January To June 2013 Case Review

Following on from our case law updates for 2012, please see the below selection of cases decided in the first half of 2013 which may be of interest to our clients and contacts in the property and construction sectors:

No right to direct payments

A.J. Building and Plastering Limited v Turner, Munday & Dalling [2013] EWHC 484 (QB)

A.J. Building were sub-contractors hired by Rok (on behalf of Zurich) to complete insurance repairs. Rok failed to pay A.J. Building before going into administration. A.J. Building sought to recover payment directly from the householders, stating that they had a direct contractual obligation to do so as the householders had signed a "Work Authority Mandate". The judge rejected the claims on the basis that it was understood by all parties involved that Zurich would pay for the repairs. Furthermore, the householders had no discussion or input into the price of the works. The effect of the Mandate was that the insurer (Zurich) was responsible for covering the insured losses, while the householder was responsible for any payment over and above that of the insurance repairs (policy excess and additional works not covered by the policy). These claims, though for small amounts, served as test cases and confirmed that sub-contractors cannot recover where they do not have a direct contractual relationship or other express right to be paid directly.

Duties to third parties for defects

Hunt and others v Optima (Cambridge) Ltd and others [2013] EWHC 681 (TCC)

In this case, parties who had purchased long leasehold interests in flats sought to claim substantial damages for numerous defects from Optima (the developer) and Strutt & Parker ("S&P" who were responsible for providing certificates in respect of the works). The developer was held liable for breach of sale agreements and repairing covenants. The court also had no doubt that S&P owed a duty of care to the residents - the certificates amounted to a negligent misstatement and also a breach of warranty. Consultants therefore need to keep in mind that they may owe duties to third parties, even if they have not entered into a direct contract with them. The issues discussed in respect of the Limitation Act in this case also highlight the need to bring claims swiftly to avoid being time-barred. This case is also a reminder of the importance for consultants to make their own enquiries when certifying that works are satisfactory. It is not advisable to rely on what other members of...