Liability periods

Does the final certificate prevent the employer from recovering for the consequential effect of defects that have been remedied either by the employer or the contractor before the final certificate?

Is the employer prevented from recovering damages for any defects that become patent after the issue of the final certificate i.e. during the post-rectification period?

It appears, following numerous cases, that the satisfactory making good of defects does not amount to an exclusion of claims in respect of their consequences. The measure of damages will therefore not only be the cost of repair of the defect, but also such compensation as the loss of the use of the building during repairs in accordance with the ordinary rules governing remoteness (mitigation) of damages.

Contractor's liability beyond the rectification period

It is a common misconception that the contactor's liability ends once the rectification period expires (such as in the case of Pearce & High Limited v Mr & Mrs Baxter (1999)), although the contractor's right to return to site and remedy the defect does end. After the rectification period, the contractor remains liable, but after proper notice the employer can pursue an action at common law for damages.

The employer's right to sue will generally continue from the date of completion to the date of expiry of the period of limitation. This is usually 6 years in the case of a simple contract executed under hand, and 12 years for a contract executed as a deed.