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	England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Holding & Management (Solitaire) Ltd v Ideal Homes North West Ltd. & Ors [2004] EWHC 2408 (TCC) (30 September 2004) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2004/2408.html Cite as: [2004] EWHC 2408 (TCC)

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IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		30 September 2004

His Honour Judge Peter Coulson Q.C:

INTRODUCTION

1. Pursuant to an action commenced on 11^th August 2003, Holding & Management (Solitaire) Ltd., (hereafter referred to as "HM"), who are the freehold owners of properties at Finland Street and Norway Gate in London, S.E.16 ("the properties") claim damages against the Second, Fourth and Sixth Defendants arising out of problems with the rendering on the external elevations. It is agreed by the parties that the spalling of and damage to the rendering was caused by the use of Fletton bricks within the external walls themselves: Fletton bricks contain an abundance of soluble sulphates which, in the present case, disrupted the brickwork and caused the rendering to fail. Subject to arguments about liability causation and loss, the parties have helpfully agreed quantum in the figure of £881,892, this figure being derived from a number of competing figures said to represent the estimated cost of carrying out the necessary remedial works.
2. The claim against the Fifth Defendants has been compromised. Each of the three remaining Defendants in the action deny liability. They are the Second Defendants, Ideal Homes North West Ltd ("Ideal North West"), the original contractors who built the properties; the Fourth Defendants, Ideal Homes Southern Ltd. ("Ideal Southern"), who commissioned and carried out a remedial scheme in 1995-1996 which ultimately proved unsuccessful; and the Sixth Defendants, Persimmon Homes (South East) Ltd., ("Persimmon SE"), who became involved in the ongoing problems in 2002.
3. During the Trial, I produced a list of the Issues which appeared to arise between the parties. Counsel considered and agreed those Issues and have produced helpful Closing Submissions which are based upon them. Before I come, in my turn, to address those Issues in this Judgment, I should set out some of the factual background to the dispute and identify in detail the contractual regime relating to the construction of these properties.

BACKGROUND

4. The Original Contract

The properties were built between 1989 and 1991 by Ideal North West, pursuant to a Contract with the London Docklands Development Corporation ("LDDC"), the then freehold owners of the site. Accordingly, Ideal North West's primary contractual obligations arose under that Contract and were owed to LDDC. Unfortunately, no copy of that Contract has been found, and it is impossible to say what Ideal North West's contractual obligations were, either generally, or more particularly, regarding the use of Fletton bricks in external rendered walls. Therefore it is at least possible that, pursuant to their Contract with LDDC, Ideal North West were obliged to use those Fletton bricks in the rendered walls.

5. The NHBC Agreements

No copies of these Agreements were produced in Court. However the parties apparently agree^[1] that those who purchased leasehold interests in the individual properties ("the Lessees") entered into agreements (presumably with Ideal North West) pursuant to which, in the event of defects in the properties which were not put right, the National House Building Council ("the NHBC") would carry out/pay for all appropriate remedial works. Such agreements were and are typical of new developments carried out by building contractors registered under the NHBC Scheme. They provide a direct way in which the occupiers of the properties can pursue those responsible for any defective work, with the NHBC acting as a kind of guarantor should the building contractor fail to honour its obligations or go into liquidation.

6. The Leases

Each of the Lessees entered into Leases with the LDDC for a period of 125 years. These Leases contained a number of standard terms, and included extensive covenants provided in favour of the LDDC by the Lessees. But the Leases were also unusual in that they were made, not only between the Lessees and the LDDC, but also between the Claimant, HM, (as the company to whom LDDC would transfer the freehold interest in the properties following the sale of the last one) and Ideal North West, as the developer. Since it is the terms of these Leases which provide the foundation for HM's principal claim, it is necessary to set out the terms of the Leases in some detail. It is agreed by the parties that each Lease contained precisely the same terms.

7. The Recitals included the following:

"(A) LDDC is the estate owner of the freehold interest in the Block specified in paragraph 6 of the Particulars being part of the land comprised in the Title above referred to.

(B) The Developer [Ideal North West] is erecting the Block on behalf of LDDC, pursuant to arrangements made between the Developer and LDDC

(C) The Developer and LDDC are desirous of letting the flats in the block, subject to the regulations hereinafter mentioned to the intent that the Lessee for the time being of any of the said flats may enforce the observance of the Regulations by the Lessee for the time being of every other flat.

(D) LDDC has agreed with the Developer and the Company [HM] to transfer to the Company the freehold interest in the block within 28 days of the completion of the sale of the last flat or dwelling house on the Estate or as soon thereafter as is reasonably practicable.

(E) The Parties hereto have agreed that the LDDC shall grant and the Lessee shall accept a Lease of one of the said flats and that the Company shall give the covenants hereinafter contained to the intent that such covenant shall upon completion of the transfer hereinbefore referred to, be annexed to the freehold reversion expectant upon the determination of the leases of the flats in the Block".

8. Clause 3 of the Lease sets out the Lessee's covenants, which included the obligations set out in the Third Schedule, Part I. These in turn included the obligations to pay rent, and to keep the property in good repair. Clause 3.1.2 also obliged the Lessee to pay both the Service Charge and the Estate Charge.
9. HM, referred to in the Lease as "The Company", covenanted with the Lessee at Clause 4 of the Lease, to carry out repairs and provide the maintenance services set out in the Fifth and Sixth Schedules, "provided always that the Lessee shall have paid the Service Charge, the Estate Charge and any adjustment due…". This covenant was the subject of an express proviso, in Clause 7.6, which stated:

"7.6 Exclusion of implied obligations:

The Lessee accepts the obligations of the Company for the performance of the matters specified in the Fifth Schedule and the Sixth Schedule in substitution for and to the entire exclusion of any implied obligations on the part of the Developer in respect of any such matters"

10. The covenants of Ideal North West, referred to in the Lease as "the Developer", and owed to both H.M. and the Lessees, were set out in Clause 5 as follows:

"COVENANTS OF THE DEVELOPER

The Developer hereby covenants with the Company and as a separate covenant with the Lessee (Provided that nothing contained in this Lease shall operate to prevent the Developer from developing the remainder of the Estate) as follows:-

5.1 That the Block and the Estate will be completed and the curtilage laid out in accordance with the plans and specifications approved by the local planning authority.

5.2 That the Developer will, when called upon by the appropriate authority (or earlier if the Developer shall think fit) procure that such of the sewers as are now or in the future to be included in any agreement made pursuant to Section 18 of the Public Health Act 1936 and adopted and maintained at public expense and/or which serve the Block shall be made and completed to the satisfaction of the relevant authority and will indemnify the Company and the Lessee against all liability in respect thereof."

11. It will be noted at once that these covenants do not address the general quality of the work being or to be carried out by Ideal North West; the Lease is entirely silent on such matters. It is for this reason that, in these proceedings, HM seek to imply a series of terms into clause 5 of the Lease, an important aspect of this dispute that is dealt with in greater detail at paragraphs 27-42 below.
12. The Sale of the Properties

The properties were sold to the Lessees between March 1989 and July 1993, with something like 40% of the relevant completions occurring during 1989 and 1990. For reasons which have not been explained in evidence, the transfer by LDDC to HM of the freehold interest in the properties did not take place until 20^th June 1997.

13. The Manifestation of the Defects

The problem with the spalling and cracking of the external render was noted by Solitaire Property Management Company Ltd. ("Solitaire"), the company managing the properties on behalf of HM, no later than April 1992. On 10^th April 1992, they wrote to Ideal Southern about the problem with the render; there is no evidence that Ideal North West had any involvement in the properties whatsoever after they were completed. By the same token, Ideal Southern had had no prior involvement in the design or construction of the properties until their receipt of this letter in April 1992, although it appears that they had been carrying out a further phase of the development on an adjoining site. Ideal Southern agreed that there was a problem with the rendering (see their letter to Solitaire of 1^st May 1992) but it does not appear that anything was done to rectify that problem during this period.

The Engagement of Brian Aspin and the First Remedial Scheme

14. Solitaire wrote again to Ideal Southern on 16^th May 1994 to complain about "blown render". This eventually prompted Ideal Southern to engage Mr Brian Aspin, who, according to his letterhead, was a "development and construction consultant". He was asked to investigate and report on the problems with the render. This he eventually did on 2^nd February 1995 in a report, which recommended a package of remedial works ("the first remedial scheme"). This scheme did not include for the removal of the Fletton bricks, because, in his report, Mr Aspin did not specifically ascribe the problems with the render to the Fletton bricks, although he did identify "extensive sulphate attack". Therefore, although nobody was aware of it at the time, the first remedial scheme was never going to work.
15. The first remedial scheme was put in hand in 1995-1996. There is no suggestion that the work that was done was anything other than the work recommended by Mr Aspin. It appears that Ideal Southern carried out the remedial work or engaged others to do the work on their behalf. They did not seek any contribution to the cost of the work, either from the Lessees or from HM.

The Ongoing Problem

16. Because Mr Aspin had not recommended the removal of the Fletton bricks, they stayed in place, and consequently, by January 2000, the spalling of the render was happening all over again. Solitaire engaged a new building consultant, Mr Alan Collinson, who investigated the problem again. Mr Collinson's report was dated 3^rd March 2000. In that report Mr Collinson did not identify the sulphate in the Fletton bricks as the cause of the problem. His findings were as follows:

"INVESTIGATION

I removed an area of render to check the brickwork behind. The brickwork was saturated indicating a failure of the damp barrier. There is also an indication that the spittal pipes are partially blocked, allowing a build-up of water in the planters which of course will find any areas of deficiency within the damp barrier.

LONG TERM SOLUTION

A specialist damp-proofing company should be asked to investigate and give their design solutions, backed by an insurance guarantee, to overcome the problem. This will involve excavating the plant, applying the new damp barrier and repairing the render. It is likely to be expensive."

17. Further investigations were carried out by Mr Collinson in July 2000 (see his letter of 15.7.00) but it does not appear that anything further happened until 2^nd February 2001. On that day, Mr Collinson wrote to Solitaire saying that he had carried out an inspection of the render to give a budget cost forecast. His budget cost figure was approximately £150,000. He made it clear that "if any of the planters leak they will cause the render to blow." His conclusion should be noted:

"It looks as though the original Builder came back within the ten year period and carried out remedial work. I suggest you take legal advice as it is clearly a latent defect and could a claim be made against the developer?"

The Involvement of Persimmon South East

18. In about October 2001, complaints about the render were made to Persimmon Homes (South East) Ltd. This company, hereinafter called "Persimmon S.E", were apparently involved because their parent company Persimmon PLC, had acquired Ideal Homes Holdings Ltd. in 1996, and both Ideal North West and Ideal Southern were wholly owned subsidiaries of that company. In February 2002, Mr Peter Cook, the Surveying Director of Persimmon S.E. visited the properties and commissioned a render specialist, Mr Andrew Goldstone, to investigate the problem. Mr Goldstone provided a written report on 16.6.02; his report made no mention of sulphate attack or the ongoing problems being caused by the Fletton bricks. He recommended further exploratory works and testing. On 28^th June 2002, Mr Cook wrote to Solitaire explaining the works that would be carried out on site and which Mr Cook was arranging through Mr Goldstone. On 9^th July 2002, the exploratory works were carried out and viewed by Mr Goldstone and Mr Collinson, on behalf of Solitaire. Various defects were found.
19. On 12^th August 2002 Mr Goldstone wrote to Mr Collinson to ask whether the Residents Association and the freeholder, HM, had any objection to remedial work being carried out to a limited area. This was proposed as a trial to see if a solution to the problem could be found. On 15^th August 2002, Mr Collinson confirmed that there was no objection to this work.
20. However, after that, things went quiet and, on 23^rd October 2002, Mr Cook wrote to the Residents Association, explaining that, due to concerns about the time being spent and the costs incurred in trying to sort out the problem, Persimmon S.E had decided not to continue to provide assistance. The full text of the letter is as follows:

"Thank you for your letter of 7^th October 2002 and what I have to say will go some way to explain the apparent silence from us. You will appreciate that Phase 1 of the Norway Dock Development was constructed by Broseley Estate/Ideal Homes Ltd. being completed in the early 1990's. It is therefore not one for which Persimmon was, or is, responsible. Despite that, because of our involvement on other phases at Norway Dock, we have, as a gesture of good will, tried to help you find a solution to the rendering issue.

I should say that I have been concerned, for some time now, about the time spent, the resources deployed and the cost incurred by us in assisting you, in circumstances where we are not legally obliged to do so.

I have been asked to inform you that my regional Board and our group Board share that concern and that they have decided we should not continue to provide assistance. I am sorry to have to inform you of this, while it would be disappointing to you, I hope you will nevertheless understand.

I trust that you will be able to find an appropriate solution to the rendering issue in due course."

21. Understandably the Lessees were extremely upset at this apparent volte face. There was a suggestion that they might commence proceedings against Solitaire for failing to make a claim in proper time against the NHBC. On 14^th November 2002, Solitaire did write to the NHBC but, rather than outlining in detail the claim which the Lessees had, Mr Cummings of Solitaire merely said:

"I was advised that render was not considered part of the major structure and therefore the repair would not form part of a claim under the NHBC guarantee. I would request that you confirm this in writing to me in order that I can advise my client accordingly."

There is no record of, or evidence concerning, any response from NHBC to this oddly negative letter.

22. The Start of Proceedings.

On 11^th August 2003, these proceedings were commenced in the name of HM and Solitaire, although Solitaire subsequently withdrew from the action. By this time, the Norway Dock Residents Association had already written to Solitaire, on 9^th June 2003, to complain that the proceedings had not been started earlier so as to avoid limitation problems. On 28^th January 2004, a separate action was commenced against the three Defendants in these proceedings, and Mr Aspin's Estate, in the name of the individual Lessees. However, that action, which is currently before His Honour Judge Anthony Thornton QC, has not progressed very far; there have been two extensions of time in respect of the service of the claim form and I am told by Mr Nicol that the second ex parte extension might be controversial.

23. It was not until January 2004 that, for the first time, HM, Solitaire and the Lessees received unequivocal advice from Mr Gill that the problem with the render was due to sulphate attack from within the Fletton bricks and that clay bricks, which are low in soluble sulphates, or concrete block work, should have been used instead.

THE ISSUES

24. HM's primary claim lies against the Second Defendants, Ideal North West, for breach of the alleged implied terms of the Leases. Those Issues have been defined as follows:

1. Did the Second Defendant covenant to the Claimant in the implied terms set out at paragraph 7 of the POC?

2. If so, was the Second Defendant in breach of those implied terms as alleged in paragraph 37 of the POC?

3. If so, when did that breach occur and is the Claimant's claim statute-barred?

4. Assuming that the Claimant has a sustainable claim for breach, which is not statute-barred, can the Claimant recover substantial damages against the Second Defendant and, if so, what is the quantum of such damages?

25. HM's further claims lie in tort against the Second Defendants, Ideal North West, and/or the Fourth Defendants, Ideal Southern. Those Issues have been defined as follows:

5. Did the Second and/or Fourth Defendants owe to the Claimant a duty of care at common law?

6. If so, when did such a duty arise and what was its nature, scope and extent?

7. If there was a duty owed by the Second and/or Fourth Defendants, were they in breach of that duty as alleged in paragraph 15 of the POC?

8. If so, when did the relevant cause of action accrue and is the claimant's claim statute barred?

9. Did the acts and omissions alleged in paragraph 24-32 of the POC create an estoppel in law which prevented the Second and/or Fourth Defendant from asserting a limitation defence?

10. Assuming that the Claimant has a sustainable claim for breach, which is not statute-barred, can the claimant recover substantial damages against the Defendants, and if so, what is the quantum of such damages?

26. In addition, HM have an alternative claim against the Sixth Defendants, Persimmon S.E. The Issues that arise in respect of that claim have been defined as follows:

11. If the claims in tort against the Second and/or Fourth Defendants are statute-barred, was that because of the acts and omissions on the part of the Sixth Defendants as alleged in paragraphs 24-32 of the POC?

12. If so, can the Claimant recover against the Sixth Defendants the damages it would have recovered against the Second and/or Fourth Defendants, as alleged in paragraph 39 of the POC?

I now turn to address each of those issues.

CLAIM ARISING OUT OF LEASES

Issue 1: Did the Second Defendant covenant to the Claimant in the implied terms set out at paragraph 7 of the POC?

27. The terms alleged at paragraph 7 of the POC are as follows:

"(1) that the Block and Estate would be completed in a good and workmanlike manner;

(2) that the Block and Estate would be completed with good and proper materials;

(3) that the Block and Estate would be reasonably fit for human habitation."

27. For each of the reasons set out at paragraphs 32-42 below, I have reached the clear conclusion that Ideal North West did not covenant to HM in the implied terms alleged by HM and that accordingly the Leases did not contain the terms set out above.
28. I have, at paragraphs 4-11 above, endeavoured to set out the contractual regime that operated in respect of the construction of these properties. Ideal North West owed their obligations as to the quality of the work which they performed to LDDC pursuant to the terms of the Contract that cannot now be found. If there were defects in that work which constituted a breach of that Contract, then Ideal North West would have been liable in damages to LDDC who, until 20^th June 1997, were the owners of the freehold interest in all the properties in any event.
29. It was not just the freehold owners who, in the event of defects, may have had a direct contractual route to Ideal North West. Pursuant to the NHBC Agreements referred to in paragraph 5 above, the Lessees could, in the event of breach, have pursued Ideal North West under the terms of those Agreements, knowing that, if Ideal North West failed to put right the problems which resulted from any breach of contract on their part, the NHBC would be obliged to step in and carry out the necessary remedial work or pay for others to perform such work.
30. In contrast to those two contractual routes leading back to Ideal North West, the Leases themselves contained no express obligations on the part of Ideal North West as to the quality of the work being carried out. Pursuant to the express provisions in the Lease, Ideal North West owed no obligations as to the quality of the work, whether in favour of the Lessees, or LDDC, or the eventual owners, HM. In my judgment, there can be no basis for implying such obligations into the Leases.
31. Firstly, Ideal North West's covenants to the Lessees and to HM, as eventual freehold owners, as set out in Clause 5 of the Lease, are very specific and very limited. They amount to no more than a promise that the properties would be built precisely within the footprint shown on the drawings on which planning permission had been obtained, and a promise that the sewers would be completed to the satisfaction of the local authority. There is, as I have said, no express promise as to the quality or standard of the construction work being carried out. The only conclusion that I can draw from this omission is that all parties understood that such obligations were fully covered by the separate Contract between Ideal North West and the LDDC, and/or the NHBC Agreements. In such circumstances, I can see no room within the overall contractual regime to imply any such promises, either to the Lessees or to HM, into this Lease.
32. Secondly, and by way of further confirmation of the first point, the Lease itself prohibits the implication of the terms now alleged by HM, at least as regards the individual Lessees. Clause 7.6 of the Lease made it plain that the Lessees accepted HM's obligations in the Fifth and Sixth Schedules (effectively, the promise to carry out repairs, redecorations etc.) "in substitution for and to the entire exclusion of any implied obligations on the part of [Ideal North West] in respect of any such matters". I find that this proviso has the unambiguous result that the implied obligations now contended for by the Claimant could not be implied into the Leases in favour of the Lessees, who were the occupiers of the properties and the people who, through the service charge, would have to pay for any remedial work. It would then be a very curious result if such terms were excluded in respect of the Lessees but were somehow still to be implied in favour of a party, HM, whose only relevance was that they would, one day, become the freehold owners of the properties.
33. Mr Royce properly recognised this difficulty and argued that Clause 7.6 was not clear enough to prevent the implication of the terms in question in favour of the Lessees. I respectfully disagree: I consider that the words of Clause 7.6 have that clear and unequivocal effect. The "implied obligations… in respect of any such matters…" which are excluded by Clause 7.6 can only relate to the quality of the work performed by Ideal North West. Mr Royce also argued that HM's obligations arose only after completion of the properties, but it seems to me that neither that point, nor the contention that an obligation to keep in good repair is not coterminous with the obligation to carry out the original work properly, have any relevance to what is a simple question of the proper construction of the proviso. Clause 7.6 plainly prevents the Lessees from setting up claims for the cost of repair works based on breach of implied terms by Ideal North West, the quid pro quo being the existence of HM's obligations to repair the properties. That may not, with hindsight, represent a very advantageous arrangement for the Lessees (because they have to pay for such repair work) but that is what each Lessee agreed when they signed the Leases and such an arrangement cannot now be unpicked all these years later.
34. Thirdly, and most importantly of all, I do not consider that the implied terms which have been alleged meet, or come anywhere near to meeting, the test of necessary implication set out by the House of Lords in Trollope & Colls v North West Metropolitan Regional Hospital Board [1973] 1 WLR 601. In his speech at page 609, Lord Pearson said:

"An unexpressed term can be implied if and only if the court finds that the parties must have intended that term to form part of their contract; it is not enough for the court to find that such a term would have been adopted by the parties as reasonable even if it had been suggested to them; it must have been a term that went without saying, a term necessary to give business efficacy to the contract, a term which, though tacit, formed part of the contract which the parties made for themselves."

35. It cannot seriously be argued here that these alleged terms "went without saying" or that, in the words of the speeches in another House of Lords case, Tai Hing v Liu Chong Hing Bank [1986] AC 80 104, citing Liverpool City Council v Irwin [1977] AC 239, the Lease was "inefficacious, futile and absurd" without them. As Mr Nicol rightly pointed out, HM did not call any evidence or advance any detailed submissions that touched on this point. Furthermore, it is clear that the Lease was primarily concerned with the arrangements between the existing owner, LDDC, and the Lessees; the link between the eventual freehold owner, HM, and the developer, Ideal North West, was peripheral to the proper operation of the Lease. The existence or otherwise of these implied terms as to quality owed to HM had no impact whatsoever on the efficacy of the Leases. Accordingly HM's claim in respect of the implied terms fails to meet the relevant test of necessity of implication and must fail for that reason too.
36. Fourthly, it would be very difficult to imply the alleged terms into the Leases in circumstances where such terms may conflict with Ideal North West's express obligations to LDDC. I have already made the point that, since the terms of the all-important Contract are unknown, nobody can say whether the use of Fletton bricks in the external wall was a breach of that contract or, conversely, was in fact expressly required by the terms of that contract. It would, of course, be impossible to find that Ideal North West were obliged to do one thing under the express terms of their Contract with LDDC, and required to do quite the opposite as a result of the implied terms of the Lease.
37. Fifthly, just standing back from the detail for a moment, it is not unfair to say that these alleged implied terms are, in effect, a belated attempt by the eventual freehold owners to obtain a collateral warranty from the developer with whom they had no real contractual link. At the time that these properties were being built, what were widely perceived as changes to the law of tort were alerting everyone in the construction industry to the desirability of ultimate building owners obtaining separate, stand-alone warranties from the contractors and consultants who were carrying out the work, but with whom, very often, the ultimate owners had no contractual relationship. If HM had wanted a collateral warranty from Ideal North West as to the quality of the properties on completion, they could and should have negotiated one. They did not do so. They cannot, in my view, seek to achieve the same result by seeking to rely on implied terms now.
38. Accordingly, on an application of general principles, I conclude that the alleged terms cannot be implied into the Lease. The final question is whether there are any authorities binding on me which must lead to a different result. In truth, none of the authorities cited by Mr Royce were directly relevant, because they did not concern the relationship that exists here, that is to say, between a developer, who owed his primary obligations as to the construction of the properties to a third party, and the ultimate freehold owner, who had no contractual link to the developer (other than the irrelevant terms of Clause 5 of the Lease) and was not paying the developer to carry out the work. In contrast, Mr Royce's main authority, Hancock v Brazier [1966] 1 WLR 1317 concerned a contract between a building contractor and a purchaser, which contained an express term that the house would be built in a proper and workmanlike manner. The Court of Appeal upheld the decision of Diplock L.J. that this express obligation as to quality carried with it the implication that good and proper materials would be used.
39. In my judgment that decision is of no direct application here, not only because this was a Lease which principally concerned parties other than the parties to this litigation, but also because, under this Lease, there were no express terms as to the quality of the work being carried out. Similarly, the other cases cited by Mr Royce, such as Miller v Cannon Hill Estates [1931] 2 KB 113 and Lawrence v Cassell [1930] 2 KB 83, are easily distinguishable on their facts. In Miller, the contract for the sale of a house in the course of erection included certain terms relating to quality, and Swift J. concluded that those terms carried with them an implied warranty that the house would be habitable on completion. In Lawrence, Scrutton L.J. reached the same view on similar facts. In both cases, the contract in question was entered into by the vendors/ contractors and the purchasers. It might therefore be concluded that the result in each case was unexceptionable. But neither of these additional authorities are of assistance in deciding whether the Lease in this case should contain implied terms as between the developer, who was carrying out work pursuant to primary contractual obligations owed to and agreed with a third party, and the ultimate freehold owner, particularly given that here, the sort of implied terms contended for have been expressly excluded from the Lease by the Lessees in any event. ^[2]
40. Of course, each case turns on its own facts and there may well be circumstances where a Lease relating to a property under construction will contain the sorts of implied terms contended for in this case. However, I am bound to observe that none of the authorities cited by Mr Royce concerned a Lease: they all involved straightforward contracts for the sale of a house in the course of erection. In this context, I note that, although paragraph 336 of Halsbury's Laws, Vol. 27(1) suggests that a warranty of fitness will "probably be implied where the tenancy agreement or the lease is entered into before the completion of the house by the landlord", all the authorities cited in the relevant footnote in apparent support of this statement are in fact concerned with contracts for sale, not tenancy agreements or leases. Furthermore, the author of paragraph 13-016 of Chitty on Contracts 29^th Edition, ventures an opposite view, to the effect that "a landlord gives no implied undertaking that leased premises are or will be fit for habitation." Accordingly, each attempt to imply these and similar terms into a Lease must be considered on its own merits; there is plainly no general rule one way or the other.
41. For all these reasons, therefore, I am bound to conclude that, on the application of the general principles relating to the implication of the terms, there is neither the room for nor the necessity of the terms alleged by HM, and there is no authority which can or should lead me to the opposite conclusion. The answer to Issue 1 is therefore No. Although that makes the answers to Issues 2,3 and 4 irrelevant (because, in the absence of the implied terms, HM's claim for breach of covenant cannot succeed), it is appropriate for me, given the detailed arguments advanced by both sides, to set out my conclusions on those Issues as well. Accordingly, for the purposes of answering Issues 2,3 and 4, I assume, contrary to my clear conclusions set out above, that the Lease contained the three general implied terms contended for.

Issue 2: If so, was the Second Defendant in breach of those implied terms as alleged in paragraph 37 of the POC?

42. It was Mr Royce's case, in his Closing Submissions, that there were two specific breaches of the implied terms: that the Fletton bricks were not fit for their purpose and that the falling render made the properties unfit for habitation. I deal with each point in turn.
43. The implied term alleged by HM as to the quality of the materials to be used was that they would be "good and proper", phraseology that derives from Hancock v Brazier, decided in 1966. However, three years later, the House of Lords distinguished between a warranty that the materials would be of merchantable quality, and a warranty that they would be reasonably fit for their purpose: see Young & Marten v McManus Childs [1969] 1 AC 454, and Gloucester County Council v Richardson [1969] 1 AC 480. Importantly, it was held that the second warranty might be excluded if it could not be shown that the materials in question had been specified or chosen by the contractor. In Young & Marten, the defective tiles were chosen by the Employer's agent, a highly skilled and experienced person, and not the contractors; the warranty of fitness for the purpose was found to be excluded in consequence.
44. In his Closing Submissions, Mr Royce properly accepted that the Fletton bricks were of merchantable quality. Accordingly, in order to demonstrate a breach in respect of the materials used, Mr Royce needed to demonstrate that Ideal North West warranted to HM that the Fletton bricks were fit for their purpose and that, when Ideal North West used those bricks in the walls which were to be rendered, they were in breach of that warranty. Such a warranty is specific, and goes beyond the three general implied terms referred to above.
45. In my judgment, even if the three implied terms derived from Hancock v Brazier were implied into this Lease, I cannot conclude that there was a further specific warranty as to the fitness for purpose of the Fletton bricks in the external walls. There is nothing to indicate any choice having been made by Ideal North West or any reliance by HM on Ideal North West's choice of materials. No one from HM gave evidence before me, and Mr Derek Strand of Solitaire, who did, was not involved at the relevant time. I have already made the point that it is at least possible that Ideal North West were obliged to use those bricks by reason of the terms of their contract with LDDC. Accordingly, although Mr Royce asserted in his Submissions that HM relied generally on Ideal North West because they were the developer, I do not consider that that point has been made good by the evidence. I am therefore unable to find that Ideal North West provided a warranty as to the fitness for purpose of the Fletton bricks.
46. Likewise, I do not consider that there is sufficient evidence to allow me to conclude that the danger of falling render meant that the properties were not reasonably fit for human habitation. The only real evidence I have are the photographs, which show unsightly staining and cracking in the render and patches where the render has fallen or been taken off the walls, but there is nothing that indicates any suggestion of danger or unfitness for habitation. As to the documents, although there is one manuscript reference to the alleged danger, no witness supported that allegation or explained how and why there was any danger to the inhabitants. Moreover, in my judgment the documents, when taken as a whole, make plain that both HM and Solitaire regarded the render problem as a matter of aesthetics and appearance rather than anything else. The e-mail from Mr Derek Strand of 9^th August 2002, which dealt with the delays in the carrying out of the remedial work, appears to be solely concerned with the appearance of the buildings. In the circumstances, I cannot conclude on the evidence before me that the render problem made the properties unfit for human habitation.
47. Accordingly, even if the three implied terms contended for by HM were part of this Lease, I do not consider that they have shown that Ideal North West were in breach of such terms. On the contrary it seems to me that what went wrong here was a failure by whoever was responsible (whether that was LDDC or Ideal North West or some other third party) for the design or specification of these walls to ensure that the various components worked effectively together. Such a failure may have put Ideal North West in breach of the terms of their contract with the LDDC but it does not, for the reasons given, put them in breach of the three general implied terms contended for by HM. Accordingly, the answer to Issue 2 is No.

Issue 3: If so, when did that breach occur and is the Claimant's Claim statute-barred?

48. Assuming now, (contrary to my decision expressed above) that the alleged terms were implied and Ideal North West were in breach of them, then HM's cause of action accrued when the breach occurred: when the building was designed or specified with Fletton bricks in rendered external walls or, at the latest, when the Fletton bricks were incorporated into the walls themselves. There is no evidence as to precisely when that was: it is sufficient for present purposes for me to find that the breach occurred between 1989 and 1991.
49. It would appear that the Leases, under which these claims are brought, were all completed after the properties themselves had been finished. Accordingly, since on HM's case that work was defective from the outset, any cause of action for breach of contract accrued no later than the date of the Lease itself: see Bellway (South East) v Holley [1984] 28 BLR 139. The parties are agreed that, since the Leases were under seal, the relevant limitation period is 12 years (see section 8 of the Limitation Act 1980). However the parties differ markedly as to the operative accrual date.
50. Mr Royce, for HM, contends that provided just one Lease was completed less than 12 years before these proceedings commenced, HM can claim the totality of their loss as a result of the breach of that one Lease, even if the claims under the other Leases were statute-barred. He said that the implied covenants extend to the Block of which each property forms part, and the Estate of which each Block forms part, and that therefore "a claim for breach in an individual lease extends to all the defects". He was not able to cite any authority in support of this proposition.
51. Mr Nicol's position is diametrically opposed to that advanced by Mr Royce: he says that the cause of action against Ideal North West accrued on the first date that a Lease was completed, namely 22^nd March 1989, and that the cause of action in respect of the claim for breach of covenant is therefore statute-barred. He argues that "the fact that there were later breaches of different contracts does not affect the position between the Claimant and the Defendant so as to grant the Claimant 12 years from the date of each Lease". He goes on to say that, as at 22^nd March 1989, either the Claimant had suffered all the loss which it was going to suffer and therefore the accrual of other claims on other Leases was irrelevant, or, if that submission is wrong, that the Claimant had suffered identifiable and recoverable loss by 22^nd March 1989, and the fact that further loss might accrue after that date, and within the limitation period, is irrelevant for limitation purposes.
52. I am in no doubt that Mr Nicol's analysis is to be preferred. It would be a nonsense if, as Mr Royce would have it, administrative delays in the completion of one Lease (over which Ideal North West would have had no control, because of their peripheral role) could thereby extend the period for which they might successfully be pursued for defective work. It would also be completely unsatisfactory to arrive at the position, for which Mr Royce must contend, whereby the individual Lessees who completed before the 11th August 1991 would have no claim, because their completion date was more than twelve years before the action commenced, whilst HM would continue to have a valid claim in respect of the same loss.
53. The authorities also explain why Mr Nicol's contentions are correct, and, in my judgment, they provide a complete answer to this particular problem. These cases start with Knapp v Ecclesiastical Insurance Group Plc [1998] PNLR 172, and include Hatton v Chafes [2003] EWCA Civ 341 and Khan v Falvey & Co. [2002] PNLR 28. They make plain that a claimant cannot get round a limitation defence by trying to limit his claim to damage which occurred within the limitation period, when he suffered damage due to the same act or omission during an earlier period. Clarke L.J's judgment in Hatton, at paragraph 12(v) summarises the principle in this way:

"A claimant cannot defeat the statute of limitations by claiming only in respect of damage which occurs within the limitation period if he has suffered damage from the same wrongful act outside that period".

Of course, these particular cases are concerned with claims in tort, which accrue when damage occurs, rather than with claims for breach of contract, which accrue on the date of the breach. But I can see no reason in principle why these authorities are not directly applicable to the unusual situation in this case, where precisely the same claim is said to accrue pursuant to a whole series of different contracts, some outside the limitation period and some within. For these reasons, I consider that any cause of action for breach of contract accrued to HM when the first breach of a Lease occurred, which was therefore outside the limitation period.

54. Accordingly, I consider that if there was a valid cause of action for breach of the Leases, that cause of action accrued more than 12 years before the 11^th August 2003, and such a claim is therefore statute-barred. That therefore is the answer to Issue 3.

Issue 4: Assuming that the Claimant has a sustainable claim for breach, which is not statute-barred, can the Claimant recover substantial damages against the Second Defendant and, if so, what is the quantum of such damages?

55. The fourth and final point which arises in respect of the claim for breach of the Leases is the question of loss: Ideal North West contend that HM have suffered no loss and cannot therefore recover substantive damages in any event. Mr Royce argued that this point was not open to Ideal North West because it was not specifically pleaded and only arose during Mr Nicol's Opening. During the trial I ruled that not only were the terms of paragraph 33 of the Defence sufficient to allow this point to be pursued by Mr Nicol, but also that, since this "no loss" argument was in effect a pure point of law, it was always open to Ideal North West in any event. Mr Royce helpfully accepted that there was no additional evidence that he needed to or could call in order to deal with the 'no loss' argument: it was entirely a matter of submission. To the extent that it is relevant, I should also note that an action in the name of the Lessees, which would only be necessary as a way round the argument that HM had suffered no loss, was started in January of this year: clearly, therefore, HM and the Lessees were alive to the ramifications of the 'no loss' point before Mr Nicol's opening remarks on 26^th July.
56. Mr Nicol's argument is simply stated. He points out that HM have not carried out any remedial work; that HM may not be obliged to carry out any remedial work; and that, even if they were obliged to carry out such work, they would be entitled to recover the costs from the Lessees. He says, therefore, that damages referable to such costs are not recoverable. In my judgment, it is this last point which contains the crux of his argument.
57. Usually, the arrangements which a Claimant might have made to obtain compensation for his loss from a party other than the contract-breaker or tort feasor are irrelevant to his claim for damages. In former times, it was said that such arrangements, with insurers or the like, were res inter alios acta: they were simply no business of the contract-breaker or tort feasor and he could not take advantage of them. Authorities on this point start with the approach of Donovan L.J. in Browning v. The War Office [1963] 1 QB 750 at 762 and include Parry v Cleaver [1970] AC1 at 18; in a building context, the point was helpfully summarised in the judgment of His Honour Judge David Smout Q.C. in Design 5 v Keniston Housing Association Ltd (1984) 34 BLR 92.
58. But in this case, the arrangement that HM would carry out all necessary repair work and the Lessees would pay for it is enshrined in the Lease itself, the very Lease into which HM now seek to imply the terms on which this entire claim for breach of covenant is founded. It seems to me that it would be absurd for HM to say, on the one hand, that such is the particular regime envisaged by this Lease, the terms as to the quality of Ideal North West's work for which they contend should be implied into it; but, on the other hand, for HM to argue that I should ignore the fact that a major element of that same regime is the Lessees' unconditional promise to pay for the cost of remedial work and that as far as the Lessees are concerned, HM's obligation to carry out remedial work replaces any implied obligations owed to them by Ideal North West. Accordingly, it seems to me that I must have regard to the terms of the Lease as a whole when considering the 'no loss' point; in doing so, I am bound to conclude that HM cannot suffer a loss measured by reference to the costs of remedial work since such costs would automatically be paid for by the Lessees, not HM. Coming full circle, this is yet another reason why the Leases do not contain the implied terms contended for: they are rendered effectively redundant by the scheme envisaged by the Lease.
59. Mr Nicol rightly accepts that there might have been a claim for damages based on the diminution in the value of the freehold reversion, but makes the point that HM called no evidence in respect of any such diminution. He submits, correctly in my judgment, that I cannot speculate as to whether there has been any such diminution, let alone endeavour to put a figure on it.
60. Accordingly, for these reasons, the answer to Issue 4 is No. This means that the claim for damages for breach of the Leases fails, not only because there is neither room for nor need of the implied terms which found such a claim (Issue 1), but because I find that there was neither breach (Issue 2), nor loss (Issue 4); in addition, I have also concluded that any valid claim would be statute-barred (Issue 3).

CLAIMS IN TORT

Issue 5: Did the Second and/or Fourth Defendants owe to the Claimant a duty of care at common law?

Issue 6: If so, when did such a duty arise and what was its nature, scope and extent?

61. It is convenient to take these two Issues together, and to deal with the position of the Second Defendants (Ideal North West) and the Fourth Defendants (Ideal Southern) separately. It is also important to make clear at the outset that what is in issue is the existence or otherwise of a duty of care in tort on the part of the relevant Defendants to prevent economic loss to the Claimant by carrying out the works to a reasonable standard. Duties of care to prevent personal injury or damage to property other than the buildings themselves, in line with the principle in Donohue v Stevenson [1932] AC 562 plainly existed in this case, but they are irrelevant to the claims now advanced by HM.

Ideal North West

62. Ideal North West's involvement in this dispute was as the original contractors, who carried out the relevant work between 1989 and 1991. In carrying out that work, they did not owe a duty of care in tort to prevent economic loss to HM, the subsequent owners. The decision of the Court of Appeal in D & F Estates v Church Commissioners [1989] AC 177, and the decision of the House of Lords in Murphy v Brentwood District Council [1991] AC 398, make it clear beyond doubt that, other than in very exceptional circumstances which simply do not arise here, a builder owes no duty of care in tort to subsequent owners to prevent economic loss arising out of his failure to complete the works to a reasonable standard.
63. Ideal North West had no involvement in the events of 1995-1996, when a sister company, Ideal Southern, engaged Mr Aspin to advise and recommend work at the properties: see paragraph 14 and 15 above. There was a suggestion in Mr Royce's opening Submissions that Ideal Southern were acting as agents for Ideal North West but there was no evidence of any kind to make good the suggestion of agency. No one from HM gave evidence as to any perception of agency on their part. Accordingly since, on the facts, Ideal North West had no involvement in the first remedial scheme, I find that they owed no duty of care of any kind in respect of its inception and performance.

Ideal Southern

64. As noted above, Ideal Southern were involved in engaging Mr Aspin, and in carrying out the work which he recommended in 1995-1996. Did they, in so doing, assume a responsibility to HM to prevent economic loss by ensuring that the works were carried our properly? In support of his contention that they did owe such a duty, Mr Royce contends that on the facts, the relationship between Ideal Southern and HM "was as near to a contractual one as might be possible in law and the circumstances were precisely those where the law will impose a duty of care not to cause economic loss". However, he was unable to cite any specific authority in support of the argument that, on facts such as these, a party in the position of Ideal Southern, who were carrying out works recommended by a professional man, free of charge, owed a duty to prevent economic loss to HM, who were not, at that point, the freehold owners of the properties.
65. In my judgment, an analysis of the facts shows that Ideal Southern did not, at any stage, voluntarily assume to HM a responsibility to prevent economic loss. In order for them to have assumed such a responsibility, they would have had, at the very least, to have given HM some kind of assurance as to the efficacy of the work being done, on which assurance HM then relied. They did not do so. On the contrary, when they were told of the problem, they engaged an apparently competent third party to investigate and to recommend a solution, and then carried out the solution that he recommended. At no time did they provide any assurance as to the result of the works recommended by Mr Aspin. They did not assume a responsibility for the work so as to oblige them to prevent HM, the subsequent owner, from suffering economic loss. Further, as previously noted, there was no evidence of any reliance from anyone at HM.
66. The authorities support that conclusion. I have already referred to D & F Estates and Murphy: if Ideal North West owed no duty to HM to prevent economic loss in respect of the original works, then it is very difficult to see how Ideal Southern could owe HM such a duty in respect of one element of remedial work arising out of those original works. In Bellefield Computer Services Ltd v E. Turner & Sons Ltd. [2000] BLR 97, the Court of Appeal reiterated that the law imposed no liability in negligence where the damage for compensation which is claimed is claimed by a subsequent owner and is damage to the building which was negligently constructed in the first place. Such loss constitutes irrecoverable economic loss: see the judgment of Schiemann L.J. at pages 103-104 and the judgment of Wall J. at page 107. The recent decision in Tesco v Costain & Others [2003] EWHC 1487 (TCC), which was not relied on by Mr Royce, is readily distinguishable on the facts, since, amongst other things, it concerned a duty owed to the original (not subsequent) owner, with whom (unlike here) the Contractor had a contract relating to the performance of the works themselves.
67. In short, there is nothing on the facts of this case which makes Ideal Southern's conduct in 1995-1996 extraordinary or exceptional, or takes this case outside the principles set out so clearly in D & F, Murphy, and Bellefield, which I have cited above. I am therefore bound to conclude that Ideal Southern owed no duty of care to HM to prevent economic loss arising out of the works carried out on Mr Aspin's suggestion in 1995-1996. Again, whilst my decision on Issues 5 and 6 renders any decision on Issues 7-10 academic, it is appropriate that I go on and deal briefly with each in turn. This is particularly so, since I have reached clear views as to the absence of both breach or loss on the evidence put before me.

Issue 7 If there was a duty owed by the Second and/or Fourth Defendants, were they in breach of that duty as alleged in paragraph 15 of the POC?

68. For two, quite distinct reasons, I have concluded that if (contrary to my findings above) either Ideal North West or Ideal Southern owed a duty of care to HM to prevent economic loss, they were not in breach of that duty by engaging Mr Aspin and then following his recommendations

.

69. It is trite law that a person who owes a duty of care to another may discharge that duty by appointing an independent third party/contractor to advise on and/or carry out appropriate works, provided that he takes reasonable steps to ensure that the third party/contractor is competent and that the advice given is generally reasonable: see, for example, Salsbury v Woodland [1970] 1QB 324. In the present case, there was no suggestion that Mr Aspin was not properly qualified to advise on the problem, particularly since he held himself out to be "a development and construction consultant". The Claimant's witnesses accepted that he was. Mr Aspin's report of 2.2.95, and the first remedial scheme which he recommended, seemed both sound and sensible on their face, a point which Mr Collinson, who gave evidence on behalf of the Claimant, very fairly emphasised during his cross-examination. Thus, if any duty was owed by Ideal Southern or Ideal North West, I find that that duty was discharged by their appointment of Mr Aspin and their following of his recommendations in carrying out the first remedial scheme.
70. Mr Royce contends that the duty was not delegable. He puts that argument in two ways; firstly by reference to the decision of the Court of Appeal in Rogers v Knight Riders [1983] RTR 324 and, secondly, on the basis that there was what he called "a special risk" in respect of the first remedial scheme which made the duty non-delegable.
71. In Rogers, the Defendants operated a minicab service. When the plaintiff's mother rang them, they contacted one of the drivers on their list, who picked up the plaintiff. In the course of her journey, the plaintiff was injured because the minicab was not property maintained. The Court of Appeal dismissed the Defendant's argument that the driver was an independent contractor, for which they were not responsible. Eveleigh L.J. summarised the position as follows:

"In my opinion this is not a case where we are concerned to consider vicarious liability or whether there is liability for the act of an independent contractor. We are concerned to consider a case of primary duty on the part of the defendants. It was never suggested, and it was not put to the Plaintiff, that she knew that the defendants were simply a kind of post-box to put her in touch with someone else with whom she would be able to make an independent contract. On the facts of this case, in my opinion, the defendants undertook to provide a car and driver to take the plaintiff to her destination. They did not undertake, and neither did she request them, to put her in touch with someone else who would undertake this obligation. In those circumstances of undertaking to provide a car and its driver to take her to her destination, the defendants could foresee that she might be injured if the vehicle were defective, and so they owed a duty arising out of this relationship to take care to see that the vehicle was safe. They relied upon the driver to do this. Whether he was a servant or an independent contractor matters not, he was a third person upon whom they relied to perform their duty arising from their relationship with the plaintiff, and it is well-established law that such a duty cannot be delegated."

72. I am bound to say that, whilst I find the judgment of the Court of Appeal in Rogers entirely unsurprising, I do not believe that it has any relevance whatsoever to the present dispute. Firstly, in that case the Court of Appeal was considering a breach of the Donohue v Stevenson duty, not a duty to prevent economic loss. Secondly, on the facts of Rogers, the plaintiff at all times believed that the car was being provided by the defendant, and simply had no knowledge that the car driver might not be part of the defendant's organisation. That is to be contrasted with the present case where everyone knew that Ideal Southern had gone to an independent consultant, Mr Aspin, and were carrying out the works which he had recommended. Everyone, including HM, knew that the first remedial scheme was devised by Mr Aspin and was only carried out by Ideal Southern because he had recommended it. For these reasons, therefore, I do not regard the decision in Rogers as being of any relevance to HM's position in the present case.
73. As to the existence of the so-called "special risk", Mr Royce needs to demonstrate that the remedial works to the external walls come within an acknowledged exception to the principle that a duty at common law can be delegated to an independent contractor. To that end he relied on Alcock v Wraith [1991] 59 BLR 16 and Johnson v BJW Property Developments Ltd. [2002] 3 All ER 574. However, these cases focus on situations where it was found that a Defendant could not delegate his duty either because there had been or was likely to be a withdrawal of support from neighbouring land, or because the work in question involved extra-hazardous acts. Neither exception is applicable on the facts of this case. This was straightforward remedial work to external walls from which render had become detached. There was no special risk, much less any question of withdrawal of support or extra-hazardous activity. Accordingly, I find that there is no applicable exception to the independent contractor principle in this case. For those reasons, I consider that, if there was any duty, that duty was discharged by the appointment of Mr Aspin and the carrying out of the works which he recommended.
74. Secondly, I would be reluctant on the evidence before me to conclude that Mr Aspin (and therefore, by extension, Ideal North West or Ideal Southern) had been negligent. The highest that it can be put by HM is that Mr Aspin made a mistake because he did not identify the sulphate within the Fletton Bricks as the cause of the problem, and the parties are now agreed that this was in fact the reason for the spalling. But the mere fact that Mr Aspin did not spot that it was the bricks themselves which were the problem does not necessarily mean that he was negligent; after all, as I have previously noted, neither Mr Collinson nor Mr Goldstone, who were appointed after Mr Aspin and (in Mr Collinson's case at least) had many more opportunities than he to inspect the properties, identified the Fletton Bricks as the cause of the problem. Further, although Mr Aspin did not refer to the Flettons, he did emphasise in his report that the problem was one of sulphate attack.
75. Of course, I note that Mr Gill's report contained at paragraphs 4.25, 4.26 and 4.33 criticisms of Mr Aspin's scheme which were not challenged by the Defendants, but in truth these paragraphs amount to different ways of putting the one central point: that Mr Aspin did not note the source of the sulphate as being the Fletton bricks. I do not conclude from those paragraphs in Mr Gill's report that Mr Gill necessarily considered that Mr Aspin fell below the standard to be expected of a building consultant exercising reasonable skill and care; if he had reached such a conclusion, Mr Gill has nowhere explained how and why he could justify such an opinion. I was told that Mr Gill was a specialist rendering consultant; Mr Aspin was not. Given that at least two other consultants failed to identify the Fletton bricks as the source of the problem, and bearing in mind Mr Collinson's evidence that he could see from his report exactly how Mr Aspin was trying to remedy the problems with the render, I cannot conclude that Mr Aspin was negligent. Accordingly, for that reason as well, I conclude that there was no breach of duty on the part of Ideal North West or Ideal Southern.

Issue 8: If so, when did the relevant cause of action accrue and is the claimant's claim statute-barred?

76. If, contrary to my conclusion set out above, Ideal North West or Ideal Southern owed and were in breach of a duty to prevent economic loss arising out of the first remedial scheme in 1995/1996, the issue then arises: when did the cause of action accrue? In tort, the cause of action usually arises when non-negligible damage occurs as a result of the relevant act or omission that constitutes the breach of duty. Since the Fletton bricks were the cause of the problem, and the actionable wrong complained of by HM was their non-removal in 1995-1996, it is clear that damage will have occurred shortly after the first remedial scheme was completed in 1996. Prima facie, therefore, any cause of action for breach of duty accrued more than six years before the issue of proceedings, and is therefore statute-barred. Mr Royce's closing submissions properly accepted that the claim was statute-barred "unless Section 14A of the Limitation Act applies". This was, of course, a reference to the Section introduced into the Limitation Act by the Latent Damage Act 1986 which allows a claimant, in certain circumstances, to rely on a different limitation period, namely three years from the earliest date on which the Claimant had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such an action.
77. Mr Royce argues that HM did not have the requisite knowledge until 2.2.01, the date of Mr Collinson's letter set out at paragraph 17 above. However, I can see no difference whatsoever between the state of HM's knowledge on 2.2.01 (when it was accepted by Mr Royce that HM had the requisite knowledge for the purpose of the Latent Damage Act) and the state of their knowledge a little less than a year earlier on 3.3.00, when they were in receipt of Mr Collinson's written report. The report of March 2000 told them that there was a deep-seated problem with the walls which the first remedial scheme of 1995-1996 had not addressed or corrected, and that further remedial work was necessary. That was effectively the same message that was set out a year later in Mr Collinson's letter of 2.2.01.
78. Accordingly, it seems to me that by March 2000, at the latest, as a result of Mr Collinson's work, HM had the knowledge required for bringing an action in damages pursuant to section 14A(5) of the Limitation Act 1980. They knew by March 2000 that the first remedial scheme had failed; they knew that they had a serious ongoing problem; they knew (or should have known) that the time for bringing claims either in respect of the original work or the first remedial scheme was fast running out; they knew that the problem, on their own case, was attributable to Ideal Southern because they had looked to Ideal Southern in 1995/1996 to carry out remedial works to ensure that no further problems with the rendering occurred. In such circumstances, they had sufficient knowledge to commence proceedings. It is irrelevant that HM did not in fact know that the particular cause of the sulphate attack was the Fletton bricks: Section 14A(5) does not require such specific knowledge before the limitation period is triggered. In any event, such knowledge could reasonably have been obtained in 2000, or indeed earlier, if Mr Gill, or someone else with his expertise, had been brought in at that stage. Moreover, HM still did not know that the Fletton bricks were the cause of the problem on 2.2.01 but they accept that, at least by that date, time would have started to run under Section 14A.
79. For all these reasons, therefore, I conclude that, even if the Claimant can rely on Section 14A of the Limitation Act, any claim in tort arising out of the first remedial scheme carried out in 1995-1996 was statute-barred prior to the commencement of these proceedings.

Issue 9: Did the acts and omissions alleged in paragraphs 24-32 of the POC create an estoppel in law, which prevents the Second and/or Fourth Defendant from asserting a limitation defence?

80. Paragraphs 24-32 of the POC set out in some detail the involvement of Persimmon SE between 31^st January 2002 and 23^rd October 2002, which events I have summarised at paragraphs 18-20 above. Mr Royce argued that, by reason of what he called Permission SE's assumption of responsibility during this period to investigate the defects and put them right, HM were effectively lulled into a false sense of security and did not pursue their claims against Ideal North West and Ideal Southern. Accordingly, he contends that if any relevant limitation period expired during this period, Ideal North West and Ideal Southern should be estopped from relying on a limitation defence.
81. The short answer to this point is that no limitation period expired during this period: if there was a claim for breach of duty, and if Section 14A is relevant, the cause of action accrued in March 2000, and thus expired in March 2003. The cause of action was not therefore statue barred when, in October 2002, Permission SE decided to have nothing further to do with the problem at the properties. There was still time to commence proceedings. In addition, since there was no evidence from HM themselves, it is very difficult to see how an estoppel case, which normally requires evidence of reliance and detriment, can get off the ground. However, there is in my judgment a clear reason of principle which leads me inescapably to the conclusion that the answer to Issue 9 is No.
82. I have no doubt that, on the authorities, Persimmon S.E.'s conduct cannot in law amount to an estoppel. In Hillingdon London Borough Council v ARC Ltd. [2000], the Court of Appeal held that, in order to establish this type of estoppel, ARC had to show that there was a clear and unequivocal representation by the Council that the claim was a valid one and that the Council would not rely on any statutory limitation defence. A similar emphasis on the need in such cases for "a clear unequivocal promise that the defendant would forego their right to plead the Limitation Act 1980" was expressed by the Court of Appeal in Seechurn v ACE Insurance [2002] LLR.Vol 2, page 390. To the extent, therefore, that the earlier decision of His Honour Judge White QC in Kaliszewska v John Clague & Partners [1984] 5 Con L.R.62 supports the founding of an estoppel on a much more generalised assurance which made no reference to the limitation position, it can no longer be regarded as good law. The principle set out in Hillingdon, Secchurn and similar authorities leads the learned editor of McGee on Limitation Periods, 4^th Edition, paragraph 21.020 to conclude that "establishing estoppel in relation to the Limitation Act is likely to be a formidable task and one which can be accomplished only in the most exceptional cases". For the reasons which I have given, that is a view with which I respectfully concur.
83. I do not consider that Mr Royce has begun to demonstrate in this case that there was a clear and unequivocal promise that Ideal North West and/or Ideal Southern, acting through Persimmon SE, would forego their right to rely on the Limitation Act. Leaving aside the question of whether Persimmon SE could act on behalf of Ideal North West and Ideal Southern in this way (which I doubt), the evidence of HM's own witnesses was that the question of limitation was never even raised in the dealings between Persimmon SE and HM during 2002. This point was made by both Mr Collinson and Mr Strand during their cross-examination. There was no acknowledgement of a valid claim. There was no promise of any kind made in respect of any limitation period. Accordingly, in my judgment, the estoppel argument cannot succeed.

Issue 10: Assuming that the Claimant has a sustainable claim for breach which is not statute-barred, can the Claimant recover substantial damages against the Defendants and, if so, what is the quantum of such damages?

84. This point arose at my prompting because it seemed to me that HM were making an assumption as to the damages which flowed from their claims in tort which was, on analysis, unwarranted. HM's claim in tort, based entirely on the failure of the first remedial scheme, is for the total cost of a proper remedial scheme, in the agreed figure of £881,892. But it seems to me clear that that cannot in law be the true measure of their loss.
85. When remedial works are not designed or carried out properly, so that a new or different scheme is required, the principal loss that flows from the failure of the inadequate remedial scheme is the abortive cost of such a scheme: the money wasted on a scheme that did not work. It is not the cost of a scheme that does work: that loss was triggered not by the failure of the inadequate remedial scheme, but by the failure of the original works themselves. Thus if A is responsible for the defective original works, and B for the inadequate remedial scheme, then in any successful proceedings for damages, A would be responsible for the cost of a proper remedial scheme, whilst B would be responsible only for the costs that were wasted on the first, failed scheme, and possibly any increase in costs arising from the fact that the first scheme did not work and that a second scheme had to be undertaken at a later date.
86. Accordingly here, if, which is not the case, there was a valid claim in tort against Ideal North West and/or Ideal Southern arising out of the failure of the first remedial scheme, the damages recoverable against them would be the abortive cost of that failed scheme and (possibly) any increased costs as a result of the failure. In principle, the cost of a remedial scheme that would work would only have been recoverable against Ideal North West under the claim for breach of covenant arising out of the original works, and which on analysis failed for the various reasons set out under Issues 1-4 above.
87. Therefore, in the absence of any evidence of abortive cost and the like, I am bound to conclude that even if there was a claim for breach of duty arising out of the failure of the first remedial scheme which was not statute barred, no loss or damage has been identified by HM as flowing from that breach. Of course, in the absence of loss or damage, there can be no cause of action in tort in any event.

CLAIM AGAINST SIXTH DEFENDANT

ISSUE 11: If the claims in tort against the Second and/or Fourth defendants are statute barred, was that because of the acts and omissions on the part of the Sixth Defendants as alleged in paragraphs 24-32 of the POC?

ISSUE 12: If so, can the Claimant recover against the Sixth Defendant's damages it would have recovered against the Second and/or Fourth Defendants, as alleged in paragraph 39 of the POC?

88. For the reasons which I have given, there were no valid claims in tort against the Second or Fourth Defendants. Accordingly, whatever happened during HM's dealings with Persimmon SE during 2002, these events could not have led to any recoverable loss on the part of HM, or any valid claim against Persimmon SE. There can be no claim for loss of a chance if the chance itself is valueless: Green v Cunningham John (1995) 46 con LR 62.
89. In addition, for the reasons which I have set out at paragraphs 77-80 above, even if there were valid claims in tort against the Second and Fourth Defendants, those claims did not become statute barred until after the involvement of Persimmon SE had ceased in October 2002. It is therefore very difficult to see how the fact that such claims became statute-barred in March 2003 had anything to do with the conduct of Persimmon SE during 2002. Further and in any event, no evidence of any kind has been adduced that could allow me to reach any contrary finding. I have not heard from anyone at HM; I have not received evidence concerning how their conduct or position was affected, if at all, by their dealings with Persimmon SE in 2002. Accordingly, even if (which I have rejected) there were valid claims against Ideal North West or Ideal Southern, I do not find that those claims became statute barred because of any act or omission on the part of Persimmon SE. There can therefore be no claim of any sort against Persimmon SE. The answer to both Issues 11 and 12 is therefore No.

CONCLUSION

90. For the detailed reasons which I have set out above, I dismiss the Claimant's claims against the three remaining Defendants. In doing so, I should gratefully acknowledge the considerable assistance of both Counsel in helping me to resolve the various legal issues that arose out of the Claimant's claims in these proceedings.

Note 1    See the court’s letter to the parties’ solicitors of 20.9.04 and the replies dated 22.9.04.    [Back]

Note 2   Clause 7.6, set at Paragraph 9 above.    [Back]