Appropriate deductions for defects under the JCT forms

Appropriate deductions for defects under the JCT forms

How will the court interpret the meaning of ‘appropriate deduction’ for the purposes of defects rectification under a JCT form of contract? Peter Clyde and Nick Lane in the construction team at Mishcon de Reya comment on the first ruling on such interpretation where the court decided the wording must be construed in the light of the circumstances of the case, and not limited artificially to contractual rates and prices.

Original news

Mul v Hutton Construction Ltd [2014] EWHC 1797 (TCC), [2014] All ER (D) 68 (Jun)

The claimant brought proceedings against the defendant contractor for damages for defects and alleged overpayment in respect of work carried out on her country house. In the course of proceedings, the Technology and Construction Court gave a preliminary ruling on the true construction of a clause in a building contract, which provided for any defects to be rectified in a stated rectification period. The court held that an ‘appropriate deduction’ meant a deduction which was reasonable in all the circumstances and could be calculated by reference to one or more factors.

What were the issues raised by this case?

Clause 2.30 of the JCT Intermediate Form of Contract (2005) provides that the contractor must make good defects notified in the rectification period unless the contract administrator (CA) with the consent of the employer shall otherwise instruct. If the CA does otherwise instruct, an ‘appropriate deduction’ is to be made from the contract sum. The issue before the court was a preliminary issue as to the proper interpretation of the words ‘appropriate deduction’ (which also appears in other JCT forms).

The employer argued that the words are not confined to a valuation based on contract prices but mean what is appropriate in all the circumstances, which could be any one of:

(a) the contractual rates

(b) the cost to the contractor of remedying the defect

(c) the reasonable cost to the employer of engaging another

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