In June 2018 O’Farrell J held that a claim by the tenant of the Liberty Stadium Swansea, the beneficiary of a collateral warranty complaining of a failure by a contractor to construct the stadium in accordance with a JCT building contract was statute barred. That decision is now reported at  BLR 652.
Two points of importance emerged from that Judgment. First, the collateral warranty was retrospective and the tenant was subject to the same limitation period as the employer would have been under the building contract. Second, because of the deeming provision in the JCT contract, practical completion was deemed to have occurred on the date specified in a notice given by the employer. This meant that the tenant’s primary claim – referred to as the Original Construction Claim – was statute barred, having been issued 12 years and 5 days after practical completion was deemed to have taken place.
That left what Pepperall J has described (2019 EWHC 989 TCC) as a secondary claim against the contractor. The tenant’s allegation was that the contractor was in breach of its obligations under Clause 16.2 and .3 of the building contract to identify and make good the flooring and paintwork defects during the Defects Liability Period.
The tenant’s claim was tried over eight days in the TCC and Pepperall J gave judgment last week. The tenant’s claim against the contractor failed, as did other claims that it had against the owner of the stadium.
The tenant’s claims failed because the employer had issued a Notice of Completion of Making Good Defects (‘the notice’). The contract provided that completion of making good defects shall be deemed, for all purposes of the contract, to have taken place on the day named in the notice. The Judge held that the notice had the effect of barring any claim for breach of the defect liability provisions.
He drew a distinction between claims for breach of Clause 16, which the notice barred and claims for the original construction defects (described in the Judgment as claims under the core provisions of the contract if there were outstanding or defective works) which the notice did not touch. As the Judge pointed out this was consistent with O’Farrell J’s construction of the similar deeming provision in relation to practical completion.
Even though the claim failed because of the notice the Judge still identified and analysed the contractor’s obligations under the defect’s liability provisions. In relation to one category of defects, he found, in effect, that the claim would have failed because whilst the tenant was able to point to defects in the work, it was unable to point to defects that existed during the Defects Liability Period or to defects that had not been properly identified or remedied according to the contract. The tenant would have had to identify a defect that the contractor ought to have identified and rectified but had not. The tenant could not do so.
Whilst that is interesting as a matter of forensic analysis, it will be unusual for the claim for the original construction to be time barred and the only claim to be left to be one under the Defects Liability Period.
It remains to be seen whether tenant will make an application for permission to appeal.
Paul Darling QC represented the contractor both in the summary judgment application in front of O’Farrell J and in the Trial in front of Pepperall J.