The TCC considered whether a contractor had extended limitation for claims where it accepted liability for NHBC warranty cover. The employer Larkfleet engaged contractor Allison (in fact Swallow Homes subsequently acquired by Allison) to build homes in Peterborough. The form of contract was a JCT 1998 WCD with amendments, which was signed under hand in September 2001, giving a 6 year limitation period.
Somewhat unusually Larkfleet registered itself as 'builder' for the purposes of the NHBC warranty cover, but inserted a provision at clause 2.5.5. of the building contract "the contractor warrants to accept responsibility for any defect and any expense incurred due to defective work for the period of 10 Years for the NHBC warranty." After completion, the houses were sold in 2002 with the benefit of NHBC cover until 2012. Prior to expiry of the NHBC cover, defects emerged in 3 houses, and the owners made successful claims to the NHBC, which then sought reimbursement from Larkfleet in 2011. Larkfleet notified Allison of the defects, but Allison responded that any claim was time-barred.
Proceedings were issued, and at a hearing of preliminary issues, the court considered whether Larkfleet's claim against Allison was time-barred or whether clause 2.5.5 made Allison responsible for NHBC claims. Fraser J held that the clause meant Allison had accepted responsibility for defects arising during the 10 year NHBC liability period, thus extending liability beyond that which would otherwise have existed under the contract.
It is a useful reminder to contractors that specific provisions in a contract may serve to limit or extend liability beyond that which would otherwise exist at common law.
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