An insurer, a project manager, and the builder were found liable in the High Court for defective repairs to an insured property. The insurer had undertaken to restore the property to an “as new” condition and the project manager was responsible for certifying payments to the builder, if the work was carried out in a tradesman like manner.

The insurer issued proceedings against the project manager’s insurer in the Court of Appeal. While both parties accepted that the project manager was not required to underwrite or guarantee the repairer’s workmanship, it did have a limited obligation to assess the quality of work. This meant the project manager would be liable for defects ‘visible to the naked eye’. It was disputed between the parties whether the project manager would be liable for every single visible defect.

The High Court made a distinction between the foundations and other defects such as the cladding and the windows when applying the naked eye test. But the Court of Appeal held that this was inaccurate, since both types of defects were visible. They also added that the “completion” of a task turns not only on the visibility of the defect, but also the nature of the defect, its seriousness in terms of the integrity of the building as a whole and the extent of the repairs necessary to fix it. They concluded that there was no distinction between the structural defects, and the cladding and windows.

The project manager was held liable in respect of every single visible defect.


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