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ARTICLE · 15 AUGUST 2014

Personal Guarantees – Be Aware!

MacRoberts
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National House Building Council (NHBC) v John Penman and Elizabeth Penman [2014] CSOH 120 considered whether the owners of JAD Homes Ltd (JAD) were liable for payment to the NHBC for costs incurred carrying out remedial works to defective properties and for compensation payable to the proprietors for the delay

United KingdomLitigation, Mediation & Arbitration
Leon Breakey
Leon Breakey
Gillian Craig
Gillian Craig
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National House Building Council (NHBC) v John Penman and Elizabeth Penman [2014] CSOH 120 considered whether the owners of JAD Homes Ltd (JAD) were liable for payment to the NHBC for costs incurred carrying out remedial works to defective properties and for compensation payable to the proprietors for the delay.

In 2005, JAD developed a residential site at Lyoncross, Falkirk consisting of 27 properties. Each house was registered with the NHBC's 'Buildmark' cover. As a builder on the NHBC register, JAD were obliged to ensure all houses met the required standard set by the NHBC.

JAD went into administration in 2008 as a result of the financial crisis. After paying for the remedial works and compensating the proprietors for costs incurred for the delay, the NHBC brought an action for payment against the Penmans (who provided personal guarantees in respect of JAD's obligations) for £957,000.

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