Citation: [2015] EWHC 1703 (TCC)
The Respondents had purchased a new house and brought proceedings against the Builder and the Developer alleging that the property suffered from numerous defects for which the Defendants were responsible. The claim against the Developer was brought by reference to the Defective Premises Act 1972 and also the contract of sale between the Respondents and the Developer.
The contract required the Developer to use its best endeavours to procure that the property was built in accordance with the planning permission, Building Regulations and the NHBC Standards. The Developer applied to strike out the contractual claim, arguing that “best endeavours” did not impose a primary liability for defects but only a secondary obligation to have the property built by the Builder in a particular manner; and that it had discharged that obligation by requiring the Builder to build the property in accordance with the planning permission, building regulations and NHBC Standards. The Developer also relied on cl.3.2.1 of the Standard Conditions of Sale, which provided that the Respondents accepted the property in the physical state it was in at the date of contract, and on cl.3.4 of the sale contract which provided that the Developer would procure an appropriate warranty and that such warranty would be in lieu of any other liability for defects. The Developer further argued that the proceedings should be struck out or stayed by reference to the sale contract, which required any dispute to be referred to the NHBC.
Peter Brogden successfully persuaded Coulson J not to stay or strike out or stay the claim, on the basis that:
(1) The Developer was wrong to characterise that as a secondary obligation and to say that it had been satisfied merely by employing a builder on those terms.
(2) The Developer could only on the Standard Conditions of Sale to the extent they were inconsistent with the terms of the sale contract, and the clause relied upon was indeed inconsistent.
(3) Clause 3.4 could not be read as an exclusion clause. There was no express cross-reference from one clause to the other. Furthermore it was not usually possible to exclude one’s own liability by reference to an arrangement with a third party. If the clause did purport to have that effect, it was very likely to be unfair under the Unfair Terms in Consumer Contracts Regulations 1999.
(4) The question whether the warranty offered was “appropriate” was a matter of fact which was not suitable for summary determination.
(5) Clause 11.5 could not operate as an exclusion clause because there had been a reference to the NHBC, although it had not been pursued and the NHBC had closed its file. There should not be a stay under that clause. The developer had taken steps in the action, and in any event such a stay would only add costs and delay. In the circumstances the contractual claim would not be struck out.
