Practical Law

We recently received a number of queries about parties’ rights and obligations relating to a snagging list. While all the queries related to JCT forms of contract, in practice the term “snagging list” is used in a variety of situations and can mean different things to different people. For example, a straw poll of PLC editors revealed three possible interpretations.

Common usage

Snagging list has no universally agreed meaning. It is not referred to at all in the JCT suite of contracts, but practical experience indicates that it is regularly applied to:

• A contract administrator’s (or employer’s agent’s) pre-completion list of outstanding work, which is shared with the building contractor to clarify what work remains outstanding before practical completion will be certified. For example, this is the context of the snagging lists referred to in Walter Lilly & Company Ltd v Giles Patrick Cyril Mackay and another [2012] EWHC 1773 (TCC). This type of list is common in the latter stages of a construction project.
• A list of de minimis (very minor) items of work that are left over at practical completion. Although not expressly provided for in JCT contracts, the courts have long recognised a contract administrator’s power to certify practical completion subject to de minimis items (see HW Neville (Sunblest) Ltd v William Press and Son Ltd (1981) 20 BLR 78). However, because the JCT contracts do not expressly refer to such a list, many practitioners regard it as best practice to allow for such a list in an amendment to a JCT contract. For example, see clause 2.36A of PLC Construction’s Standard document, Schedule of amendments to JCT Design and Build Contract, 2011 edition.
• Non-de minimis items of outstanding work identified at practical completion and listed in an appendix to the certificate of practical completion. This envisages a list issued at, or immediately after, practical completion. Using a snagging list in this way is inconsistent with the JCT contract mechansim, but that conflict could be overcome by bespoke amendments. For example, the amendment in PLC’s standard document, referred to above, could assist the parties.
• Non-de minimis items of outstanding work identified in a list that is issued some time after practical completion (and may or may not overlap with defects identified during the rectification period). The JCT contracts do not provide for this type of snagging list and it is very difficult to draft bespoke amendments governing its operation. This is because it is unclear how this type of list ties in with the parties’ contractual rights and obligations under an unamended JCT contract, particularly in relation to defects, the rectification period, retention monies or liquidated damages. After practical completion, it is best practice to use the JCT contract’s defects liability (or rectification) process.

Why does it matter?

The JCT contracts do not refer expressly to snagging lists. This means that a contract administrator that issues a snagging list under an unamended JCT contract is stepping outside the recognised contractual mechanism. However, as already explained, there is no real difficulty with a list of pre-completion items or a list of de minimis items outstanding at completion (the first two examples listed above).

In contrast, unless the parties have amended the JCT contract, there is no legal certainty about how a court would interpret the effect of a snagging list of non-de minimis items issued on or after practical completion (the final two examples listed above). As already explained, bespoke amendments can cater for a list issued on completion, but a list that is issued or amended later should be avoided.

What should you do?

Snagging lists are a fact of life and often make commercial sense to the parties to a building contract. At their best, they provide a sound means of communication between the parties and the contract administrator at the end of the works, facilitating an orderly transition between the construction of a building and its final use. Rather than regarding a snagging list as an abuse of the contractual process, a lawyer negotiating a building contract should address the issue head on, by:

• Never assuming that the parties have a shared understanding of the term “snagging list” or its contractual effect.
• Taking steps to establish whether a snagging list will be used on a project by raising the issue with the parties and the contract administrator at an early stage. If there is a chance that a snagging list of non-de minimis items will be issued on completion, the lawyer should consider inserting express contract terms dealing with its effect. However, parties should avoid using that type of list if it will be issued or amended after practical completion, instead of using or adapting the JCT contract’s defects retification procedures.

These simple steps can safeguard against significant problems further down the line.