Birse Construction Ltd v Eastern Telegraph Company Ltd

This case concerns extensive defects and contractual disputes arising from Eastern Telegraph Company Ltd's Coventry training college built by Birse Construction to MJP's acclaimed design. After partial possession in 1993 and practical completion, a March 1994 settlement fixed the final account and established a snagging and retention regime. Birse claimed outstanding retention; ET counterclaimed for numerous defects across renders, paving, copings, ceilings, roofs, paintwork, electrical and water features. MJP settled during trial. The court construed the 1994 agreement as varying the building contract, obliging Birse to make good listed 'snagging defects' irrespective of underlying liability, and held clause 3.3 created a debt only for actual costs incurred. Retention under clause 4 was conditional on certificates, but AI 80 prevented Birse's compliance, requiring ET to pay retention subject to set-offs. Applying Ruxley, ET’s claims for unremedied defects were largely rejected as disproportionate and lacking genuine intent to repair, with only nominal damages awarded. Factually, Pozament render failures were design-driven, Blanc de Bierges paving defects were Birse's breach, many copings/DPC remedials addressed design, and discrete liabilities were found for certain roofing, paintwork, electrical and kitchen ceiling defects.