an item essential to complete the works – even if the works were operable without the item.

[3]           There is no power for the contract administrator to instruct when these defects must be rectified as it is for the contractor to plan and perform the works however it chooses. All references in this blog are to JCT 2011 DB unless otherwise noted.

[4]                 [1999] CLC 749 at 751.

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Guarantees for Solid Wall Insulation and Getting Insurance for Failure.

More Unscrupulous Dealings from The World of External Wall Insulation

If considering EWI then accept nothing less than a 25 year guarantee. Some unscrupulous installers will not offer it.

If considering EWI then accept nothing less than a 25 year guarantee. Some unscrupulous installers will not offer it.

We have previously warned about the double standards being operated by some external wall insulation installers with regard to the guarantees being offered on these systems. DECC insisted that these systems came with a 25 year guarantee if they were to be rolled out to the mass market; enter SWIGA, the company formed to provide those guarantees. However, it seems that a large proportion of the industry is only providing those guarantees for grant funded work, such as ECO funding. If you are a cash buyer for one of these systems then there is a strong chance that you will be offered a substantially reduced guarantee. I have a client who was only offered a 12 month guarantee, though their installer later offered to pass on the system manufacturers 5 year materials guarantee, which is fairly pointless. When made aware of the 25 year SWIGA guarantee my client questioned this but found that their installer was not a member of SWIGA and therefore could not offer the 25 year guarantee. As grant funded work dries up we are seeing a number of installers sever ties with SWIGA or generally failing to maintain any links with a body that can provide the appropriate level of insurance protection. After all, if the Government isn’t forcing you to offer a 25 year guarantee then why pay membership to an organisation that oversee’s an insurance scheme that you are not offering to clients. Irrespective of whether work is privately or grant defended this application of double standards is an industry scandal. In this particular case the installer was recommended to my client by the system manufacturer, despite that installer having no way to provide the appropriate guarantee. Should we expect material suppliers to carry out some level of due diligence to ensure that their recommended installers can offer an appropriate guarantee? I think so, and if you can’t do this then don’t make recommendations!

 If you have followed this blog then you will be aware that the system failed within weeks of being applied leading to months of conflict and disagreement. One culmination of the disagreement over the guarantee being offered, or rather, not being offered, was the installers suggestion that they would now provide the following system guarantee…

Screen Shot 2016-04-06 at 21.20.35

 

To my mind this raised a very obvious question, which is, can you actually get insurance cover for an EWI system that has already failed? Possibly… but as with all things risk related, the greater the risk, the more you pay to offset that risk. In this case we are fairly confident that the insurance company  would refuse to insure a previously failed and repaired system, or they would increase the premium to such an extent that the installer would not want to pay the price. We are fairly confident that the system failure was not disclosed to the insurer because the insurer would have wanted to know the full facts relating to the cause of failure and repair in order to help their loss adjusters reach a decision. So in fact a guarantee is being offered when the insurer is not yet in receipt of all the facts relating to the case. We’d go so far as to say that having spoken to this insurer, the policy may not actually be available under these circumstances. It goes without saying that it would be construed as fraud to obtain an insurance policy without disclosing all material and relevant facts and I’d consider substantial failure of the system within weeks of application as fairly relevant, wouldn’t you? You can pick holes in a lot of these policies until the cows come home and the fact remains that the vast majority of EWI failures are caused by poor workmanship, inadequate design or poor site storage of materials. Given that poor workmanship is the primary common cause of failure then you’re left in dispute with your contractor because a lot of these policies only pay out in those circumstances if your contractor is no longer around to deal with it. There are a lot of aftermarket guarantees and you should study them carefully if you’re placed in an unfortunate  position of having to buy one. To avoid this proverbial stable door simply ensure that your installer is registered with SWIGA and can provide the full 25 year protection; If not then find an installer who can! Oh, and please budget to have your installation independently quality managed, we guarantee that you’ll be glad you did.

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The Hidden Dangers in Buying a New Home

The Hidden Dangers in Buying a New Home

New homes are a risky proposition

New homes are a risky proposition

Why would you consider buying a new home, is it simply because you want that feeling of owning something new? Perhaps you want cutting edge design and modern standards of thermal comfort with low energy bills, or perhaps you simply feel that buying a new home gives you peace of mind that nothing could possibly go wrong? You may even have reasonable expectations that nothing is perfect and perhaps you may find one or two snags but so what, your constructor will willingly correct defects in the first two years and after that you have NHBC insurance to cover further eventualities.  Moreover, even your solicitor has advised you not to bother getting a full survey because its a new property and you’re covered by the construction guarantee and NHBC warranty. Well a qualified solicitor must know what he’s talking about and given the expense in moving home you’re predisposed to taking this advice because you’re trying to manage a budget. Of course your solicitor is absolutely right in principle but in practice he is very very wrong because there are many hidden dangers in buying a new home

 

An old traditional property is surely a greater risk to the home buyer than a new build isn't it?

An old traditional property is surely a riskier proposition tor the home buyer than a new build…  Isn’t it?

I write this blog very conscious of the fact that I’m in a ‘well you would say that wouldn’t you’ position since I’m advising a course of action that I may potentially profit from, but to be frank this information is only going to come from a surveyor dealing with these issues at the sharp end.  I’ve carried out many detailed snagging surveys on new build properties and I can not remember ever signing off on a property that only had reasonably minor defects. So what is going wrong?

The Decline in Quality Standards

Firstly there has been a gradual and systematic decline in quality control linked to a number of fundamental issues:

  1. Developers self manage their  quality control pprocess. The Site managers primary focus is on managing productivity and site efficiencies and you will rarely see them employ a Clerk of Works anymore to oversee quality control.
  2. A mistaken belief that either building control or the NHBC are responsible for managing the quality control process. They aren’t.
  3. Big developers deliver the larger portion of their works through a wide range of sub-contractors and often very little of the work is completed by in-house staff. Developers then expect sub-contractors to self manage their own quality control process but they’re under the same commercial pressures as the developer and time is money.
  4. The lack of time served tradesmen and their subsequent replacement with multi-skilled, jack of all trade, operatives.

 

Delamination of solid floor in 6 year old new build.

Delamination of solid floor in 6 year old new build.

5.  British workers are increasingly refusing to carry out works on a price and this has resulted in an influx of Eastern European workers on the large development sites and even fundamental  communication problems on site. I often find myself on development sites where I genuinely struggle to encounter staff that speak English.

6.  The advent of MMC (Modern Methods of Construction) and ‘Lean’ construction principles has resulted in the development of some truly terrible composite products. For example, there are some really shocking composite I-beams on the market that are both cheap and nasty. This has resulted in a marked increase in the number of floors that are flexing under load, something that was rarely a problem when standard timber floor joists were used. MMC is actually the modern version of non-traditional construction and will have a significantly reduced life span when compared to traditional construction erected during the Georgian or Victorian era. It is being optimistic to expect a 100 year life span from MMC construction and I believe that most will have a significantly shorter lifespan due to poor  quality materials and low architectural merit.

7. The move away from traditional skilled building and plumbing techniques. Most central heating is plumbed in on cheap plastic push fit pipework and soldered copper pipes are in decline, you’d be amazed at the number of flooded properties we see due to poor plumbing. Roof leadwork is also being severely de-skilled on new build sites with leadwork sealed in place with mastic rather than being properly installed. Push fit pipework relies on a rubber o-ring to make a seal but how long do you think this o-ring lasts when compared to soldered copper pipework. I’ve always held a view that plastic push fit pipework is OK for Portacabins or other temporary installations but it is now in common use.

8. The lack of a site benchmark test wall. There was a time when a standard test wall was constructed on every site and used to benchmark the site build standard. You rarely see this anymore, though we’d advise that you should use the site show home as your benchmark build standard. They are generally significantly better than anything else constructed on site.

9. New home buyers rarely have a detailed snagging survey carried because why would you need to check build quality on a new home? Possibly even your solicitor informed you that a full survey was not required.  This is yet another missed opportunity  to challenge the developer on quality control and another factor for increased  levels of complacency on site. Incredibly we have even been refused access to site to carry out a quality inspection until the buyer had signed the contract.

10. Many defects are ‘patent’ or immediately obvious, but many are ‘latent’, which means they are hidden. If not picked up during key stages of construction inspection then often they’ll remain hidden until failure occurs. Key construction stages are simply not being checked and signed off as they once were. It has been said that this ‘removal of red tape’ facilitates the construction process but in reality it has meant further erosion of the quality control process, which has facilitated poor quality development.

So what can be done? 

No provision made for surface drainage and rainwater breaching door threshold and entering lounge. The property was 7 years old.

No provision made for surface drainage and rainwater breaching door threshold and entering lounge. The property was 7 years old.

Firstly accept that there is nothing that you can do as a potential purchaser of a new home to deal directly with site related issues. There is a National housing shortage and developers generally sell new homes as quickly as they are being built. New housing is what economists call a highly elastic product with demand often exceeding supply. Despite this, it was  reported in December 2015 that Britain’s nine biggest housebuilders have land banked 615,152 housing plots that have not yet been developed – four times the total number of homes built in the past year. The top four firms – Berkeley, Barratt, Persimmon and Taylor Wimpey – also hold £947million of cash, according to an investigation by The Guardian. Developers generally like to see a 25% gross profit on development, which compares very favourably to the wider construction industry. Land banking brings to mind a very interesting fact about the diamond trade… Did you know that diamonds are not actually that rare. In fact the market is carefully controlled by DeBeers who hold a massive stock of diamonds and carefully control their limited release into the market place. If Debeers chose to flood the market with their vast stockpile then diamond prices would collapse.  It is to my mind a thought provoking comparison.

We  speak from experience when we say that we have formed a firm opinion that buying a new home is a far riskier proposition than buying an old traditionally constructed property.  Of course many buyers of older properties would not consider signing off on what could potentially be their biggest ever purchase without investing in the surety that comes with a detailed home buyers survey. Very few new home buyers make that same investment because they have been lulled into a very false sense of security. Despite this, very few want to go through a process of suing their developer for breach of contract when things go badly wrong and why should they? They expect developers to remedy defects in the first two years and the NHBC Guarantee to cover the remaining 8 years. In fact very little is covered by these guarantees and claimants often realise that they are dealing with building guarantee companies with a general predisposition towards claim refusal. I recently enquired about buying a new home from a large National developer and I rang their sales office to discuss my requirements. Hello I said, I’m interested in buying a new home but I have no interest in the NHBC guarantee and  in fact I would insist that my contractual arrangement remains with you, the developer. I explained why I had no interest in the NHBC warranty but the sales person was stumped by my enquiry and promised to call me back once they’d looked into the matter. As expected, I never heard from them again. Far too risky for them to assume full responsibility for their own products.

Shocking standard of lead flashings and lead soakers on Durham new build

Shocking standard of lead flashings and lead soakers on Durham new build

 

In terms of dealing with what developers call ‘legacy’ issues, some are far better than others and again we speak from pragmatic experience. Some developers do have legacy people who will genuinely try to deal with customer complaints and correct your defects. Then there are some who simply ignore customer complaints and hope the customer goes away and sadly many customers do just that out of sheer frustration.

Be Objective Enough to Walk Away

As new home buyers we have to learn to be far more careful and far more discerning because development standards have been in decline for quite some time. I recently had a potential client who emailed me a number of pictures of his potential new home, which was under construction. He had numerous concerns about the build quality and asked me for my thoughts on correcting the issues. I agreed that it was shocking and my advice was “since you’ve not signed the contract then walk away now.” I never heard from the chap again because I suspect he did not get the answer he wanted; he was committed to buying it no matter what! Sadly the heart often rules the head when buying a new home.  If new home buyers consistently appoint a Chartered professional to carry out a detail snagging survey ahead of signing the contract then build quality would increase dramatically but as potential purchasers we also have to be prepared to put head before heart. Once you have signed the contract, all is not necessarily lost because you have up to 12 years to pursue a claim against the developer for breach of contract. Developers may like to think that risk transfers to insurers like NHBC after two years but this is not necessarily the case. If you have notified your developer of a defect within the first two years then you have between 6 or 12 years to pursue a claim from the date of cause of action. The NHBC would simply to refuse to pay out on any claim which had been notified to the developer within the first two years anyway and would likely refer it back to the developer for resolution. Insurers will not insure against pre-existing defects and why should they.

Whatever assumed level of protection you think you have in buying a new home please be forewarned that everything is geared towards providing very little protection. I recently read that you have more consumer rights when buying a tin of baked beans and I have far too many clients for whom we have discovered major defects on their new homes to believe otherwise. If ever there was a case of Caveat Emptor then purchasing a new home is it!

 

 

 

 

 

 

 

 

 

 

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Legal Costs in Construction Claims

The Need to Keep Costs Proportionate in Construction Claims

Screen Shot 2015-11-27 at 8.17.28 AM

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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