BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!
 |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | |
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 >> Harrison & Ors v Shepherd Homes Ltd & Ors [2011] EWHC 1811 (TCC) (11 July 2011) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2011/1811.html Cite as: [2011] EWHC 1811 (TCC), (2011) 27 Const LJ 709 |
||
[New search] [Printable RTF version] [Help]
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
LEEDS DISTRICT REGISTRY
Strand, London, WC2A 2LL |
||
B e f o r e :
____________________
| Mr Andrew Harrison and Others |
Claimants |
|
| - and - |
||
| Shepherd Homes Limited National House Building Council NHBC Building Control Services Limited |
Defendants |
____________________
Roger Stewart QC, Anneliese Day and Sian Mirchandani (instructed by Weightmans LLP) for the First Defendants
____________________
Crown Copyright ©
The Hon Mr Justice Ramsey :
Introduction
Background
(1) Mr and Mrs Knight at Plot 15, 15 Barley Close.
(2) Mr and Mrs Dobson at Plot 20, 16 Clover Drive.
(3) Mr and Mrs Frostwick at Plot 34, 25 Clover Drive.
(4) Mr and Mrs Simpson at Plot 39, 15 Clover Drive.
(5) Mr and Mrs Manners at Plot 43, 7 Clover Drive.
(6) Mr and Mrs Willis at Plot 50, 26 Meadowgate Drive.
(7) Mr and Mrs Henderson at Plot 59, 15 Hayfield Close.
(8) Mr and Mrs Adamson at Plot 87, 57 Meadowgate Drive.
(9) Mr Jeffery/Ms McDermott at Plot 89, 53 Meadowgate Drive.
(10) Mr and Mrs Pettite at Plot 90, 51 Meadowgate Drive.
Claims against SHL
Claims under the contracts for sale
The issues and the evidence
The sales contracts
Clause 7.1 of the Sales Contract
"The Works shall be completed by the Seller in a good and workmanlike manner and shall be so completed and made ready for occupation with all reasonable despatch after the Agreement Date…"
Submissions
Decision
"There is first a reference to the completion of the house in a proper and workmanlike manner. My inclination would be to regard that express clause as relating to the way in which the work was carried out rather than to the materials, and that clause requires that the work shall be carried out with due skill, care and judgment."
"This is a contract for the supply of work and materials and this case raises a general question as to the nature and extent of the warranties which the law implies in such a contract. As regards the contractor's liability for the work done there is no dispute in this case: admittedly it must be done with all proper skill and care."
Implied Terms
Submissions
"Where the parties have made an express provision as regards some matter with regard to the contract, it is, and must be, extremely difficult for either of them to say in regard to that subject matter, as to which there is an express provision, that there is also an implied provision or condition in the contract."
Decision
Entire Agreement Clause
"This Agreement and the "Buildmark" Offer of Cover constitute the entire contract between the parties and shall be only varied or modified....in writing under the hands of the parties and any terms undertakings promises or agreements not set out in this Agreement are released by both parties and shall have no effect. The buyer acknowledges that save as to such of the written statements of the Seller's Solicitors prior to the Agreement Date as were not susceptible of independent verification by inspection and search and enquiry of any local or other public authority (and whether or not such inspection search and enquiry has been made) the Buyer has not entered into this Agreement in reliance wholly or partly on any statement or representation made to him."
Submissions
"The Buyer agrees that no oral representations have been made to the Buyer prior to the date of this Contract by the Seller or its employees or agents which has [sic] influenced or persuaded the Buyer to enter into this Contract. In any event, the Buyer will not be able to rely upon any oral or written representations and this Contract contains all of the terms of the Contract."
"Contractor … assumes only the obligations and liabilities stated herein. Except for such obligations and liabilities specifically assumed by Contractor, Operator shall be solely responsible and assumes liability for all consequences of operations by both parties … notwithstanding … the negligence or fault of Contractor, its employees, agents or servants …"
"27 The primary obligation of importance for present purposes is that contained in paragraph 502, under which the contractor undertakes responsibility for the operation of the rig. It was common ground that under that paragraph the contractor specifically assumes an obligation to operate the rig in order to perform the services provided for by the contract, but Mr. Rainey submitted that, unless the contract otherwise provides, it also assumes an obligation to carry out the work with reasonable skill and care, since that is an incident of any obligation of that kind, originally imposed by the common law and now by section 13 of the Supply of Goods and Services Act 1982.
28 The judge accepted Mr. Rainey's submission and in my view he was right to do so. When paragraph 501 refers to obligations and liabilities which the contractor has "specifically assumed" it must naturally refer to the obligations which arise out of the express terms of the contract with all the incidents which the law ordinarily attaches to them, since those incidents are inherent in them. It may, of course, be possible for the parties to agree otherwise, but unless they have done so, they can only be presumed to have accepted that the ordinary incidents apply. To proceed on any other basis would make commercial life impossible. To say, therefore, that under this form of contract the contractor specifically assumes an obligation to operate the rig but does not specifically assume an obligation to do so carefully is to approach the question from the wrong end. Prima facie it assumes the obligation as expressed and all that the law attaches to it, unless there is agreement to the contrary."
Decision
Merger
Submissions
"Any obligation of this Agreement or of the Buildmark Offer of Cover which is expressed as or which implies any obligation which will remain to be performed or observed after the completion of the sale and purchase and the Lease or Transfer of the Property to the Buyer shall remain in full force and effect after such completion."
Decision
"But when the contract is of a dual nature, as is the case with building contracts of this kind — and they are very common — namely, a contract to do two things, one to convey the land and the other to build a house, it is in my view quite clear that there can have been no intention on the part of the parties that the contract to build a house should disappear because the contract to convey the land is merged in the actual conveyance of it. That was said very clearly by Scrutton L.J. in Lawrence v. Cassel. It has been acted upon time and time again since that date, and I have no doubt that the obligation, such as it was, on the defendants under clause 9, as well as clause 11, of the contract survived the transfer."
.
Statutory Control
Claimants' submissions
The 1999 Regulations
(1) A term is unfair if it causes a significant imbalance in the parties' rights and obligations under the contract to the detriment of the consumer in a manner or to an extent which is contrary to the requirement of good faith.
(2) There is "significant imbalance" if a term is so weighted in favour of the supplier as to tilt the parties' rights and obligations under the contract significantly in his favour.
(3) The element of "detriment to the consumer" makes clear that the Regulations are aimed at significant imbalance against the consumer, rather than the seller or supplier.
(4) The requirement of good faith is one of fair and open dealing in which:
(a) Openness requires that the terms should be expressed fully, clearly and legibly, containing no concealed pitfalls or traps. Appropriate prominence should be given to terms which might operate disadvantageously to the customer.
(b) Fair dealing requires that a supplier should not, whether deliberately or unconsciously, take advantage of the consumer's necessity, indigence, lack of experience, unfamiliarity with the subject matter of the contract, weak bargaining position or any other factor listed in or analogous to those listed in Schedule 2 to the 1994 Regulations (an inducement to the consumer to agree to the term, whether goods or services were sold or supplied at the special order of the consumer or whether the seller or supplier dealt fairly and equitably with the consumer). The supplier should deal fairly and equitably with the consumer.
(5) Schedule 2 to the Regulations is best regarded as a check list of terms which must be regarded as potentially vulnerable to being unfair.
(6) Useful approaches include:
(a) assessing the impact of an impugned term on the parties' rights and obligations by comparing the effect of the contract with the term and the effect it would have without it.
(b) considering the effect of the inclusion of the term on the substance or core of the transaction; whether if it were drawn to his attention the consumer would be likely to be surprised by it; whether the term is a standard term, not merely in similar non-negotiable consumer contracts, but in commercial contracts freely negotiated between parties acting on level terms and at arms' length; and whether, in such cases, the party adversely affected by the inclusion of the term or his lawyer might reasonably be expected to object to its inclusion and press for its deletion.
(7) Where the consumer has imposed the term either by their own choice or a choice made by their professional agent then it is unlikely that there would be any lack of good faith or fair dealing with regard to the incorporation of the terms into the contract.
The Unfair Contract Terms Act
(1) when itself in breach of contract, exclude or restrict any liability in respect of the breach; or
(2) claim to be entitled
(a) to render a contractual performance substantially different from that which was reasonably expected of it, or
(b) in respect of the whole or any part of its contractual obligation, to render no performance at all,
except in so far as (in any of the cases mentioned above in this subsection) the contract term satisfies the requirement of reasonableness
In relation to a contract term, the requirement of reasonableness for the purposes of this Part of this Act...is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made. ...
(5) It is for those claiming that a contract term or notice satisfies the requirement of reasonableness to show that it does.
To the extent that this Part of this Act prevents the exclusion or restriction of any liability it also prevents—
making the liability or its enforcement subject to restrictive or onerous conditions;
excluding or restricting any right or remedy in respect of the liability, or subjecting a person to any prejudice in consequence of his pursuing any such right or remedy...
(1) the strength of the bargaining positions of the parties relative to each other, taking into account (among other things) alternative means by which the customer's requirements could have been met;
(2) whether the customer received an inducement to agree to the term, or in accepting it had an opportunity of entering into a similar contract with other persons, but without having a similar term;
(3) whether the customer knew or ought reasonably to have known of the existence and the extent of the term (having regard, among other things, to any custom of the trade and any previous course of dealing between the parties);
(4) where the term excludes or restricts any relevant liability if some condition was not complied with, whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable;
(5) whether the goods were manufactured, processed or adapted to the special order of the customer.
(1) As to (a), as appears from the Claimants' witness statements, SHL had a far stronger bargaining position than the Claimants. Even had the Claimants realised the alleged effect of this term, they would not have had the bargaining position to cause SHL to alter it;
(2) As to (c), the Claimants who had sales contracts all say that they did not understand the terms to have the effect SHL alleges and, given the difference between what a consumer would expect from a contract with a reputable housebuilder and what SHL says these contracts mean, it cannot fairly be said that the Claimants ought reasonably to have known the existence and extent of the term as alleged by SHL.
SHL's submissions
The 1999 Regulations
The Unfair Contract Terms Act
Decision: The 1999 Regulations
"(1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.
(2) A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term.
(3) Notwithstanding that a specific term or certain aspects of it in a contract has been individually negotiated, these Regulations shall apply to the rest of a contract if an overall assessment of it indicates that it is a pre-formulated standard contract.
(4) It shall be for any seller or supplier who claims that a term was individually negotiated to show that it was."
"The fact that a consumer or his legal representative has had the opportunity of considering the terms of an agreement does not mean that any individual term has been individually negotiated. The supplier must prove that the relevant term was individually negotiated. The concept of ability to influence the substance of a term comes from regulation 5(2) which provides:
"A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term."
This therefore imposes an absolute prohibition on a finding of individual negotiation if there has not been an ability to influence the substance of a term. It does not follow from the existence of the ability to influence the substance of a term that the term has, in fact, been individually negotiated. That is still a matter for the supplier to prove and, in my judgment, the landlord did not prove that in this case."
Clause 7.1
"I readily accept that the protection given to house owners by those provisions is not total. On the other hand, that protection is of very substantial benefit to a huge number of house owners across the country. The biggest single risk which house owners face is that the original builder may be unable (e.g. through insolvency) or unwilling to put right defects in relatively new houses. The NHBC affords substantial protection against this risk. In my view, against that background it is quite impossible to say that contractual terms limiting a house purchaser's rights to those conferred by the NHBC agreement are unreasonable."
"Again I do not see that the agreement that the landlord can retain the final payment is contrary to the concept of good faith. It cannot be suggested that the term is not fully, clearly and legibly expressed or was not given appropriate prominence. No doubt Mr Francis was short of money when he made the contract for the sale and lease-back of the property but it cannot be said that he has been "taken advantage of" unfairly. The very nature of the transaction necessitated that he instructed a solicitor which he did. There was (probably inadmissible) evidence that his solicitor made a careful report to him on the contracts which he was about to sign drawing specific attention to the fact that, if the court granted an order for possession in the event of his being in breach of the terms of the tenancy agreement, he would not receive the final payment. This evidence was probably inadmissible because the matter has to be judged at the time when the contract was made without regard to privileged communications passing between a solicitor and his client. But the fact is that Mr Francis necessarily had the protection of a solicitor at the time and he would have the protection of the court if and when a possession order was sought by the landlord. I cannot see here any failure to conform with "good standards of commercial morality and practice"."
Clauses 7.5 and 10
Clause 8
Unfair Contract Terms Act
Claims under the Defective Premises Act 1972
"Duty to build dwellings properly.
(1)A person taking on work for or in connection with the provision of a dwelling (whether the dwelling is provided by the erection or by the conversion or enlargement of a building) owes a duty—
(a) if the dwelling is provided to the order of any person, to that person; and
(b) without prejudice to paragraph (a) above, to every person who acquires an interest (whether legal or equitable) in the dwelling;
to see that the work which he takes on is done in a workmanlike or, as the case may be, professional manner, with proper materials and so that as regards that work the dwelling will be fit for habitation when completed."
Liability under the 1972 Act
"The plaintiffs have contended that the Act creates a single and continuing duty, which is not either completely performed or breached until the work has been completed. It is, they say, a duty to provide a dwelling which is fit for habitation by work done in a workmanlike or professional manner with proper materials. If work taken on is not completed until after January 1, 1974, the statutory duty becomes enforceable after the commencement of the Act which, when so construed, does not, the plaintiffs submit, have a retroactive effect.
The defendants, on the other hand, contend that upon the language of the section the statutory duty arises when a person takes on work for or in connection with the provision of a dwelling, and continues throughout the course of the work, so that when the work is completed it will have been done in a workmanlike manner with proper materials and the dwelling will be fit for habitation. They say that the plaintiffs' construction involves giving the Act a retroactive effect and should therefore be discarded."
"It seems to me clear upon the language of section 1 (1) that the duty is intended to arise when a person takes on the work. The word "owes" is used in the present tense, and the duty is not to ensure that the work has been done in a workmanlike manner with proper materials so that the dwelling is fit for habitation when completed, but to see that the work is done in a workmanlike manner with proper materials, so that the dwelling will be fit for habitation when completed. The duty is one to be performed during the carrying on of the work. The reference to the dwelling being fit for habitation indicates the intended consequence of the proper performance of the duty and provides a measure of the standard of the requisite work and materials. It is not, I think, part of the duty itself. If, at an early stage in the provision of the dwelling — for instance, the putting in of the foundations — someone who had taken on that part of the work failed to do it in a workmanlike manner, then in my judgment, assuming that the section applied, an immediate cause of action would arise. It would not be necessary to await the completion of the dwelling to claim relief on the basis of a breach of statutory duty.
The argument that the duty is a single duty which continues in operation until completion of the dwelling but in respect of which no relief can be obtained until the dwelling is completed, is in my view inconsistent with, or at least accords very ill with, section 1 (5) , which is in these terms:..."
"Mr. Browne argued that "taking on work" in section 1 (1) of the Defective Premises Act 1972 is equivalent to "doing," that there is only one duty imposed by the section, namely, to provide a dwelling fit for habitation when completed, and that, therefore, a breach of the statutory duty occurs when the building is finished and not earlier, so that the Act applies if it comes into force before that happens, even if but very little remains to be done.
This argument could not be sustained without some qualification, because the statutory duty must, in my judgment, be broken as soon as bad workmanship, or the use of faulty materials, takes place. Indeed, as Buckley L.J. has pointed out, and I agree, the concluding words of the section do not state the duty but the measure of the duty imposed by the earlier words, that is to say, to do the work in a workmanlike or, as the case may be, professional manner and to do it with proper materials, so that the result may be produced that the dwelling will be fit for habitation when completed."
"It seems to me that the judge was right to give the words "taking on work" in section 1 (1) their natural meaning, and they clearly point to the beginning of operations and not the end. For my part I cannot read them as equivalent to "doing," still less to "having taken on" or "having done." Where there is no contract the time when a person takes on work must, I think, be when he starts to do it. Where there is a contract, I would think the time would be when the contract is made; but in any case it cannot be later than when the party starts to perform it."
"I would only add that the phrase "taking on" is an unusual phrase to find in a statute, and in my opinion would appear to be incapable of being construed in a manner which is different from the starting of the work or the entering into of the contract. In other words, the latest time at which "taking on" could possibly mean would be the time when the work was started.
Mr. Browne's submission that the duty was an all-embracing duty, including the completion of the work, is, I think, further made difficult by the words towards the end of the section. The duty is to see that the work which he takes on is done in a workmanlike manner, etc., so that as regards that work the dwelling will be fit for habitation when completed. As it seems to me, the duty starts when the person takes on and continues while the work is done, and the test of the manner in which the work is done is that when the building is completed it is fit for human habitation."
"The researches of counsel have revealed that there is no reported case in which the particular point of construction raised in this summons has been directly raised for consideration. The substance of Mr Twigg's argument on behalf of the first defendants is founded on observations made by the three Lords Justices in the Court of Appeal in Alexander and Another v. Mercouris [1979] 1 W.L.R. 1270."
"It will be seen that all three Lords Justices explicitly said in slightly different language, that the reference in section 1(1) to the dwelling being fit for habitation is a measure of the standard of the work to be done and the materials to be provided and Buckley L.J. said that he did not think the reference to fitness for habitation was part of the duty itself.
Mr Twigg has submitted that, although the question that arose in that case was not the same as that which arises in the present summons, the observations of the three Lords Justices were an integral part of their reasoning and are decisive of the question that arises in this case. He has referred me to the latest editions of three text books, namely Winfield and Jolowicz on Tort (13th ed.), Salmond and Heuston on the Law of Torts (19th ed.) and Charlesworth and Percy on Negligence (8th ed.), all of which adopt without question the views expressed in the Court of Appeal in Alexander v. Mercouris that the reference to fitness for habitation in section 1(1) of the Act simply sets the standard required by the duty created in the section."
"Mr Seymour has submitted that the observations of the Lords Justices in Alexander v. Mercouris to the effect that the fitness for habitation provision of section 1(1) is simply a measure of the standard of the requisite work and materials were obiter and therefore not binding on me."
"It is not within my competence critically to analyse judgments of the Court of Appeal which are binding on me and I approach Mr Seymour's argument with caution. I should emphasise, in fairness to him, that his argument that there was an inconsistency in Buckley L.J.'s reasoning was directed solely to what he submitted were obiter dicta in relation to the scope of the duty imposed by section 1(1).
As I have said, all three Lords Justices in Alexander v. Mercouris plainly said that the fitness for habitation reference in section 1(1) related to the standard of duty imposed by the section. It seems to me that their views on this matter were intimately bound up with their reasoning on the matters in issue in that case and that I am obliged to follow them."
"Although both Buckley L.J. and Goff L.J. explicitly indicated that the duty imposed by section 1(1) would be broken as soon as bad workmanship took place, it seems to me to be obvious that a person who acquired an interest in the dwelling after completion which, at the time of completion, had no defects making it unfit for habitation, would have no cause of action whatever defects there may have temporarily existed during the course of construction. If a breach of duty was committed during the course of construction which led to the dwelling being unfit for habitation on completion, the position would obviously be otherwise. In the latter case the date when the breach occurred would be earlier than the date of completion. I see no illogicality or inconsistency in this."
"33. As regards the content of the proposed obligation, we have considered the terms of the obligation implied in building contracts by the common law (in the absence of terms to the contrary effect); and, in particular, whether it is necessary to provide both that the work should be done efficiently, and with proper materials, and that the house should be fit for habitation. In Hancock v B.W. Brazier (Anerley) Ltd, Diplock L.J. described the requirement of fitness for habitation as being merely an alternative way of formulating the requirement for good work and proper materials. It is not, however, the view normally taken, and the implied obligation is generally thought to have threefold application covering:
(a) good workmanship, and
(b) proper materials, and
(c) fitness for habitation,
all three of which must be met. We think that there are good reasons for the latter view.
34. It may be that proper work with good materials will usually produce a house which is fit for habitation, but it is possible to imagine cases in which, however skilful the work and however good the material, there is some defect of design or lay-out which makes the resulting dwelling unsuitable for its purpose. We propose, therefore that the statutory obligation should follow the form last outlined and should contain each of those three requirements."
"This clause will impose a threefold statutory duty upon:-
(a) any person who takes on work for or in connection with the provision of a new dwelling; and
(b) any person who, in the course of a business or in the exercise of statutory powers of providing or arranging for the provision of new dwellings, arranges for others to take on such work.
…
Where building contractors undertake the provision of dwellings, the common law implies a term into their contracts which has the same content as the threefold statutory duty, unless all the circumstances are such as to exclude its implication...."
"it can hardly be doubted that the obligation of the builder was an obligation to build properly, to build with proper materials, and in a proper manner, and to provide a house fit for the purposes for which, to the knowledge of both parties, the house was required-namely for the habitation of the plaintiff and his wife."
"That formulation of the implied warranty is sometimes varied by the use of the words "a house fit for human habitation", but I think it is very clear from the judgments of the Court of Appeal in Perry v Sharon Development Co Ltd, which I have already cited, that there is no substantial or significant difference between the formulation of the warranty that the house should be built of materials suitable and fit and proper for the purpose and the work should be carried out in a proper, efficient and workmanlike manner, and the alternative way of stating it, that the house is habitable and fit for humans to live in."
"By section 1 of the Defective Premises Act 1972 Parliament has in fact imposed on builders and others undertaking work in the provision of dwellings the obligations of a transmissible warranty of the quality of their work and of the fitness for habitation of the completed dwelling."
"The vendor hereby warrants that the dwelling has been built or agrees that it will be built: (i) in an efficient and workmanlike manner and of proper materials and so as to be fit for habitation...."
"For the first defendants it is said that the obligation imposed by the warranty "and so as to be fit for habitation," though expressed as a separate warranty, co-ordinate with the two warranties which precede it in the clause, ought to be read as though it were expressed as "and so as to be fit for habitation so far as compliance with the two preceding warranties can achieve that result."
I am afraid that I cannot accept that construction."
Fitness for habitation
Submissions
"34. It may be that proper work with good materials will usually produce a house which is fit for habitation but it is possible to imagine cases in which, however skilful the work and however good the materials, there is some defect of design or lay-out which makes the resulting dwelling unsuitable for its purpose."
"i) The finding of unfitness for habitation when built is a matter of fact in each case.
ii) Unfitness for habitation extends to what Lord Bridge described as "defects of quality" rendering the dwelling unsuitable for its purpose as well as to "dangerous defects".
iii) Unfitness for habitation relates to defects rendering the dwelling dangerous or unsuitable for its purpose and not to minor defects.
iv) Such a defect in one part of the dwelling may render the dwelling unsuitable for its purpose and therefore unfit for habitation as a dwelling house even if the defect does not apply to other parts of the dwelling. This is also the case under the Housing Act – see Summers v Salford Corporation.
v) The Act will apply to such defects even if the effects of the defect were not evident at the time when the dwelling was completed.
vi) In considering whether or not a dwelling is unfit for habitation as built one must consider the effect of the defects as a whole."
"...it might have been better if the judge had explained what he meant by a dwelling being unfit for its purpose. It is perhaps understandable that he used the phrase "unfit for purpose" in the light of paragraph 34 of the Law Commission report. I cannot, however, accept that there is any material error here. In my view, it is clear that the judge meant that defects which render a dwelling unfit for its purpose, are defects which render it unfit for habitation. The obvious purpose of a dwelling is for it to be occupied and inhabited safely and without inconvenience."
"As regards the particular point made by Mr Hussain in relation to paragraph 174 of the judgment, I accept the submission of Mr Crowley that this was based on the evidence. The fact that the doors to the garage could not be locked was a relevant but not the only consequence of RMA's unprofessional work, which made the house unfit for habitation. Part of living in a house is to be able to maintain the security of the home."
Decision
Claims under Section 2 of the Buildmark cover
"Within a reasonable time and at his own expense, to put right any Defect or Damage to your Home or its Common Parts which is notified to him in writing within the period of the cover.
Any reasonable costs you incur, by prior agreement with the Builder, for removal storage and appropriate alternative accommodation if it is necessary for you or anyone normally living in the Home to move out so that work can be done."
Notice
"Our clients have made it clear throughout that in any situation where they have not met the contractual standards of construction required… they will accept full responsibility to carry out remedial works…
Given that each property has had the benefit of a full 10 year NHBC Warranty, and that our clients have confirmed all along that they will carry out remedial works required…
SHL have notified all residents that they will not only carry out any necessary works but will also meet the costs of those works...
SHL admits openly that where they have not met their contractual obligation and the standards required… they will accept full responsibility to carry out remedial works...
SHL have always stated and continue to accept that in circumstances where they have not met the contractual standard required… they will accept full responsibility to carry out the remedial works…"
"The principle of waiver is simply this, that if one party by his conduct leads another to believe that the strict rights arising under the Contract will not be insisted on, intending the other should act on that belief, and he does act on it then the first party will not afterwards be allowed to insist on the strict rights when it would be inequitable for him so to do."
Decision
"Where it is said that there has been an election to affirm rather than to avoid, the position is more problematic. Is it sufficient for affirmation that there is knowledge and a communication (by words or conduct) which, assuming such knowledge, demonstrates an unequivocal choice? Or must the communication itself or the surrounding circumstances demonstrate such knowledge to the other party? In principle, it seems to me that the latter approach is correct in the context of affirmation. The communication itself or the circumstances must demonstrate objectively or unequivocally that the party affirming is making an informed choice … Whether conduct amounts to an unequivocal communication of a choice to affirm requires therefore, an objective assessment of the impact of the relevant conduct on a reasonable person in the position of the other party to the contract. A reasonable person in that position must, it seems to me, be treated as having a general understanding of the possibility of choice between affirmation and objection. In affirmation (as distinct from estoppel), the actual state of mind of the other party is not the test. Affirmation depends on the objective manifestation of a choice."
"That was said in a case concerned with an established area of true election, the affirmation of an insurance contract which an insurer is entitled to avoid for non-disclosure. I take this analysis as relating to what in that context needs to be objectively available to the non-electing party. I do not think that it is saying that in cases of election the party with the choice will be bound by sufficiently clear appearances even in the absence of any informed choice. That is a potentially difficult subject: on the whole it is necessary for the election to be exercised and to be exercised with sufficient knowledge. ...However, there will be some circumstances where, even in the absence of an actual election, the party with the choice created by relevant knowledge, actual or obviously available, will be regarded as having exercised it after a reasonable time has passed: see Lord Goff in The Kanchenjunga [1990] 1 Lloyd's Rep 391, 398 and Clough v L & NW Railway Co (1871) LR 7 Ex 26, 34–35. This is, I think, part of the rationale of a doctrine which seeks to give a pragmatic response to parties in contractual relations who need to know where they stand."
Issues of liability
Issues of Quantum
The Claimants' claims for damages
Damages for defective properties
The Claimants' primary quantum case
Damages for distress and inconvenience
"A contract-breaker is not in general liable for any distress, frustration, anxiety, displeasure, vexation, tension or aggravation which his breach of contract may cause to the innocent party. This rule is not, I think, founded on the assumption that such reactions are not foreseeable, which they surely are or may be, but on considerations of policy.
But the rule is not absolute. Where the very object of the contract is to provide pleasure, relaxation, peace of mind or freedom from molestation, damages will be awarded if the fruit of the contract is not provided or if the contrary result is procured instead."
"In cases not falling within this exceptional category, damages are in my view recoverable for physical inconvenience and discomfort caused by the breach and mental suffering directly related to that inconvenience and discomfort. If those effects are foreseeably suffered during a period when defects are repaired I am prepared to accept that they sound in damages even though the cost of repairs is not recoverable as such."
"Like Bingham LJ in Watts v Morrow [1991] 1 WLR 1421, 1445H, I consider that awards in this area should be restrained and modest. It is important that logical and beneficial developments in this corner of the law should not contribute to the creation of a society bent on litigation."
Decision
Damages for Defective Premises
The Ruxley Decision
"But, quite independently of these conclusions, to hold in a case such as this that the measure of the building owner's loss is the cost of reinstatement, however unreasonable it would be to incur that cost, seems to me to fly in the face of common sense."
"Damages are designed to compensate for an established loss and not to provide a gratuitous benefit to the aggrieved party from which it follows that the reasonableness of an award of damages is to be linked directly to the loss sustained. If it is unreasonable in a particular case to award the cost of reinstatement it must be because the loss sustained does not extend to the need to reinstate. A failure to achieve the precise contractual objective does not necessarily result in the loss which is occasioned by a total failure."
"What constitutes the aggrieved party's loss is in every case a question of fact and degree. Where the contract breaker has entirely failed to achieve the contractual objective it may not be difficult to conclude that the loss is the necessary cost of achieving that objective. Thus if a building is constructed so defectively that it is of no use for its designed purpose the owner may have little difficulty in establishing that his loss is the necessary cost of reconstructing. Furthermore in taking reasonableness into account in determining the extent of loss it is reasonableness in relation to the particular contract and not at large. Accordingly if I contracted for the erection of a folly in my garden which shortly thereafter suffered a total collapse it would be irrelevant to the determination of my loss to argue that the erection of such a folly which contributed nothing to the value of my house was a crazy thing to do."
"Having taken on the job the contractor is morally as well as legally obliged to give the employer what he stipulated to obtain, and this obligation ought not to be devalued. In my opinion however the hypothesis is not correct. There are not two alternative measures of damage, at opposite poles, but only one; namely, the loss truly suffered by the promisee. In some cases the loss cannot be fairly measured except by reference to the full cost of repairing the deficiency in performance. In others, and in particular those where the contract is designed to fulfil a purely commercial purpose, the loss will very often consist only of the monetary detriment brought about by the breach of contract. But these remedies are not exhaustive, for the law must cater for those occasions where the value of the promise to the promisee exceeds the financial enhancement of his position which full performance will secure."
"In building cases, the pecuniary loss is almost always measured in one of two ways; either the difference in value of the work done or the cost of reinstatement. Where the cost of reinstatement is less than the difference in value, the measure of damages will invariably be the cost of reinstatement. By claiming the difference in value the plaintiff would be failing to take reasonable steps to mitigate his loss. In many ordinary cases, too, where reinstatement presents no special problem, the cost of reinstatement will be the obvious measure of damages, even where there is little or no difference in value, or where the difference in value is hard to assess. This is why it is often said that the cost of reinstatement is the ordinary measure of damages for defective performance under a building contract.
But it is not the only measure of damages. Sometimes it is the other way round."
"The appellant argued that the cost of reinstatement should only be allowed as damages where there was shown to be an intention on the part of the aggrieved party to carry out the work. Having already decided that the appeal should be allowed I no longer find it necessary to reach a conclusion on this matter. However I should emphasise that in the normal case the court has no concern with the use to which a plaintiff puts an award of damages for a loss which has been established. Thus irreparable damage to an article as a result of a breach of contract will entitle the owner to recover the value of the article irrespective of whether he intends to replace it with a similar one or to spend the money on something else. Intention, or lack of it, to reinstate can have relevance only to reasonableness and hence to the extent of the loss which has been sustained. Once that loss has been established intention as to the subsequent use of the damages ceases to be relevant."
"...the law must cater for those occasions where the value of the promise to the promisee exceeds the financial enhancement of his position which full performance will secure. This excess, often referred to in the literature as the 'consumer surplus' (see for example the valuable discussion by Harris, Ogus and Philips (1979) 95 L.Q.R. 581) is usually incapable of precise valuation in terms of money, exactly because it represents a personal, subjective and non-monetary gain. Nevertheless where it exists the law should recognise it and compensate the promisee if the misperformance takes it away."
"Addis v. Gramophone Co. Ltd. established the general rule that in claims for breach of contract, the plaintiff cannot recover damages for his injured feelings. But the rule, like most rules, is subject to exceptions. One of the well established exceptions is when the object of the contract is to afford pleasure, as, for example, where the plaintiff has booked a holiday with a tour operator. If the tour operator is in breach of contract by failing to provide what the contract called for, the plaintiff may recover damages for his disappointment: see Jarvis v. Swans Tours Ltd. [1973] QB 233 and Jackson v. Horizon Holidays Ltd. [1975] 1 WLR 1468."
"This was, as I understand it, the principle which Judge Diamond applied in the present case. He took the view that the contract was one 'for the provision of a pleasurable amenity.' In the event, Mr. Forsyth's pleasure was not so great as it would have been if the swimming pool had been 7 feet 6 inches deep. This was a view which the judge was entitled to take. If it involves a further inroad on the rule in Addis v. Gramophone Co. Ltd. [1909] AC 488, then so be it. But I prefer to regard it as a logical application or adaptation of the existing exception to a new situation.
...
That leaves one last question for consideration. I have expressed agreement with the judge's approach to damages based on loss of amenity on the facts of the present case. But in most cases such an approach would not be available. What is then to be the position where, in the case of a new house, the building does not conform in some minor respect to the contract, as, for example, where there is a difference in level between two rooms, necessitating a step. Suppose there is no measurable difference in value of the complete house, and the cost of reinstatement would be prohibitive. Is there any reason why the court should not award by way of damages for breach of contract some modest sum, not based on difference in value, but solely to compensate the buyer for his disappointed expectations? Is the law of damages so inflexible, as I asked earlier, that it cannot find some middle ground in such a case? I do not give a final answer to that question in the present case. But it may be that it would have afforded an alternative ground for justifying the judge's award of damages. and if the judge had wanted a precedent, he could have found it in Sir David Cairns's judgment in G.W. Atkins Ltd. v. Scott, 7 Const. L.J. 215, where, it will be remembered, the Court of Appeal upheld the judge's award of £250 for defective tiling. Sir David Cairns said, at p. 221:
'There are many circumstances where a judge has nothing but his common sense to guide him in fixing the quantum of damages, for instance, for pain and suffering, for loss of pleasurable activities or for inconvenience of one kind or another'"
The decision in Watts v Morrow
"It is clear, I think, that the judge was regarding the contract between Mr. and Mrs. Watts and the defendant as a contract in which the subject matter was to provide peace of mind or freedom from distress within the meaning of Dillon L.J.'s phrase in Bliss v. South East Thames Regional Health Authority [1987] I.C.R. 700, 718 cited by Purchas L.J. in Hayes v. James & Charles Dodd [1990] 2 All ER 815, 826. That, with respect, seems to me to be an impossible view of the ordinary surveyor's contract. No doubt house buyers hope to enjoy peace of mind and freedom from distress as a consequence of the proper performance by a surveyor of his contractual obligation to provide a careful report, but there was no express promise for the provision of peace of mind or freedom from distress and no such implied promise was alleged. In my view, in the case of the ordinary surveyor's contract, damages are only recoverable for distress caused by physical consequences of the breach of contract. Since the judge did not attempt to assess the award on that basis this court must reconsider the award and determine what it should be."
"A contract-breaker is not in general liable for any distress, frustration, anxiety, displeasure, vexation, tension or aggravation which his breach of contract may cause to the innocent party. This rule is not, I think, founded on the assumption that such reactions are not foreseeable, which they surely are or may be, but on considerations of policy.
But the rule is not absolute. Where the very object of a contract is to provide pleasure, relaxation, peace of mind or freedom from molestation, damages will be awarded if the fruit of the contract is not provided or if the contrary result is procured instead. If the law did not cater for this exceptional category of case it would be defective. A contract to survey the condition of a house for a prospective purchaser does not, however, fall within this exceptional category.
In cases not falling within this exceptional category, damages are in my view recoverable for physical inconvenience and discomfort caused by the breach and mental suffering directly related to that inconvenience and discomfort. If those effects are foreseeably suffered during a period when defects are repaired I am prepared to accept that they sound in damages even though the cost of the repairs is not recoverable as such. But I also agree that awards should be restrained, and that the awards in this case far exceeded a reasonable award for the injury shown to have been suffered."
The decision in Farley v Skinner
"17. ...the issue whether the present case falls within the exceptional category governing cases where the very object of the contact is to give pleasure, and so forth, focuses directly on the terms actually agreed between the parties. It is concerned with the reasonable expectations of the parties under the specific terms of the contract. Logically, it must be considered first.
18. It is necessary to examine the case on a correct characterisation of the plaintiff's claim.
...
The case must be approached on the basis that the surveyor's obligation to investigate aircraft noise was a major or important part of the contract between him and the plaintiff. It is also important to note that, unlike in Addis v Gramophone Co Ltd [1909] AC 488, the plaintiff's claim is not for injured feelings caused by the breach of contract. Rather it is a claim for damages flowing from the surveyor's failure to investigate and report, thereby depriving the buyer of the chance of making an informed choice whether or not to buy resulting in mental distress and disappointment."
"I consider that as a general approach it would be appropriate to treat as cases falling within the exception and calling for an award of damages those where: (1) the matter in respect of which the individual claimant seeks damages is of importance to him, and (2) the individual claimant has made clear to the other party that the matter is of importance to him, and (3) the action to be taken in relation to the matter is made a specific term of the contract. If these three conditions are satisfied, as they are in the present case, then I consider that the claim for damages should not be rejected on the ground that the fulfilment of that obligation is not the principal object of the contract or on the ground that the other party does not receive special and specific remuneration in respect of the performance of that obligation."
"79. Ruxley's case establishes, in my opinion, that if a party's contractual performance has failed to provide to the other contracting party something to which that other was, under the contract, entitled, and which, if provided, would have been of value to that party, then, if there is no other way of compensating the injured party, the injured party should be compensated in damages to the extent of that value.
...
80. In Ruxley's case the breach of contract by the builders had not caused any consequential loss to the pool owner. He had simply been deprived of the benefit of a pool built to the depth specified in the contract. It was not a case where the recovery of damages for consequential loss consisting of vexation, anxiety or other species of mental distress had to be considered.
81. In Watts v Morrow [1991] 1 WLR 1421, however, that matter did have to be considered."
"Second, the adjective "physical", in the phrase "physical inconvenience and discomfort", requires, I think, some explanation or definition. The distinction between the "physical" and the "non-physical" is not always clear and may depend on the context. Is being awoken at night by aircraft noise "physical"? If it is, is being unable to sleep because of worry and anxiety "physical"? What about a reduction in light caused by the erection of a building under a planning permission that an errant surveyor ought to have warned his purchaser-client about but had failed to do so? In my opinion, the critical distinction to be drawn is not a distinction between the different types of inconvenience or discomfort of which complaint may be made but a distinction based on the cause of the inconvenience or discomfort. If the cause is no more than disappointment that the contractual obligation has been broken, damages are not recoverable even if the disappointment has led to a complete mental breakdown. But, if the cause of the inconvenience or discomfort is a sensory (sight, touch, hearing, smell etc) experience, damages can, subject to the remoteness rules, be recovered."
"In summary, the principle expressed in Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344 should be used to provide damages for deprivation of a contractual benefit where it is apparent that the injured party has been deprived of something of value but the ordinary means of measuring the recoverable damages are inapplicable. The principle expressed in Watts v Morrow [1991] 1 WLR 1421 should be used to determine whether and when contractual damages for inconvenience or discomfort can be recovered."
"I would add that if there had been an appreciable reduction in the market value of the property caused by the aircraft noise, Mr Farley could not have recovered both that difference in value and damages for discomfort. To allow both would allow double recovery for the same item."
Conclusion on the law
(1) There will generally be an award of the cost of reinstatement provided that reinstatement is reasonable: East Ham v Bernard Sunley at 434, 445; Ruxley at 358D, 360E, 367B.
(2) Reinstatement will be unreasonable if the cost of reinstatement would be out of all proportion to the benefit to be obtained: Ruxley at 367B.
(3) The question of reasonableness has to be answered in relation to the particular contract: Ruxley at 358D.
(4) It is not necessary for recovery of the cost of reinstatement to show that the claimant will reinstate the property but the intention to reinstate may be relevant to reasonableness: Ruxley at 359C to D and 372A to 373E.
(5) If reinstatement is unreasonable then the measure will generally be diminution in value: East Ham v Bernard Sunley at 434, 445; Ruxley at 360E, 367B.
(6) Where reinstatement is unreasonable and there is no diminution in value, then the court may award damages for loss of amenity: Ruxley at 354D, 360H, 374.
(7) There is a general rule, subject to exceptions, established in Addis v Gramophone, that a claimant cannot recover damages for injured feelings for breach of contract: Watts v Morrow at 1445; Ruxley 374 A to B; Farley v Skinner 747D.
(8) One of the exceptions, explained in Watts v Morrow and Farley v Skinner and applied or adapted in Ruxley and applied in Farley v Skinner is that where the object of the contract is to afford pleasure, relaxation, peace of mind or freedom from molestation such damages are recoverable: Ruxley 374B to D; Farley v Skinner 747D.
(9) In cases not falling within that exception, damages may be recovered for physical inconvenience and discomfort caused by the breach and mental suffering directly related to physical inconvenience and discomfort: Watts v Morrow at 1445F.
(10) That for physical inconvenience or discomfort, the cause of that inconvenience or discomfort must be a sensory (sight, touch, hearing, smell etc) experience: Farley v Skinner at 768D to E.
(11) That any damages under either of the heads are modest: Ruxley at 374C to D; Watts v Morrow at 1443, 1445; Farley v Skinner at 751.
Reinstatement or diminution in value
Submissions
Decision
The claim for diminution in value
(1) The market value when purchased, assuming there were no issues with the properties.
(2) The market value on the basis of the condition in the engineering experts' Joint Statement but assuming that the properties had been underpinned and had the benefit of an ASUC guarantee and engineer's certificate.
(3) The market value but for the allegations now made (subject to some differences between the valuations for Plots 15, 20, 34 and 43).
Mortgageable: Capital Comparison Method
(1) Plot 15, 15 Barley Close: £133,650
(2) Plot 20, 16 Clover Drive: £158,625
(3) Plot 34, 25 Clover Drive: £124,875
(4) Plot 39, 15 Clover Drive: £130,275
(5) Plot 43, 7 Clover Drive: £151,875
(6) Plot 50, 26 Meadowgate Drive: £131,625
(7) Plot 59, 15 Hayfield Close: £155,250
(8) Plot 87, 57 Meadowgate Drive: £156,600
(9) Plot 89, 53 Meadowgate Drive: £121,837
(10) Plot 90, 51 Meadowgate Drive: £132,637
Unmortgageable: The Investment method
(1) Ashbrook £78,000
(2) Langdale £90,000
(3) Newbury £75,000
(1) Ashbrook £122,000 (£121,900)
(2) Langdale £144,000 (£143,932)
(3) Newbury £114,000 (£114,158)
(1) Ashbrook £100,000
(2) Langdale £117,000
(3) Newbury £94,500
Unmortgageable Mortgageable
(1) Plot 15, 15 Barley Close: £102,000 £133,650
(2) Plot 20, 16 Clover Drive: £119,000 £158,625
(3) Plot 34, 25 Clover Drive: £99,000 £124,875
(4) Plot 39, 15 Clover Drive: £100,000 £130,275
(5) Plot 43, 7 Clover Drive: £117,000 £151,875
(6) Plot 50, 26 Meadowgate Drive: £102,000 £131,625
(7) Plot 59, 15 Hayfield Close: £117,000 £155,250
(8) Plot 87, 57 Meadowgate Drive: £119,000 £156,600
(9) Plot 89, 53 Meadowgate Drive: £97,000 £121,837
(10) Plot 90, 51 Meadowgate Drive: £103,000 £132,637
Mortgageability
The claim for damages for loss of amenity, distress and inconvenience
The claims for the minor remedial work
(1) Where cracks have appeared internally in walls, ceiling or cornices or where plasterboard nails have become apparent I consider that, on the balance of probabilities, unless there is some other obvious explanation, the crack will have occurred because of movement of the structure. The movement of the piles and ground beams causes a redistribution of stresses which will cause cracks to the more sensitive areas.
(2) Externally many of the houses have suffered from cracking where the lead flashing is bedded in the mortar joint on the Ashbrook and Newbury houses. I consider that whilst this is partly caused by thermal expansion of the different materials, that joint provides a weak point which will crack due to any movement of the structure. The cracked mortar is therefore substantially contributed to by movement of the piles and ground beams.
(3) Where there has been putlog damage which has been repaired then, again, on the balance of probabilities I consider that unless there is clear evidence that the defect is caused by inadequate repair of the putlog damage, any crack or other defect is likely to have been caused by stress re-distribution arising from movement of the piles and ground beams.
The claims for the external areas
The other quantum claims
The claims for each lead property
Mr and Mrs Knight Plot 15 (15 Barley Close)
Background
The Encia litigation
"521. ...It stands in an area of negative skin friction. It has 15 piles, of which seven have factors of safety below 1, and a further six piles have factors of safety below 1.5.
522. There are 17 millimetres of horizontal tilt. The damage sustained by this property, however, is very slight. Mr Newman classifies this property as purple. Mr Johnson classifies the property as a "low risk blue" or "blue tending to purple". Mr Johnson accepted in cross-examination that any future damage to this house would be cosmetic (see Day 7, pages 89 to 90).
523. I have come to the conclusion that the foundations of plot 15 are inadequate, but only by a small degree. Having regard to the state of the property and the expert evidence, the factors of safety are probably somewhat higher than calculated. The minor damage which has occurred to date is in part attributable to foundation settlement. The remedial action for this property will comprise cosmetic repairs to the superstructure if and when necessary."
Engineering expert evidence
Conclusion on the Property
Diminution in value
Cost of minor remedial work
Distress inconvenience and loss of amenity
Increased costs or wasted expenditure
VAT and Interest
Work to external areas
Damages
(1) Special Damages
(a) Increased costs or wasted expenditure: £300.00
(b) Additional mortgage payments: £ nil
(c) Increased insurance cost: £ nil
(2) General damages for distress, inconvenience and
loss of amenity to date of trial: £1,500.00
(3) Cost of minor remedial works on property: To be determined
(4) Diminution in value: £96,000.00
(5) Future loss:
(a) Repairs and redecoration: To be determined
(b) Maintenance due to ground movement £ nil
(c) General damages for future distress,
inconvenience and loss of amenity: £3,000.00
(d) Additional mortgage payments: £ nil
(e) Increased insurance cost: £ nil
Total: £100,800.00
Mr and Mrs Dobson Plot 20 (16 Clover Drive)
Background
"You state in your letter that we have been provided with updates on numerous occasions. These updates are merely snippets of information that you deem fit to share with us and despite requests through your helpline for additional information, such as a written guarantee for our insurance company that our house is structurally sound you didn't feel able to provide this information, only referring to the "scant" report we received from you following one of the two visual inspections carried out by BSCP."
The Encia Litigation
"534 This is a Langdale house. It stands in an area of negative skin friction. It has 13 piles, of which ten have factors of safety below 1.
535 The property has suffered only minor damage. The horizontal tilt is 10 millimetres and the vertical tilt is 5 millimetres.
536 Mr Johnson classifies this property as blue. Mr Newman classifies this property as purple, but would reclassify it blue if (as has happened) SHL succeeds on the CAPWAP issue. On that basis both experts recommend further monitoring. However, the only remedial works that may be required are cosmetic (see the evidence of Mr Johnson at Day 7, page 91).
537 In the course of his closing speech Mr Cavender reminded me that monitoring is an expensive process. He submitted that there is no point in monitoring simply for the purpose of future cosmetic works. I see force in that submission. My decision in respect of plot 20 is that the foundations are inadequate, but only to a slight degree. The only remedial works are cosmetic repairs, to be undertaken if and when necessary."
Engineering expert evidence
Conclusion on the Property
Limitation
Diminution in value
Cost of minor remedial work
Distress inconvenience and loss of amenity
Increased costs or wasted expenditure
VAT and Interest
Work to external areas
Damages
(1) Special Damages
(a) Increased costs or wasted expenditure: £775.00
(b) Additional mortgage payments: £800.00
(c) Increased insurance cost: £ nil
(2) General damages for distress, inconvenience and loss
of amenity to date of trial: £1,400.00
(3) Cost of minor remedial works on property: To be determined
(4) Diminution in value: £116,000.00
(5) Future loss:
(a) Repairs and redecoration: To be determined
(b) Maintenance due to ground movement £ nil
(c) General damages for future distress,
inconvenience and loss of amenity: £3,000.00
(d) Additional mortgage payments: £2,400.00
(e) Increased insurance cost: £ nil
Total: £124,375
Mr and Mrs Frostwick Plot 34 (25 Clover Drive)
Background
"(1) a fine vertical crack through bricks and perpends has recently occurred in the left hand gable, half a brick in from the front corner. The crack starts about 6 courses above ground level and continues for about 2 metres. This crack may be settlement related. All other external cracking was recorded during our first inspection and does not appear to have worsened. (2) Cracking in the kitchen ceiling has worsened slightly."
The Encia litigation
"569. ...It stands in an area of negative skin friction. It has 16 piles. They all have factors of safety above 1.5, except for pile C3, which has a factor of safety of 1.42.
570 This house has suffered minimal damage and very little tilt. Mr Johnson classifies the house blue. Mr Newman classifies the house purple.
571 On the factual and expert evidence before the court, SHL has failed to prove its case in respect of plot 34. I hold that the foundations are adequate."
Engineering expert evidence
Conclusion on the Property
Diminution in value
Cost of minor remedial work
Distress inconvenience and loss of amenity
Increased costs or wasted expenditure
VAT and Interest
Work to external areas
Damages
(1) Special Damages
(a) Increased costs or wasted expenditure: £957.00
(b) Additional mortgage payments: £ nil
(c) Increased insurance cost: £ nil
(2) General damages for distress, inconvenience and loss
of amenity to date of trial: £1,450.00
(3) Cost of minor remedial works on property: To be determined
(4) Diminution in value: £73,062.50
(5) Future loss:
(a) Repairs and redecoration: To be determined
(b) Maintenance due to ground movement £ nil
(c) General damages for future distress,
inconvenience and loss of amenity: £2,500.00
(d) Additional mortgage payments: £ nil
(e) Increased insurance cost: £ nil
Total: £77,969.50
Mr and Mrs Simpson Plot 39 (15 Clover Drive)
Background
The Encia litigation
"577. ... It stands in an area where negative skin friction probably does not apply. All piles have adequate factors of safety. Both experts classify this house as purple. They agree that the very minor settlement related damage at this house could be within the normal range of foundation settlement.
578. I hold that the foundations of plot 39 are adequate."
Engineering expert evidence
Conclusion on the Property
Diminution in value
Cost of minor remedial work
Distress inconvenience and loss of amenity
Increased costs or wasted expenditure
VAT and Interest
Work to external areas
Damages
(1) Special Damages
(a) Increased costs or wasted expenditure: £ nil
(b) Additional mortgage payments: £ nil
(c) Increased insurance cost: £ nil
(2) General damages for distress, inconvenience and loss
of amenity to date of trial: £1,200.00
(3) Cost of minor remedial works on property: To be determined
(4) Diminution in value: £62,725.00
(5) Future loss:
(a) Repairs and redecoration: To be determined
(b) Maintenance due to ground movement £ nil
(c) General damages for future distress,
inconvenience and loss of amenity: £2,000.00
(d) Additional mortgage payments: £ nil
(e) Increased insurance cost: £ nil
Total: £65,925.00
Mr and Mrs Manners Plot 43 (7 Clover Drive)
Background
The Encia litigation
"579. The experts have agreed that all these properties are yellow. Accordingly, I hold that the foundations are adequate."
Engineering expert evidence
Conclusion on the Property
Diminution in value
Cost of minor remedial work
Distress inconvenience and loss of amenity
Increased costs or wasted expenditure
VAT and Interest
Work to external areas
Damages
(1) Special Damages
(a) Increased costs or wasted expenditure: £1,000.00
(b) Additional mortgage payments: £ nil
(c) Increased insurance cost: £ nil
(2) General damages for distress, inconvenience and loss
of amenity to date of trial: £250.00
(3) Cost of minor remedial works on property: To be determined
(4) Diminution in value: £73,125.00
(5) Future loss:
(a) Repairs and redecoration: To be determined
(b) Maintenance due to ground movement £ nil
(c) General damages for future distress,
inconvenience and loss of amenity: £ nil
(d) Additional mortgage payments: £ nil
(e) Increased insurance cost: £ nil
Total: £ 74,375.00
Mr and Mrs Willis Plot 50 (26 Meadowgate Drive)
Background
The Encia litigation
"594 ... It stands in an area where negative skin friction applies. It has 15 piles. Pile A3 has a factor of safety of 0.98. Seven other piles have factors of safety below 1.5.
595 The house has 20 millimetres of horizontal tilt and 5 to 7 millimetres of vertical tilt. The house has sustained damage category 1 to 2 on the BRE scale comprising cracks and doors sticking. Some internal damage is in the vicinity of pile C2, which has a factor of safety of 1.19.
596 Mr Johnson categorises this house as blue; so does Mr Newman in the event that Mr Johnson's factors of safety are accepted.
597 My conclusion in respect of this property is that the foundations are inadequate. I put this property in the category "monitor and decide later"."
Engineering expert evidence
Conclusion on the Property
.
Diminution in value
Cost of minor remedial work
Distress inconvenience and loss of amenity
Increased costs or wasted expenditure
VAT and Interest
Work to external areas
Damages
(1) Special Damages
(a) Increased costs or wasted expenditure: £ nil
(b) Additional mortgage payments: £ nil
(c) Increased insurance cost: £ nil
(2) General damages for distress, inconvenience and loss
of amenity to date of trial: £1,500.00
(3) Cost of minor remedial works on property: To be determined
(4) Diminution in value: £78,187.50
(5) Future loss:
(a) Repairs and redecoration: To be determined
(b) Maintenance due to ground movement £ nil
(c) General damages for future distress,
inconvenience and loss of amenity: £2,500.00
(d) Additional mortgage payments: £ nil
(e) Increased insurance cost: £ nil
Total: £82,187.50
Mr and Mrs Henderson Plot 59 (15 Hayfield Close)
Background
"(1) the cracking at DPC level which has appeared during July 2005 to June 2006 may be due to differential settlement of the piled foundations. This can take a long time to show visible signs of distress in the superstructure due to load shedding between the piles.
(2) the next inspection is intended to see if there have been any visible signs of widening of the fine cracks at DPC level. Depending on what we see we may recommend that a Demec survey be undertaken at two monthly intervals to determine whether or not the cracking is progressive."
The Encia litigation
"615 ... It stands in an area of negative skin friction. It has 13 piles, one of which has a factor of safety of 0.95. Most other piles have factors of safety below 1.5. The tilt and damage sustained by this house are very slight. The experts have agreed that plot 59 is purple.
616 In cross-examination Mr Johnson said it was difficult to conclude that the state of plot 59 was due to incompetent piling because the level of damage was so slight. Mr Newman reached the same conclusion more confidently.
617 In my view the foundations of plot 59 are adequate."
Engineering expert evidence
Conclusion on the Property
.
Diminution in value
Cost of minor remedial work
Distress inconvenience and loss of amenity
Increased costs or wasted expenditure
VAT and Interest
Work to external areas
Damages
(1) Special Damages
(a) Increased costs or wasted expenditure: £ nil
(b) Additional mortgage payments: £ nil
(c) Increased insurance cost: £ nil
(2) General damages for distress, inconvenience and loss
of amenity to date of trial: £1,200.00
(3) Cost of minor remedial works on property: To be determined
(4) Diminution in value: £93, 875.00
(5) Future loss:
(a) Repairs and redecoration: To be determined
(b) Maintenance due to ground movement £ nil
(c) General damages for future distress,
inconvenience and loss of amenity: £2,500.00
(d) Additional mortgage payments: £ nil
(e) Increased insurance cost: £ nil
Total: £97,575.00
Mr and Mrs Adamson Plot 87 (57 Meadowgate Drive)
Background
The Encia litigation
"680. ... It stands in an area of negative skin friction. It has 13 piles, 11 of which have factors of safety below 1. The two remaining piles have factors of safety slightly above 1.
681. Mr Johnson classifies this property as blue. Mr Newman classifies it yellow, but would change to blue if Mr Johnson's factors of safety prevail.
682. The horizontal tilt across the house is 21 millimetres and the vertical tilt is up to 12 millimetres. The cross-examination of the experts in relation to plot 87 does not greatly affect the position. Mr Newman commented on the different ground models used by the two experts in their assessment. Mr Johnson made it plain that any remedial work would probably be cosmetic but he could not rule out other possibilities.
683. I am satisfied that the foundations of plot 87 are inadequate, although it is not clear to what degree. It is also unclear what form of remedial work, if any, will be required.
684. I put this house into the category "monitor and decide later"."
Engineering expert evidence
Conclusion on the Property
Diminution in value
Cost of minor remedial work
Distress inconvenience and loss of amenity
Increased costs or wasted expenditure
VAT and Interest
Work to external areas
Damages
(1) Special Damages
(a) Increased costs or wasted expenditure: £75.00
(b) Additional mortgage payments: £ nil
(c) Increased insurance cost: £ nil
(2) General damages for distress, inconvenience and loss
of amenity to date of trial: £1,500.00
(3) Cost of minor remedial works on property: To be determined
(4) Diminution in value: £94,200.00
(5) Future loss:
(a) Repairs and redecoration: To be determined
(b) Maintenance due to ground movement £ nil
(c) General damages for future distress,
inconvenience and loss of amenity: £2,500.00
(d) Additional mortgage payments: £ nil
(e) Increased insurance cost: £ nil
Total: £98,275.00
Mr Jeffery and Ms McDermott Plot 89 (53 Meadowgate Drive)
Background
The Encia litigation
"688 ...It stands in an area of negative skin friction. It has 12 piles, of which three have factors of safety below 1. Of the remaining piles, eight have factors of safety below 1.5. The house has 26 millimetres of horizontal tilt and up to 12 millimetres of vertical tilt.
689 Mr Johnson classifies this property as blue. Mr Newman classifies it yellow, but would upgrade to blue if Mr Johnson's factors of safety prevail. Mr Johnson considers that any remedial works required after monitoring would probably only be cosmetic but he cannot exclude the possibility of underpinning.
690 I have come to the conclusion that the foundations of plot 89 are inadequate, but it is not clear by what degree. It is also unclear what remedial works, if any, will be required.
691 I put this house into the category "monitor and decide later"."
Engineering expert evidence
Conclusion on the Property
Diminution in value
Cost of minor remedial work
Distress inconvenience and loss of amenity
Increased costs or wasted expenditure
VAT and Interest
Work to external areas
Damages
(1) Special Damages
(a) Increased costs or wasted expenditure: £350.00
(b) Additional mortgage payments: £ nil
(c) Increased insurance cost: £ nil
(2) General damages for distress, inconvenience and loss
of amenity to date of trial: £1,000.00
(3) Cost of minor remedial works on property: To be determined
(4) Diminution in value: £71,081.50
(5) Future loss:
(a) Repairs and redecoration: To be determined
(b) Maintenance due to ground movement £ nil
(c) General damages for future distress,
inconvenience and loss of amenity: £1,250.00
(d) Additional mortgage payments: £ nil
(e) Increased insurance cost: £ nil
Total: £73,681.50
Mr and Mrs Pettite Plot 90 (51 Meadowgate Drive)
Background
"as you may be aware my property has visible cracks appearing in the external brickwork, which have been examined twice by the independent surveyor appointed by Shepherd Homes-the awaited report will hopefully identify both the cause and associated remedial action. Considering the above and coupled with the recent press coverage, I am reluctant to put the property on the market because I do not believe it will reach its true market value. Therefore, I would request a meeting with you at a mutually convenient time to discuss the possible options for moving forward….."
"(1)the step cracking around the front right hand corner of the house at high level, running down from the bottom corner of the window of bedroom 1 and around the right-hand gable does not appear to have worsened.
(2) the cracking at DPC level in the wall to the left of the bay window has increased in size.
(3) the fine step cracking at the left hand corner of the bay, two courses below cill level does not appear to have worsened.
(4) a new horizontal crack has appeared at DPC level at the left hand front corner of the house in the garage wall. A vertical crack in one of the vertical joints can also be seen two courses below DPC level close by. This crack was exposed by removing some of the gravel from the front of the gable wall."
The recommendation was for the property to be re-examined again in 4 months' time.
"(1) A fine horizontal crack was recorded in right hand gable from the rear corner, in the bed-joint 20 courses above DPC. This crack coincides with putlog holes but was not previously recorded, which suggests it has occurred since our last visit.
(2) Other cracking in external masonry does not appear to have worsened.
(3) A fine crack was recorded in ceiling of the bedroom 1 ensuite and in the ceiling of bedroom 1, plasterboard joints are becoming apparent. Mr Pettite confirmed these defects have occurred recently."
The Encia litigation
"688 Plot 89 is a Newbury house. It stands in an area of negative skin friction. It has 12 piles, of which three have factors of safety below 1. Of the remaining piles, eight have factors of safety below 1.5. The house has 26 millimetres of horizontal tilt and up to 12 millimetres of vertical tilt.
689 Mr Johnson classifies this property as blue. Mr Newman classifies it yellow, but would upgrade to blue if Mr Johnson's factors of safety prevail. Mr Johnson considers that any remedial works required after monitoring would probably only be cosmetic but he cannot exclude the possibility of underpinning.
690 I have come to the conclusion that the foundations of plot 89 are inadequate, but it is not clear by what degree. It is also unclear what remedial works, if any, will be required.
691 I put this house into the category "monitor and decide later"."
Engineering expert evidence
Conclusion on the Property
Diminution in value
Cost of minor remedial work
Distress inconvenience and loss of amenity
Increased costs or wasted expenditure
VAT and Interest
Work to external areas
Damages
(1) Special Damages
(a) Increased costs or wasted expenditure: £100.00
(b) Additional mortgage payments: £ nil
(c) Increased insurance cost: £ nil
(2) General damages for distress, inconvenience and loss
of amenity to date of trial: £1,500.00
(3) Cost of minor remedial works on property: To be determined
(4) Diminution in value: £78,681.50
(5) Future loss:
(a) Repairs and redecoration: To be determined
(b) Maintenance due to ground movement £ nil
(c) General damages for future distress,
inconvenience and loss of amenity: £2,500.00
(d) Additional mortgage payments: £ nil
(e) Increased insurance cost: £ nil
Total: £82,781.50
Summary
