What is the "appropriate deduction" for defects remedied by an alternative contractor?

What is the "appropriate deduction" to be made from the final account for defects arising during the defects liability period which are rectified by another contractor under standard form JCT wording? The answer: "whatever is reasonable in all the circumstances". 

In a recent Technology and Construction Court case, the Contractor argued that only the contract rates/priced schedule of works/specification in the JCT Intermediate  Contract 2005 should be used to calculate the sum due as an "appropriate deduction" under clause 2.30. 

The Court said that the contract rates were only part of the answer, and the Contract Administrator should also consider:

  • whether the Contractor has the right to remedy the defects himself and the effect of this on recovery
  • the Employer's obligation to mitigate its losses
  • the cost to the Contractor of remedying the defect
  • the reasonable cost to the Employer of engaging another contractor to remedy the defect
  • the particular factual circumstances and/or expert evidence relating to each defect and/or the proposed remedial works

For anyone involved in a project where use of an alternative contractor to rectify defects during the defects liability period has been proposed, these issues should be considered carefully against the facts of your project.  The details in the case report give guidance on when each factor may be relevant.

Oksana Mul v Hutton Construction Limited [2014] EWHC 1797 (TCC)

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