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Housing - Contract – procurement- negligence - architect - housing association

An architect, AB & Co, was commissioned by a Housing Association to design two blocks of flats. Practical completion was certified for the two blocks in March and June 2002 respectively. There were immediate noise complaints from tenants. An expert report for Block 1, obtained in June 2005, confirmed that the cause was inadequate design and sound insulation of the internal walls. A report for the second block was obtained in December 2005 with similar findings. In November 2008, the Housing Association brought proceedings, alleging a failure in the design of the building and non-compliance with Building Regulations. It claimed £127,000 and £192,000 for remedial works to the respective blocks. The architect argued the proceedings were out of time under the Limitation Act 1980.

Going to Court

The case goes to court. The trial in May 2010 lasts 5 days. The District Judge finds that the claim in relation to Block 1 is time barred. Under s14A, Limitation Act 1980, the action should have been brought, at the latest, by June 2008, i.e. within three years of the Housing Association becoming aware of the defect in design. More questionably the District Judge also dismisses the claim in relation to Block 2. He considers the Housing Association had constructive knowledge of the cause of the problem in relation to Block 2 from June 2005 and the earlier report for Block 1. The Housing Association pays its own costs of £120,000 and £90,000 of the architect’s costs. The successful 8 year working relationship with AB & Co breaks down and AB & Co are removed from the Association’s panel. The noise problem is so severe that a number of tenants move out, resulting in a loss of rental income. The Association feels unable to undertake remedial work until it knows its position on recovery.

With Centre for Justice (CFJ)

Following issue of the claim, the parties agree to a referral to CFJ. The Centre’s assessor gives his preliminary view that the claim for Block 1 is time barred but not that for Block 2, where time only ran from the report of December 2005. The cause of the defects in Block 2 might have been different and could only be identified with any certainty when the second report was provided. The architect agrees to pay 90% of the cost of the proposed works on Block 2. The matter is resolved in 2 months. The Association obtains interim funding and completes the remedial works in June 2009. The empty flats are re-let. The architect agrees to discount its fees to secure two further projects and the relationship is restored. The parties share the Centre’s fees of £6,000.

Outcome

Cost saving with CFJ: £207,000 (98%).

Other benefits: By using CFJ the Housing Association:

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