Arbicon ADR Ltd
RICS

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Defects Claims When a construction project reaches completion and the final account and final payment must be considered, it is not uncommon for the paying party to withhold sums against what they consider to be defective works. Most standard forms of contract contain mechanisms/provisions for dealing with defects, normally in the form of a procedure which includes a notice that practical completion has been reached, a defects liability period and a notice of making good or defects. It is important that the contractual procedure is understood so that any rights to claim are not lost.

The types of issue that arise under the heading of defects, relate to withholding payment on the grounds of defective work, pursuit of due retention or pursuit of damages for defective work including latent defects. It is also not unusual for one party to consider an i tem a defect and the other a variation, the latter of which does not have to be carried out after practical completion. It is easy to see that this could lead to a set off argument if others are employed to carry out the work. Sewn into the financial remedies pursued will also be arguments in respect of what constitutes practical completion, valid service of notices and failures to carry out timely defects inspections. If not defined in the contract, there is no hard and fast rule as to what constitutes practical completion unless expressly agreed. This can lead to issues regarding Liquidated and Ascertained Damages (LAD's) and defects. It is not unusual for paying parties to accuse the Contractor or Sub Contractor of non-completion for minor outstanding works whilst taking possession of the building which, in the absence of a definition, is likely to constitute practical completion.

Arbicon have been instructed to deal with projects where works have been significantly non- compliant. We saved our Clients from lengthy court proceedings by adopting our management expertise and adjudicating our Clients' rights. For example, we have acted on a project where an existing office building was converted into numerous flats. The Contractor failed to obtain building control sign off due to a defective sound test, which is critical on flats and dwellings that adjoin one another. The Client had not only endured incompetence with the builder, his Contract Administrator was negligent on numerous points including certifying non-compliant work. Arbicon prosecuted the Contractor in adjudication and prepared the PI claim against the Contract Administrator which, in the end, became unnecessary.

Pursuit of the final account and final payment including retention can be difficult when set off and defects are argued. Arbicon's team understand the law and rights of parties in respect of these matters and the best commercial way of tackling such issues. Arbicon are experts in resolving problem final accounts and collecting outstanding retentions.


Author: Jonathan Nugent

Managing Director - Arbicon ADR Ltd, Chartered Quantity Surveyor, Construction Adjudicator, Arbitrator, Mediator, Expert Witness/Reports/Determination, Lecturer, Delay and Loss Analyst, Leading Authority on Construction Contracts/Law, Commercial Construction Contract Solutions and Dispute Resolution.