Melhuish & Saunders Ltd v Hurden & Anor

A building contractor may be under an implied term to construct works to a standard qualifying for a statutory completion certificate and to use reasonable endeavours to obtain it. Defective cavity wall ties may justify the cost of remedial work even where physical damage has not yet occurred, if there is a significant future risk. The appropriate damages are the proportionate cost of cure, assessed by reference to cost, risk, adequacy of the remedy and other legitimate factors, including the occupants’ peace of mind. A defendant is not required to accept remedial work from the original contractor where, in the circumstances, that would be unreasonable.

The claimant building contractor sought payment of the balance of its final invoice for constructing the defendants’ new home. The defendants counterclaimed for defects, including inward-sloping cavity wall ties, inadequate lintels and various finishing defects. An approved inspector had withheld the final certificate.

The principal issues were whether the contract required construction to a standard qualifying for a final certificate, whether the wall ties were defective despite the absence of present water damage, which remedial scheme represented the proper measure of loss, whether the defendants had failed to mitigate by refusing the claimant’s remedial services, and the effect of substantial completion and set-off on the claim.

1. Contractual obligations. The contract contained an implied term that the house would be constructed to a standard qualifying for a final certificate from the approved inspector. It also contained an implied obligation to obtain the certificate, but that obligation required only reasonable endeavours. The claimant breached both obligations in several respects.
2. Wall ties. Inward-sloping or inadequately embedded wall ties were defects. They reduced structural bracing and created a significant medium- to long-term risk of moisture penetration. The absence of present physical damage did not prevent recovery of the cost of remedial work.
3. Measure of loss. The cost of cure was appropriate. The proportionate remedy was replacement of the defective wall ties, together with necessary associated works and complete repointing, rather than rebuilding the whole outer leaf. The assessment took account of cost, the level of risk, the likely effectiveness of each scheme, the prospect of a final certificate and the defendants’ legitimate concern that their home should meet proper construction standards.
4. Other defects. The claimant was liable for inadequate lintel and cavity-tray works, excessive and uneven joints around openings, and specified minor defects. It was not liable merely because divided head stones had been used, since the contract did not require single continuous stones.
5. Mitigation and damages. The defendants were entitled to use a new contractor. The claimant had not shown that refusal of its services was unreasonable, given the defective original work, the inadequacy of earlier remedial work and the prolonged litigation. Damages were also awarded for distress and inconvenience in relation to defects in the defendants’ home, and for temporary accommodation.
6. Disposition. The works were substantially completed, so the final invoice had fallen due. Nevertheless, the counterclaim operated as a set-off and exceeded the invoice. The claim therefore failed, while the counterclaim succeeded to the extent assessed, subject to credit for the retained sum.