5
Control of the works
5.1 The contract administrator’s duties to the employer are normally set out in an appointment document, frequently on a standard form produced by one of the professional institutions. The contract administrator’s role within the construction contract, however, is to be determined solely from the construction contract terms. A contract administrator named in SBC16 will be required to take certain actions; for example, supplying necessary information, issuing instructions and issuing certificates or statements. In some matters the contract administrator will act as agent of the employer, such as when issuing instructions which vary the works, and in others as an independent decision maker, for example when issuing certificates or deciding on claims for direct loss and/or expense. Failure by the contract administrator to comply with any obligation (usually prefaced by the phrase ‘the contract administrator shall’) will constitute failure on the part of the employer tantamount to breach of contract (see Tables 5.1 and 5.2). Furthermore, clause 1.11 now requires that all consents or approvals shall not be unreasonably delayed or withheld (except in relation to accepting defective work, and clause 7.1, assignment).
Table 5.1 Key powers of the contract administrator
Table 5.2 Key duties of the contract administrator
5.2 Direct control over the carrying out of the contract works, including the manner in which the works are undertaken, is, however, solely the responsibility of the main contractor (cl 3.6). The duty of the contract administrator to the employer will normally be to inspect the work at intervals. The contractor is obliged to provide the contract administrator with reasonable access to the works, its premises, and to its sub-contractors’ premises (cl 3.1). The precise obligation and purpose of such visits will arise directly from the terms (either express or implied) of the professional appointment, and of course SBC16 includes no express provision relating to inspection or monitoring of work by the contract administrator. Clearly, when the contract administrator is required under the contract to form an opinion on various matters, including the standard of work and materials prior to issuing a certificate, then it would be implied, even if not expressly set out in the terms of appointment, that some form of inspection must take place.
Site manager and contractor’s persons
5.3 The contractor is required to keep a competent ‘Site Manager’ on the site ‘at all material times’ (cl 3.2). There is no requirement in the contract conditions to have the person named in the contract documents; however, they must be approved by the employer. This is an important role, as this person may receive instructions from the contract administrator, and therefore acts as the contractor’s agent. It would therefore be good practice to establish the identity of the site manager no later than at the pre-contract meeting, and to make sure this is agreed and recorded in writing. If the contractor appoints a replacement, this must also be approved by the employer (cl 3.2). The contractor has full responsibility for the performance of the site manager and all people the site manager engages on the project (cl 3.6).
5.4 The contract administrator has the power to exclude persons from site (cl 3.21), but may not do so ‘unreasonably or vexatiously’. This power is only likely to be used where it appears that the employee may be seriously affecting operations on site. If used unreasonably, this could constitute an ‘impediment’ under clauses 2.29.7 and 4.22.5.
Employer’s representative
5.5 Although the majority of the administration of the contract is dealt with by the contract administrator, the employer has an active role to play. The employer is required to make decisions on various matters and to issue notices direct to the contractor and is entitled to exercise various powers (see Tables 5.3 and 5.4). The employer is entitled to appoint a representative to exercise all these functions (cl 3.3). The contractor must be notified in
Table 5.3 Key duties of the employer
Table 5.4 Key powers of the employer
writing of the identity of the individual, and of any exceptions to the functions the individual will perform. Footnote [39] to the form makes it clear that to avoid any confusion in the roles, neither the contract administrator nor the quantity surveyor should be appointed as the employer’s representative.
Clerk of works
5.6 The employer is entitled to employ an independent clerk of works whose duty is solely ‘to act as inspector on behalf of the Employer under the Architect/Contract Administrator’s directions’ (cl 3.4).
5.7 It should be noted that the presence of a clerk of works does not lessen the contract administrator’s duty in respect of site inspection (Kensington Health Authority v Wettern). The clerk of works does not act as agent for the contract administrator but may issue directions to the contractor. However, any such direction must be one which the contract administrator could have made under the contract and must be confirmed in writing by the contract administrator within two working days if it is to be effective. The contractor will frequently take the initiative and ask for an instruction to confirm the clerk of works’ direction, but there is no requirement for the contractor to do this, and therefore the contract administrator and clerk of works should be careful to co-ordinate over such matters. To avoid confusion, it may be sensible for the clerk of works to refrain from giving an instruction directly, unless the matter is urgent, but instead to request that the contract administrator issues it; alternatively, all clerk of works’ instructions could be given in writing, with copies sent at the same time to the contract administrator.
Wettern Composites was the subcontractor for the supply and erection of precast concrete mullions for an extension to the Westminster Hospital, on which the Health Authority had also engaged architects, engineers and a clerk of works. Tersons Ltd was the main contractor. The hospital was completed in 1965. In 1976 it was discovered that there were considerable defects in the mullions. The Health Authority brought an action against the architects, engineers and sub-contractor, though the latter subsequently went into liquidation. Judgment was given for the Health Authority. The architects had failed to exercise reasonable skill and care in ensuring conformity of the works to the design. Although a clerk of works had been employed, this did not lessen the architects’ responsibility. However, the Health Authority was vicariously liable for the contributory negligence of its clerk of works, and the damages recoverable from the architects were reduced by 20 per cent accordingly.Kensington and Chelsea and Westminster Area Health Authority v Wettern Composites (1984) 31 BLR 57
Principal contractor
5.8 The contract assumes that the contractor will act as principal contractor for the purposes of the CDM Regulations, unless another firm is named in Article 6. It is the employer’s responsibility to appoint a principal contractor; therefore, if the contractor is unable to or ceases to take on this role, the employer must appoint a substitute (Article 6). It is the contractor’s responsibility to develop the construction phase plan so that it complies with the Regulations (regulation 12), and to ensure that the works are carried out in accordance with the plan.
5.9 The principal designer has no duty to inspect the works and would be very unlikely to visit the site unless some highly unusual circumstance arises, such as the discovery of an unanticipated hazard. The main responsibility for ensuring that correct health and safety measures are employed on site rests with the contractor, both under statute and under the express terms of the contract.
Information to be provided by the contract administrator
5.10 In the majority of construction contracts the information contained in the contract documents will not be sufficient to enable the project to be constructed. Even if the works have been fully specified it is likely, for example, that information regarding assembly, location, detail dimensions, colours, etc. will be needed by the contractor throughout the project. Supply of this information will usually form part of the contract administrator’s duties to the employer under the terms of appointment.
5.11 SBC16 refers in four places to the contract administrator’s obligation to provide information. These refer to ‘descriptive schedules or similar documents’ and information required under the CDM Regulations (cl 2.9.1.1); setting-out information (cl 2.10); ‘information referred to in the Information Release Schedule’ (cl 2.11); and ‘such further drawings or details as are reasonably necessary to explain and amplify the Contract Drawings’ (cl 2.12.1). Although the clauses do not require this information to be released under a contract administrator’s instruction, this is common practice – and is wise, as it would enable the clause 3.11 provisions to be brought into operation if necessary (see paragraph 5.32 on contract administrator’s instructions). If any of the information supplied introduces changes or additions to the works, it must be covered by a contract administrator’s instruction requiring a variation.
5.12 The ‘descriptive schedules or similar documents’ and CDM regulation 4 information are to be provided as soon as possible after the execution of the contract (cl 2.9.1.1). These appear to be by way of amplification of information given in the tender documentation, as the clause makes it clear that nothing in these documents shall ‘impose any obligation beyond those imposed by the Contract Documents’ (cl 2.9.3).
5.13 Under clause 2.10 the contract administrator is responsible for giving sufficient accurately dimensioned drawings and levels to enable the contractor to set out the works, and the contractor must accurately follow this information. The contractor must ‘amend any errors’ that result from its own inaccurate setting out. Alternatively, the contract administrator, with the employer’s consent, may instruct that the error remains, in which case ‘an appropriate deduction may be made from the Contract Sum’ (cl 2.10). There is no suggestion in the conditions as to how this might be assessed, and in practice it will be a matter for negotiation. The error and the deduction should first be discussed with the employer, and the agreed deduction should ensure adequate compensation.
5.14 Information shown on the information release schedule must be supplied at the stipulated date, unless the contract administrator is prevented from doing so ‘by an act or default of the Contractor’ (cl 2.11). Failure to provide the information and instructions under clause 2.11 would constitute a ‘Relevant Event’ under clause 2.29.7 and a ‘Relevant Matter’ which may give rise to a direct loss and/or expense claim under clause 4.22.5, and possible grounds for termination under clause 8.9, but only where such failure has led to the suspension of the carrying out of the whole of the works for at least a period which has been entered in the contract particulars (cl 8.9.2). An act or default of the contractor might include, for example, failure to provide design documents as required by the contract and which the contract administrator needs to finalise part of the design.
5.15 There is no mechanism whereby the contract administrator may unilaterally adjust the schedule following, for example, an extension of time. Such adjustments will have to be negotiated and agreed by the parties, and it may be necessary to do this on a regular basis, keeping the contract administrator involved (the contract allows the employer and contractor to agree changes to the information release schedule under clause 2.11). Parties should tackle this co-operatively – the contract states that such agreement should not be unreasonably withheld. For example, if variations have been issued that involve additional work and have resulted in an extension of time, or if work has been omitted and an earlier completion date fixed, then it would be reasonable for the information release schedule to be adjusted to reflect this. If the contractor refuses to agree to an adjustment, the document will become worthless with respect to assessing extensions of time.
5.16 With respect to information not shown on the information release schedule, or where a schedule is not used, the contract administrator is under an obligation to provide ‘such further drawings or details as are reasonably necessary to explain and amplify the Contract Drawings and shall issue such instructions … as are necessary to enable the Contractor to carry out and complete the Works’ (cl 2.12.1). It is suggested that this obligation would extend to both amplification of information in the contract documents and providing full information regarding any variation that is required to be carried out. The inclusion of the word ‘reasonably’ suggests that the contractor can be expected to obtain some detailed information, for example manufacturers’ fixing information. The contract administrator should be careful, however, in respect of leaving decisions to the contractor, as it may not always be possible to hold the contractor responsible should a detail or fixing fail.
5.17 The information and instructions should ‘be provided at the time the Contractor reasonably requires them, having regard to the progress of the Works’. However, there is no need to supply them any earlier than would be necessary to allow the contractor to complete by the completion date (cl 2.12.2). There is no general requirement for the contractor to apply for information in writing, but if the contractor has ‘reason to believe that the Architect/Contract Administrator is not aware’ of when information may be needed, the contractor should give ‘advance notice’ to the contract administrator (cl 2.12.3). In practice, such notice may frequently be in the form of a programme indicating dates when information is required. As above, failure to provide the information and instructions under clause 12.1 would constitute a relevant event under clause 2.29.7 and a relevant matter which may give rise to a direct loss and/or expense claim under clause 4.22.5, and possible grounds for termination under clause 8.9.2.
5.18 Whether or not an information release schedule is used, if any acceleration to the works is proposed (e.g. under the acceptance of a Schedule 2 quotation), the contract administrator should take care to warn the employer at an early stage if this might present difficulties for programming of information.
5.19 Under SBC16 there is no provision for other consultants to issue information direct to the contractor; this would have to be done through the contract administrator. Delay in supplying necessary drawings by other consultants would therefore have the effect under the contract of a delay on the part of the contract administrator, i.e. a delay for which the employer is responsible. An obligation to supply information on time would normally be implied into the terms of engagement of any consultant, if not expressly set out (Royal Brompton Hospital v Frederick Alexander Hammond).
The Royal Brompton Hospital (RBH) engaged Frederick Alexander Hammond to undertake a £19 million construction project on a JCT80 standard form of contract. The contractor successfully claimed against RBH, including for losses suffered due to delays. RBH commenced proceedings against 16 defendants, who were all members of the professional team. A trial was fixed to deal with a number of different issues, all of which were settled except for one relating to the consulting M&E engineers, Austen Associates Ltd (AA). The issue was whether AA was obliged to provide co-ordination and builder’s work information to ensure that RBH complied with clause 5.4 of the main contract. The court decided that AA was under a duty to use reasonable skill and care to ensure that the drawings were provided in time to enable the contractor to prepare his installation drawings, and thus to carry out and complete the works in accordance with the contract conditions.Royal Brompton Hospital National Health Trust v Frederick Alexander Hammond and others (No. 4) [2000] BLR 75
Information provided by the contractor
5.20 The contractor may be required to provide information in regard to requirements of the CDM Regulations, and in relation to the completion of design for which the contractor is responsible under the contractor’s designed portion of the works.
5.21 The contractor as ‘Principal Contractor’ may be required by the principal designer to provide information in relation to the health and safety file (regulation 7(12) and clause 3.23.2). If the contractor is acting as ‘Principal Designer’ then, under regulation 12(5) and (6), it is required to prepare and deliver the health and safety file to the employer.
5.22 Under clause 2.40, the contractor is obliged to provide the employer before practical completion with ‘such Contractor’s Design Documents and related information as is specified in the Contract Documents or as the Employer may reasonably require’. The documents and information are those that ‘show or describe the Contractor’s Designed Portion as built or relate to the maintenance and operation of it or its installations’. Note that if nothing is set out in the contract documents the contractor is still under an obligation to provide such information as may reasonably be required which, depending on the scale of the designed portion, could amount to a substantial operation and maintenance manual.
Contractor’s design submissions
5.23 SBC16 contains detailed provision regarding the submission of the developing design by the contractor. This information is essential in order for the contract administrator and employer to monitor the development of the design and to integrate it with the rest of the works.
5.24 The contractor must provide the contract administrator with ‘such Contractor’s Design Documents as are reasonably necessary to explain or amplify the Contractor’s Proposals’ (cl 2.9.4). This information should include (if requested) related calculations and information (cl 2.9.4.1) and (whether or not requested) ‘all levels and setting out dimensions which the Contractor prepares or uses for the purposes of carrying out and completing the Contractor’s Designed Portion’ (cl 2.9.4.2). ‘Contractor’s Design Documents’ are defined as ‘the drawings, details and specifications of materials, goods and workmanship and other related documents and information prepared by or for the Contractor in relation to the Contractor’s Designed Portion (including such as are contained in the Contractor’s Proposals or referred to in clause 2.9.4), together, where applicable, with any other design documents or information to be provided by him under the BIM Protocol’ (cl 1.1). In practice there could be differences of opinion as to what information may be ‘reasonably necessary’. The information the contractor may need to actually construct the work may be different from the information that the employer and contract administrator would like to receive. If specific information is needed, and the BIM protocol is not used, then it may be sensible to set out a schedule in the employer’s requirements.
5.25 As regards timing, the information is to be provided ‘in accordance with the Design Submission Procedure’, and ‘the Contractor shall not commence any work to which such a document relates before that procedure has been complied with’ (cl 2.9.5). The ‘Design Submission Procedure’ is defined in clause 1.1 as ‘such procedure as is specified in the BIM Protocol or, where that is not applicable, the procedure set out in Schedule 1, subject to any modifications of that procedure set out in the Contract Documents’.
Schedule 1 procedure
5.26 The design submission procedure (Schedule 1) states that the documents should be submitted ‘by the means and in the format stated in the Employer’s Requirements’. It also states that documents must be submitted ‘in sufficient time to allow any comments of the Architect/Contract Administrator to be incorporated’ (Schedule 1:1) and refers to ‘the period for submission … stated in the Contract Documents’ (Schedule 1:2). It would therefore be open to the employer – and on most projects it would be wise – to include detailed requirements regarding scope, format and timing of submissions in the contract documents.
5.27 Following submission of a contractor’s design document, the contract administrator must respond within 14 days of the date of receipt, ‘or (if later) 14 days from either the date or expiry of the period for submission of the same stated in the Contract Documents’ (Schedule 1:2) (in other words, if the contractor supplies information earlier than any agreed date, the contract administrator would not be required to respond any earlier than stated in the contract documents).
5.28 The contract administrator is entitled to take three alternative courses of action (see Figure 5.1); it can accept the contractor’s design document, in which case it should return it marked ‘A’. It may accept it, subject to certain comments being incorporated, in which case it should be marked ‘B’. Or it can make comments and require the contractor to resubmit the document with the comments incorporated for further approval, in which case it should be marked ‘C’ (Schedule 1:5). In the case of marking B or C, the contract administrator must state why the document does not comply with the contract (comments are only valid if the document does not comply (Schedule 1:2) – if it does comply, any required alteration would constitute a variation). If the contract administrator does not respond within the specified period, it is deemed to have accepted the document (Schedule 1:3).
Figure 5.1 Procedure for submission of design documents
5.29 Schedule 1:8.3 states that no comments or any action by the contract administrator will relieve the contractor of its liability to ensure that the document complies with the contract, or that the project complies with the contract. This has the effect that if the contractor incorporates a comment made by the contract administrator then it accepts that the comment has been properly made (i.e. it identifies a way in which the design document is not in accordance with the contract).
5.30 If the contractor disagrees with a comment and considers that the document complies with the contract, it is required to inform the contract administrator, within seven days of receipt of the comment, that compliance with the comment would give rise to a variation (Schedule 1:7). The contractor must give reasons as to why it thinks this. The contract administrator must either confirm or withdraw the comment within seven days. The confirmation or withdrawal is stated not to signify that the employer accepts that the contractor’s design document complies or that the comment represents a variation (Schedule 1:8.1) – this would be a question of fact, if necessary to be resolved by adjudication. The contractor would have to implement the comment and argue its case later.
5.31 If the contractor does not notify the contract administrator of its disagreement with a comment, then the comment will not be treated as a variation, even if it could be later shown in fact to be a variation (Schedule 1:8.2).
Contract administrator’s instructions
5.32 Only the contract administrator is given the power to issue instructions (cl 3.10). Sometimes the contract administrator ‘may’ issue instructions (e.g. instructions requiring a variation under clause 3.14), but at other times the contract administrator ‘shall’ issue instructions (e.g. instructions regarding discrepancies between contract documents under clause 2.15). The latter is an obligation. If the employer gives an instruction other than through the contract administrator, this would not be effective under the contract. The contractor would be under no obligation to comply with any such instruction. If the contractor does, however, carry out the instruction, a court might consider that there had been an agreed amendment to the contract. The consequences of such an agreement would be difficult to sort out in practice – the employer would be very unwise to make such agreements or issue any instructions other than through the contract administrator.
5.33 Clause 3.12.1 states that if any instruction is given ‘otherwise than in writing’ (which would normally mean oral instructions), it is of no immediate effect, but the contractor must confirm its terms in writing within seven days. It then takes effect after seven days have elapsed from the date of the contractor’s confirmation, provided that the contract administrator has not, in the meantime, dissented in writing. The contract administrator must therefore check carefully that the confirmation represents exactly what is required. Of course, the contract administrator may choose to confirm the instruction, in which case it takes effect from the date of the contract administrator’s confirmation (cl 3.12.2). If neither party confirms the oral instruction, but the contractor acts upon it anyway, then the contract administrator can later sanction the instruction at any time prior to the issue of the final certificate (cl 3.12.3), but the contractor would be taking a risk (MOD v Scott Wilson Kirkpatrick and Partners).
Scott Wilson Kirkpatrick (SWK) was engaged as structural engineer and supervising officer by the MOD in relation to refurbishment of the roof at Plymouth Dockyard under GC/Works/1. Several years after the works were completed, wind lifted a large section of roof and deposited it in a nearby playing field. The contract required 9–12 in. nails, but the contractor had used 4 in. nails. The supervising officer had been party to discussions regarding the use of the 4 in. nails, but neither he nor the contractor could remember very clearly when these discussions had taken place, or exactly what had been said. The Court of Appeal decided that the evidence was sparse and vague, and declined to find that there was any instruction under 7(1)(a) or 7(1)(m) (instructions that may be given orally), or that there had been any agreement as to the replacement. Even if the supervising officer’s conduct amounted to confirmation or encouragement, this could not absolve the contractor from its duty to fix the purlins in a workmanlike manner. The MOD was therefore entitled to insist on its strict contractual rights. The Court of Appeal noted, however, that an instruction in writing was not a condition precedent to a claim by the contractor, so long as it was able to prove that the change had been agreed.Ministry of Defence v Scott Wilson Kirkpatrick and Partners [2000] BLR 20 (CA)
5.34 All instructions must be in writing and sent in the format and by the means the parties ‘have agreed or may from time to time agree in writing’, which could include electronic communications (cl 1.7.2). If no means have been agreed, instructions may be sent by ‘any effective means’ (cl 1.7.3), and will be considered ‘duly served’ if sent by the methods set out in clauses 1.7.3.1 and 1.7.3.2. It should be remembered that it may also be necessary to prove when an instruction has been received, and therefore it is advisable to send a hard copy by recorded delivery or to record receipt of instructions at a subsequent progress meeting.
5.35 Unless a special format has been agreed, an instruction in a letter would be effective, as long as the letter is quite clear. A drawing sent with a letter requiring it to be executed would constitute an instruction, but a drawing with no covering instruction may be judged to be ineffective. Instructions in site meeting minutes may also constitute a written confirmation of an oral instruction if issued by the contract administrator. It would depend on the circumstances whether the minutes were sufficiently clear to fall within the terms of the contract, and it is therefore not good practice to rely on this method. The use of site instruction books should also be avoided. Although signing an instruction in a book would constitute a written instruction under the terms of the contract, there is no obligation to sign such books, and it may also be prudent not to make quick decisions on site but to wait until all the implications of the instruction can be considered. In practice, many people use the instruction forms published by the RIBA (either as hard copy or through NBS Contract Administrator).
5.36 The contractor must comply with every instruction (see Table 5.5) provided that it is valid, i.e. provided that it is in respect of a matter regarding which the contract administrator is empowered to issue instructions. The contractor must ‘forthwith’ comply, which for practical purposes means as soon as is reasonably possible (cl 3.10).
5.37 If the contractor feels that a contract administrator’s instruction might not be empowered by the contract, or requires clarification, then the contractor may ask the contract administrator to specify in writing the provisions of the contract under which the instruction is given, and the contract administrator must do this ‘forthwith’ (cl 3.13). The contractor must then either comply or issue a notice disputing the matter. If, however, the contractor chooses to accept the contract administrator’s reply and complies with the instruction, then the employer is bound by the instruction. This would appear to be the case even if at a later stage it is established that the contract administrator had no authority under the contract.
Table 5.5 Matters about which the contract administrator is empowered to issue instructions
5.38 Even if the contractor decides to query the instruction under clause 3.13, this does not relieve the contractor of the obligation to comply. Should the instruction be found to be valid, the contractor would be liable for any delay caused by failing to comply as required by the contract. If the contractor does comply, but the instruction turns out to have been invalid, the contractor may be entitled to any losses incurred through compliance.
5.39 The requirement to comply with a valid instruction is subject to certain exceptions:
- a clause 5.1.2 variation instruction (access and use of the site, etc.) to the extent that the contractor makes a reasonable objection (cl 3.10.1);
- an instruction relating to a Schedule 2 variation quotation, until a confirmed acceptance has been given (cl 3.10.2);
- where the instruction might affect the efficacy of the design of the Contractor’s Designed Portion (cl 3.10.3, see paragraph 5.46);
- where the instruction might affect the contractor’s compliance with the CDM Regulations (cl 3.10.3, see paragraph 5.40);
- where the instruction may infringe patent rights (cl 3.10.4);
- where the instruction relates to a named specialist, and the contractor is unable to enter into a contract with that firm (cl 3.10.5, Schedule 8:9.3 and 9.4, see paragraph 5.69).
5.40 In respect of the exceptions under clause 3.10.3, and provided the contractor notifies the contract administrator of the problem within seven days, the instruction will not take effect unless and until it is confirmed by the contract administrator (cl 3.10.3). In the case of patent right infringement, again the contractor must notify the contract administrator (although there is no time limit for this), and vice versa if the contract administrator is the party who becomes aware of the infringement, and the instruction will not take effect until confirmed (cl 2.23.2).
5.41 If the contractor does not comply with a written instruction, the employer may employ and pay others to carry out the work to the extent necessary to give effect to the instruction (cl 3.11). The contract administrator must have given written notice to the contractor requiring compliance with the instruction, and seven days must have elapsed after the contractor’s receipt of the notice before the employer may bring in others. This indicates that a recorded form of delivery is desirable. Although there is no obligation to issue such notices, it would be prudent for the employer to take swift action in order to protect its interests. The employer is entitled to recover any additional costs from the contractor, i.e. the difference between what would have been paid to the contractor for the instructed work and the costs actually incurred by the employer. These costs could include not only the carrying out of the instructed work, but also any special site provisions that need to be made, including health and safety provisions, and any additional professional fees incurred. Although it would be wise to obtain alternative estimates for all these costs wherever possible, if the work is urgent there would be no need to do so.
Variations
5.42 Contract administrator’s instructions often require some variation to the works. Under common law neither party to a contract has the power to unilaterally alter any of its terms. Therefore, in a construction contract neither the employer nor the contract administrator would have the power to require any variations unless the contract contains such a power. As some aspects of construction may be difficult to define exactly in advance, most construction contracts contain provisions allowing the employer to vary the works to some degree. Changes can arise because of a variety of reasons, including unexpected site problems or because of design changes wanted by the employer or which become necessary in order to integrate the contractor’s designed portion.
5.43 Under SBC16 the contract administrator is empowered to order specific variations (cl 3.14.1). The scope of what constitutes a variation is set out in clause 5.1. It is broadly defined and includes alterations to the quantity and specification of the works, and to operational restrictions such as access to the site. The contract expressly states that no variation will vitiate the contract (cl 3.14.5), but the power does not extend to altering the nature of the contract, nor can the contract administrator issue variations after practical completion. All variations under clause 3.14.1 may result in an adjustment of the contract sum (cl 4.3.1) and give rise to a claim for an extension of time (cl 2.29.1) or direct loss and/or expense (cl 4.22.1). If the works are suspended as a consequence, the variation may also be grounds for termination by the contractor, unless the variation is necessitated by some negligence or default of the contractor (cl 8.9.2).
5.44 The contract administrator may vary the works (cl 5.1.1), for example by changing the standard of a material specified. The contract administrator may add to or omit work, substitute one type of work for another or remove work already carried out. The contract administrator may vary the access to or use of the site, limitations on working space or working hours, the order in which the work is to be carried out or any restrictions already imposed (cl 5.1.2). As well as giving the employer a great deal of flexibility, this contract provision is necessary to accommodate difficulties that may arise, for example through local authority restrictions on working hours. However, the contractor need not comply with a clause 5.1.2 instruction to the extent that it makes reasonable objection (cl 3.14.2). Given that the contractor will be paid for such variations, it is difficult to see what might constitute a ‘reasonable’ objection, although it is possible that a variation might, for example, have a detrimental ‘knock-on’ effect on some other project, causing the contractor to suffer losses for which it would not otherwise be compensated.
5.45 Finally, the contract administrator may sanction any variation made by the contractor other than under an instruction of the contract administrator (cl 3.14.4). If such a variation were likely to affect the employer, the contract administrator would be wise to discuss it with the employer before taking action.
Variations to the contractor’s designed portion
5.46 Clause 3.14.3 states that where instructions require a variation in respect of the contractor’s designed portion, any instruction ‘shall be an alteration to or modification of the Employer’s Requirements’. This would appear to prevent the contract administrator from directly requiring changes to the proposals after the contract is entered into, including to any further design details that are developed as the contract progresses, except in cases where the developing design does not meet the employer’s requirements. If the contract administrator issues any instruction which in the opinion of the contractor may affect the efficacy of the design, the contractor must object within seven days of receiving the instruction. The instruction will not then take effect until confirmed by the contract administrator (cl 3.10.3).
Defective work
5.47 Clauses 2.3.1 and 2.3.2 state that all materials, goods and workmanship shall be of the standard specified in the contract documents (see discussion under paragraphs 3.18–3.24). The contract administrator will normally inspect at regular intervals to monitor the standard that is being achieved. However, achieving the contractual standard is the responsibility of the contractor, and the lack of an inspection cannot be used as an excuse for sub-standard work. When the standard achieved appears to be unsatisfactory it can be tempting to become involved in directing the day-to-day activities of the contractor on site. Apart from being an enormous burden on the contract administrator, this could confuse the issue of who is ultimately responsible for quality and is to be avoided.
5.48 Where the standard of goods, materials or workmanship is a matter for the approval of the contract administrator under clause 2.3, any dissatisfaction should be expressed within a reasonable time (cl 3.20). The contract administrator must also state reasons for the dissatisfaction. In all other cases there is no obligation to point out defects or errors, but the contract administrator would normally, of course, draw the contractor’s attention to areas of defective or poor quality work. The fact that work has been included in an interim certificate does not relieve the contractor of its responsibility for the standard of work, or prevent the contract administrator from deciding that the work is defective (cl 3.6).
Testing work
5.49 The contract administrator may instruct the contractor to open up completed work for inspection, or arrange for testing of any of the work or materials, fixed or unfixed (cl 3.17). No time limit is specified, but obviously the contract administrator should instruct as soon as the need for such action becomes apparent (delay could result in escalating or unnecessary costs). Failure to ask for tests in no way relieves the contractor of the obligation to provide work according to the contract. The cost of carrying out the tests is added to the contract sum, unless it was already provided for in the bills of quantities under a provisional sum or unless the work proves to be defective. Unless the work is defective, the contractor may also be entitled to an extension of time under clause 2.29.2.2 and loss and/or expense under clause 4.22.2.2, unless these tests were provided for in the contract bills.
5.50 The contract administrator has several courses of action if work is defective. An instruction can be issued requiring the removal of work, materials or goods from the site (cl 3.18.1); the work, materials or goods can be allowed to remain (cl 3.18.2) (unless part of the contractor’s designed portion); a variation can be issued (cl 3.18.3); or further tests can be instructed ‘having due regard’ to the Code of Practice for tests set out in Schedule 4 (cl 3.18.4).
5.51 If a notice requiring compliance with a clause 3.18.1 instruction to remove from the site is given and not complied with, then the provisions of clause 3.11 could be brought into operation (Bath and NE Somerset DC v Mowlem). To fall under clause 3.18.1, the instruction must specifically require removal of the work from site, however impractical. Simply drawing attention to the defective work would not be sufficient (Holland Hannen v Welsh Health Technical Services). Refusal to remove defective work is also a ground for termination under clause 8.4.1.3, provided there has been a written notice or instruction and the refusal materially affects the work.
Mowlem plc was engaged on JCT98 (Local Authorities With Quantities) to undertake the Bath Spa project. Completion was expected to be in 2002 but work was still under way in 2003. Paint applied by Mowlem to the four pools began to peel, and the contract administrator issued architect’s instruction no. 103 which required Mowlem to strip and repaint the affected areas. Mowlem refused to comply and the Council issued a notice under clause 4.1.2. Mowlem still did not comply, and the employer engaged Warings to carry out this work. Mowlem refused Warings access to the site, and the Council applied to the court for an injunction, which was granted. Mowlem appealed against the injunction, but the appeal was dismissed. Mowlem had argued that it was able to rectify all the defects and that the liquidated damages provided under the contract were the agreed remedy for delays caused. The Council was able to show that the liquidated damages were not adequate compensation for the losses suffered. Lord Justice Mance held that, in such cases, the court should examine whether the liquidated damages would provide adequate compensation, and if they would not, as in this case, it was appropriate to grant an injunction. In reaching this decision he took into account irrecoverable losses such as the ‘unquantifiable and uncompensatable damage to the Council’s general public aims’.Bath and North East Somerset District Council v Mowlem plc [2004] BLR 153 (CA)
Cubitts Ltd was employed by the Welsh Health Technical Services Organisation (WHTSO) to construct two hospitals at Rhyl and Gurnos. Percy Thomas (PTP) was the architect. Redpath Dorman Long Ltd (RDL) was the nominated sub-contractor for the design and supply of pre-cast concrete floor slabs. RDL assured WHTSO that the floors would be designed to CP 116 (concerning deflection), but the design team later required RDL to work to CP 204. Following installation, the contractor complained about extra work and costs due to adjustments to the partitions necessitated by excessive deflection of the floors, and it was established that they had been designed to CP 116 not CP 204. PTP sent three letters ‘condemning’ the floors, but the first did not mention clause 6(4), and none of them required removal of the work. Cubitts stopped work for 20 weeks until PTP issued instructions specifying how the defect should be resolved. Cubitts commenced proceedings, claiming compensation for delay. The claim was settled, but the relevant parties maintained their proceedings against each other for contribution. The official referee decided that RDL was liable for two-thirds of the amount paid to Cubitts and the design team for one-third. The Court of Appeal decided that this was incorrect and the correct apportionment should have been that RDL was liable for one-third and the design team for two-thirds. In reaching this conclusion it stated: ‘PTP contributed very substantially to the delay which occurred, in failing to recognise the defect in the design at an earlier stage; by issuing an invalid notice in 1976, and by moving very slowly thereafter to take the necessary steps to have the defects in the flooring put right’ (Robert Goff LJ).Holland Hannen & Cubitts (Northern) Ltd v Welsh Health Technical Services Organisation (1985) 35 BLR 1 (CA)
5.52 If defective work is to be allowed to remain, there must be consultation with the contractor and the approval of the employer must be obtained (cl 3.18.2). The contract administrator must specify in writing exactly which work may remain, and an appropriate deduction is made from the contract sum (cl 4.14.3). It is advisable that the value of the deduction is agreed before the work is accepted (see Mul v Hutton Construction Limited). Sometimes when defective work is retained, a variation is needed to other work, in order to accommodate the change. If such a consequential variation becomes necessary (again following consultation with the contractor) no addition is made to the contract sum and no extension of time or direct loss and/or expense is given in respect of this (cl 3.18.3). Where the work is part of the contractor’s designed portion, the contract administrator has no authority to allow or require it to remain. If the employer prefers that the work is allowed to stay (perhaps seeking to avoid delays to the programme), this would have to be agreed with the contractor, which would presumably seek to limit its liability for any defects in the non-compliant work.
This case concerned what constitutes an ‘appropriate deduction’ when an employer decided to accept non-conforming work. The project concerned an extension and refurbishment work to a country house using the JCT IC05 form. A practical completion certificate was issued with a long list of defects attached, and during the rectification period the employer decided to have this work corrected by other contractors. The employer then started court proceedings against the contractor, to claim back the costs of this work. A key issue was the interpretation of clause 2.30, which provides that the contract administrator can instruct the contractor not to rectify defects and ‘If he does so otherwise instruct, an appropriate deduction shall be made from the Contract Sum in respect of the defects, shrinkages or other faults not made good’. In this case the contractor argued that an ‘appropriate deduction’ was limited to the relevant amount in the contract rates or priced schedule of works. The court disagreed. It decided that ‘appropriate deduction’ under clause 2.30 meant ‘a deduction which is reasonable in all the circumstances’, and could be calculated by any of the following: the contract rates or priced schedule of works; the cost to the contractor of remedying the defect (including the sums to be paid to third party sub-contractors engaged by the contractor); the reasonable cost to the employer of engaging another contractor to remedy the defect; or the particular factual circumstances and/or expert evidence relating to each defect and/or the proposed remedial works. However, the judge also pointed out that the employer will still have to satisfy the usual principles that apply to a claim for damages, which include showing that it mitigated its loss. If the employer unreasonably refused to let the contractor rectify defects, then it is likely to find its damages limited to what it would have cost the contractor to put them right.Mul v Hutton Construction Limited [2014] EWHC 1797 (TCC)
5.53 If work has been shown to be defective, and further similar non-compliance is suspected, then further tests may have to be ordered (cl 3.18.4). The costs of these, including any direct loss and/or expense, are borne by the contractor. If the work is shown to have been in accordance with the contract, the contractor may be entitled to an extension of time (cl 2.29.2.2) and any direct loss and/or expense (cl 4.22.2.2). Clause 3.18.4 refers to a Code of Practice, which is included in the form in Schedule 4. Its purpose is to ‘assist in the fair and reasonable operation’ of the provisions regarding further testing. It sets out criteria that the contract administrator should consider when deciding whether to instruct further testing, including, for example, the potential consequences of the non-compliance and the standard of supervision of the work by the contractor.
Non-compliance with clause 2.1
5.54 Clause 2.1 requires the contractor to carry out the work ‘in a proper and workmanlike manner’ and in accordance with the construction phase plan. Clause 3.19 states that in the event of any failure to comply in this respect, the contract administrator may issue instructions requiring compliance, and these will not result in any addition to the contract sum, nor will they entitle the contractor to any extension of time or direct loss and/or expense. The clause empowers the contract administrator to intervene in the contractor’s working methods if necessary.
Sub-contracted work
5.55 SBC16 provides for three methods of sub-contracting work: to sub-contractors selected by the contractor, to sub-contractors ‘listed’ in the contract documents by the employer and to ‘named specialists’, who may be identified in the contract documents or through an instruction relating to a provisional sum. All of these methods allow for some control over which firms the contractor uses.
Domestic sub-contractors
5.56 Under clause 3.7 the contractor may only sub-contract work, including the design of the contractor’s designed portion, with the written consent of the contract administrator. Failure to obtain this would be a default, providing grounds for termination under clause 8.4.1.4. However, as with other approvals, the contract administrator’s permission cannot be unreasonably withheld (cl 1.11.1). It is suggested that permission is required for each instance of sub-letting, rather than agreeing to sub-letting in principle. Clause 3.9 states that ‘Where considered appropriate, the Contractor shall engage the sub-contractor using the relevant version of the JCT Standard Building Sub-Contract’. While this is not an absolute requirement, it is suggested that the contractor must be able to justify any departure from this policy. JCT Ltd publishes a suite of sub-contracts developed for use with SBC16, including one for use where the sub-contracted work relates to the contractor’s designed portion. Whatever form of domestic sub-contract is used, clause 3.9 requires that it must include certain conditions, including that:
- the sub-contract is terminated immediately upon termination of the main contract (cl 3.9.1);
- unfixed materials and goods placed on the site by the sub-contractor shall not be removed without written consent by the contractor (cl 3.9.2.1);
- it shall be accepted that materials or goods included in an interim certificate that have been paid for by the employer become the property of the employer (cl 3.9.2.1.1);
- it shall be accepted that any materials or goods paid for by the main contractor prior to being included in a certificate become the property of the main contractor (cl 3.9.2.1.2);
- the sub-contractor shall provide access for the contract administrator to workshops, etc. (cl 3.9.2.2);
- each party will comply with its obligations under the CDM Regulations (cl 3.9.2.3);
- the sub-contractor has a right to interest on late payments by the contractor at the same rate as that due on main contract payments (cl 3.9.2.4);
- the sub-contractor will grant third party rights and/or enter into warranties as required under the main contract (cl 3.9.2.5);
- the sub-contractor shall provide information and grant licenses reasonably necessary for the contractor to fulfil its obligations under clauses 2.40 and 3.23 and/or as required under the BIM protocol (cl 3.9.3).
5.57 Clause 3.9.2.1 is to protect the position of the employer and the provisions regarding unfixed goods and materials are of particular importance in this respect. If a main contractor should sub-contract on other terms, and this results in losses to the employer, then the contractor may be liable as this would be a breach of contract.
5.58 Once materials have been built in, under common law they would normally become the property of the owner of the land, irrespective of whether or not they have been paid for by the contractor. This would be the case even if there were a retention of title clause in the contract with the sub-contractor or supplier. A retention of title clause is one which stipulates that the goods sold do not become the property of the purchaser until they have been paid for, even if they are in the possession of the purchaser.
5.59 The employer could be at risk, however, where materials have not yet been built in, even where the materials have been certified and paid for. The contractor might not actually own the materials paid for because of a retention of title clause in the sale of materials contract. Under the Sale of Goods Acts 1979, sections 16–19, property in goods normally passes when the purchaser has possession of them, but a retention of title clause will be effective between a supplier and a contractor even where the contractor has been paid for the goods, provided they have not yet been built in. It should be noted, however, that the employer may have some protection through the operation of section 25 of the Act, which in some circumstances allows the employer to treat the contractor as having authority to transfer the title in the goods, even though this may not in fact be the case (Archivent v Strathclyde Regional Council).
Archivent agreed to sell a number of ventilators to a contractor which was building a primary school for Strathclyde Regional Council. The contract of sale included the term ‘Until payment of the price in full is received by the company, the property in the goods supplied by the company shall not pass to the customer’. The ventilators were delivered and included in a certificate issued under the main contract (JCT63), which was paid. The contractor went into receivership before paying Archivent, who claimed against the Council for the return of the ventilators or a sum representing their value. The Council claimed that section 25(1) of the Sale of Goods Act 1979 operated to give it unimpeachable title. The judge found for the Council. Even though the clause in the sub-contract successfully retained the title for the sub-contractor, the employer was entitled to the benefit of section 25(1) of the Sale of Goods Act 1979. The contractor was in possession of the ventilators and had ostensible authority to pass the title on to the employer, who had purchased them in good faith.Archivent Sales & Developments Ltd v Strathclyde Regional Council (1984) 27 BLR 98 (Court of Session, Outer House)
5.60 Another risk relating to rightful ownership is where the contractor fails to pay a domestic sub-contractor who has purchased materials and the sub-contractor claims ownership of the unfixed materials. Here, the risk may be higher, as a work and materials contract is not governed by the Sale of Goods Act 1979. Therefore, there can be no assumption that property would pass on possession.
5.61 SBC16 attempts to deal with the issues surrounding ownership in several ways. First, unfixed materials and goods which have been delivered to the site and intended for the works may not be removed without the written consent of the contract administrator (cl 2.24 and 3.9.2.1). Removal would be a breach of contract, therefore the employer could claim from the contractor for any losses suffered through unauthorised removal. This would apply even though the materials or goods may not yet have been included in any certificate. Second, unfixed materials and goods either on or off site which have been included in an interim payment are to become the property of the employer (cl 2.24 and, and the contractor is thereby prevented from disputing ownership.
5.62 Clauses 2.24 and 2.25 of the main contract, however, are only binding between the parties, and do not place obligations on any sub-contractor. The risk facing the employer is that if the contractor becomes insolvent, a sub-contractor or supplier may still have a rightful claim to ownership of the unfixed goods, even though they have been paid for by the employer (see Dawber Williamson Roofing v Humberside County Council). The main contract therefore requires that all sub-contracts include similar clauses to 2.24 and 2.25 regarding non-removal from site and ownership passing upon payment (cl 3.9.2.1). Sub-contracts must also include a clause stating that once materials and goods have been certified and paid for under the main contract they become the property of the employer and that the sub-contractor ‘shall not deny’ this. This would operate even where the main contractor has become insolvent. Even this provision might not protect the employer in some circumstances because if the sub-contractor does not have ‘good title’ it cannot pass it on. Thus, for example, it might not prevent a sub-subcontractor claiming ownership.
The plaintiff entered into a sub-contract with Taylor and Coulbeck Ltd (T&C) to supply and fix roofing slates. The main contractor’s contract with the defendant was on JCT63. By clause 1 of their sub-contract (which was on DOM/1), the plaintiff was deemed to have notice of all the provisions of the main contract, but it contained no other provisions as to when property was to pass. The plaintiff delivered 16 tons of roofing slates to the site, which were included in an interim certificate, which was paid by the defendant. T&C then went into liquidation without paying the sub-contractor, who brought a claim for the amount or, alternatively, the return of the slates. The judge allowed the claim, holding that clause 14 of JCT63 could only transfer property where the main contractor had a good title. (The difference between this and the Archivent case cited above is that in this case the sub-contract was a contract for work and materials, to which the Sale of Goods Act 1979 did not apply.) Provisions within clause 3.9.2 of SBC16 now deal with the problem illustrated by this case.Dawber Williamson Roofing Ltd v Humberside County Council (1979) 14 BLR 70
Listed sub-contractors
5.63 Under clause 3.8 the contractor’s choice of a sub-contractor to carry out certain work, measured or otherwise described, can be restricted to any one of three or more persons named in the contract bills, or in a list annexed to the bills. The contractor must select one of those listed and is responsible for the performance of such sub-contractors to the same degree as it would be for any sub-contractor it had selected itself. All sub-contracts should contain the provisions described above and the contractor may be required to obtain warranties from the listed sub-contractor (see paragraph 2.59).
5.64 Names may be added to the list by either the employer or the contractor, with the consent of the other (cl 3.8.1). If less than three of those listed are able or willing to carry out the work then the employer (or the contract administrator on its behalf) and the contractor may add names to bring the total up to no fewer than three (cl 3.8.1, see Figure 5.2). If it is not possible to maintain a list of three, then the work may be carried out by the contractor, or sub-let to a domestic sub-contractor under clause 3.7 (cl 3.8.2). The contractor has the right of reasonable objection to any new addition to the list, and given that it is taking responsibility for the sub-contractor’s performance, it is likely that any real concern about the competence of the firm would be a good reason for withholding its consent. Where there are difficulties in engaging any of those preferred by the employer, the employer may be considered unreasonable if it objects to any alternative suggestions put forward by the contractor.
Figure 5.2 Appointment of listed sub-contractors
Named specialists
5.65 The provisions for ‘Named Specialists’ are set out in Supplemental Provision 9 of Schedule 8. They give the employer the right to require the contractor to use a particular firm to undertake part of the works. CDP work is specifically excluded from this provision (Schedule 8:9.1) and, unlike the more detailed named sub-contractor provisions in the Intermediate Building Contract with Contractor’s Design (ICD16), there is no reference to named specialists undertaking a design role in either the contract or in the JCT Standard Building Contract Guide (SBC/G). If a design role is intended, parties would need to consider many matters, including whether or not the contractor is to be responsible for that design, the level of liability and whether professional indemnity insurance and collateral warranties are required; all of these would require carefully drafted amendments to the form.
5.66 Despite this limitation, the provision may be useful in situations where the employer wishes to involve particular firms in certain aspects of construction. The employer may, for example, have used the firm on other projects and found it to be particularly reliable, and/or its workmanship to be exceptional. The contractor remains entirely responsible for the quality of the firm’s work. There are, however, some risks to the employer; these would arise if there were difficulties in entering into a contract with the named specialist, or the firm became insolvent. (The resulting risk distribution is summarised in Table 5.6.)
Table 5.6 Risk distribution
5.67 If the employer wishes the contractor to engage a named specialist, this can be done in two ways. The first is to name the firm and identify the work in the contract documents (the work is termed ‘Pre-Named Specialist Work); the second is to do this under an instruction relating to a provisional sum (the work is termed ‘Post-Named Specialist Work). In the latter case, the contractor may make a reasonable objection to the firm.
5.68 The contractor must enter into an agreement with the named specialist ‘as soon as reasonably practicable’ (Schedule 8:9.2). The contractor should engage the specialist on terms that comply with clause 3.9, i.e. using the appropriate JCT sub-contract or incorporating the provisions set out in that clause (Schedule 8:9.2; see paragraph 5.56). Other than this, no particular terms are required for the sub-contract, unless the employer has stipulated special conditions in the tender documents or in the instruction.
5.69 If the contractor is unable to enter into a sub-contract it must immediately inform the contract administrator of the reasons that have prevented this from happening (Schedule 8:9.3, see Figure 5.3). Provided the contractor’s objections are reasonable, the contract administrator must, within seven days, by an instruction either remove the reason, or select another named specialist to carry out the work, or direct the contractor to undertake the work itself (or have it carried out by a sub-contractor selected by the contractor and approved by the employer), or omit the named specialist work as a variation (Schedule 8:9.3.4). If the named specialist’s contract is terminated (see paragraph 9.34), the contract administrator has the same options regarding issuing instructions to remedy the situation.
Figure 5.3 Appointment of named specialists
5.70 Where a named specialist is named in an instruction relating to a provisional sum, or in an instruction to remove difficulties as described above (but was not named in the contract), then this may be grounds for claiming an extension of time or loss and/or expense (cl 2.29.2.3 and 4.22.2.4). If a named specialist becomes insolvent, then this may also provide grounds for such claims (cl 2.29.14 and 4.22.2.5).
Work not forming part of the contract/persons engaged by the employer
5.71 Under clause 2.7 the employer may engage persons directly to carry out work that does not form part of the contract, while the main contractor is still in possession. If the contract bills have included this requirement, then the contractor must permit the employer to execute such work (cl 2.7.1). Otherwise, the employer can only do this with the contractor’s permission (cl 2.7.2). The permission may not be unreasonably delayed or withheld.
5.72 It should be remembered that the indemnities given by the contractor under clauses 6.1 and 6.2 (and therefore the insurances under clause 6.4) do not extend to persons employed under clause 2.7. The employer should also be made aware that any serious disruption caused to the contractor’s working could lead to an extension of time (cl 2.29.7), to loss and/or expense (cl 4.22.5), or even to termination (cl 8.9.2.2).
Making good defects
5.73 The contract administrator may instruct the contractor to make good any ‘defects, shrinkages or other faults’ which appear during the rectification period (cl 2.38.2). The power is limited to those defects that result from the work not having been carried out in accordance with the contract or to the contractor failing to comply with its obligations with respect to the contractor’s designed portion. This does not include other defects that may be due, for example, to errors in the design information supplied to the contractor, or to general wear and tear resulting from occupation by the employer. The power is also limited to those defects that appear after practical completion, although it would be sensible to allow the contractor to correct any outstanding defects (Pearce and High v Baxter). The power would cover defects appearing during the rectification period that have been caused by frost, but only where the damage was due to a default of the contractor before practical completion.
The Baxters employed Pearce and High on MW80 to carry out certain works at their home in Farringdon. Following practical completion, the architect issued interim certificate no. 5, which the employer did not pay. The contractor commenced proceedings in Oxford County Court, claiming payment of that certificate and additional sums. The employer, in its defence and counterclaim, relied on various defects in the work that had been carried out. Although the defects liability period had by that time expired, neither the architect nor the employer had notified the contractor of the defects. The Recorder held that clause 2.5 was a condition precedent to the recovery of damages by the employer, and further stated that it was a condition precedent that the building owner has notified the contractor of patent defects within the defects liability period. The employer appealed and the appeal was allowed. Lord Justice Evans stated that there were no clear express provisions within the contract which prevented the employer from bringing a claim for defective work, regardless of whether notification had been given. He went on to state, however, that the contractor would not be liable for the full cost to the employer of remedying the defects, if the contractor had been effectively denied the right to return and remedy the defects itself.Pearce and High v John P Baxter and Mrs A S Baxter [1999] BLR 101 (CA)
5.74 If an instruction to make good defects is issued, the contractor must comply ‘within a reasonable time’ (cl 2.38). Unless causing unacceptable problems, defects that appear during the rectification period are normally left until after the expiration of the period. The power to instruct ends at the time the schedule of defects is issued or 14 days after the end of the rectification period.
5.75 The contract administrator has a duty under clause 2.38.1 to issue a schedule of defects not later than 14 days after the end of the rectification period, the only point where the contract requires the contract administrator to issue such a schedule. The schedule is issued in the form of an instruction, and the contractor is required to rectify the defects within a reasonable time. If the contract administrator, with the agreement of the employer, decides to accept the defective work then this should be clearly shown in the instruction, and under clause 2.38 an appropriate deduction is made from the contract sum (cl 4.14.3). Care should be taken to establish the full extent of the problem before such a course of action is taken, as it is unlikely that the employer would thereafter be able to claim for consequential problems or further remedial work. In particular, if the work was stated to be ‘to approval’ in the contract documents, this will have implications for the final certificate (see paragraphs 7.48–7.51) which should be resolved before the work is accepted.
5.76 Once satisfied that all the defects have been made good, the contract administrator must issue a certificate to that effect (a ‘Certificate of Making Good’) (cl 2.39). The certificate is one of the preconditions to the issue of the final certificate. The contract does not state what should happen in respect of defects which appear after the issue of the certificate but before the issue of the final certificate. It is, however, clear from clause 2.38 that the contract administrator no longer has the power to instruct that these are made good. It is suggested that in such circumstances there would be two possible courses of action. The first would be to make an agreement with the contractor to rectify the defects before the final certificate is issued. If the contractor refuses to do this, an amount could be deducted from the contract sum to cover the cost of making good the work, but this would involve some risk to the employer. The second and less risky course would be to have the defective work rectified by another contractor, and to deduct the amount paid from the contract sum. This would involve a delay to the issue of the final certificate and would probably be disputed by the contractor.