The Court recently gave judgment in the case of Rendelsham Estates Plc & Others v Barr Ltd [2014] EWHC 3968 (TCC). This case highlights that the Defective Premises Act  1972 (“the DPA”)  may sometimes assist a property owner to make recoveries against a building contractor where a  claim under a contractual relationship is not possible.

The Facts

The case involved the owners (“the Claimants”) of 120 flats in two apartment blocks in Leeds.  Throughout the building works, reductions in the specification were made in order to achieve cost  savings so that lesser quality material and finishes were used within the construction of the  blocks. As a result, following completion, the Claimants suffered flooding, damp ingress and that  the intercom system within the apartments was not working. In the years that followed, significant further problems arose including leaks, mould and condensation.

The Claimants issued a claim against Barr Limited (“Barr”) being the building contractor, who had  built the blocks on behalf of the developer, City Wall Limited (“CWW”). The Claimants were  prevented from bringing a claim directly against CWW as CWW had entered into administration  in  February 2008. Further, the Claimants did not have the benefit of new home warranties.

The Claimants were unable to bring a contractual claim against Barr as they did not have a direct  contractual relationship. The claim was therefore brought under the DPA on the basis that the  apartments were not fit for habitation.

The case involved a detailed consideration of the DPA and in particular, Section 1 of the DPA,  which provides:

“(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…”

Judgment

The trial was conducted on the basis of eight lead apartments and in order to determine the claim,  the Court had to consider the following:

  1. The meaning of a dwelling;
  2. The meaning of “in connection with the provision of a dwelling”; and
  3. How fitness for habitation was to be determined.

Dwelling

The Claimants alleged that both blocks together or even one block could constitute a dwelling. This  argument was rejected however the Court found that each individual apartment, together with its  balcony, was capable of constituting a dwelling.

In connection with the provision of a dwelling

The Court found that works to the structural and common parts of both blocks were works done “in  connection with the provision” of each of the apartments, on the basis that each owner had an  interest in and a financial responsibility for maintenance and repair of the structural and common  parts as well as a right of access to the common parts.

Fit for habitation

Justice Edwards-Stuart stated that for a dwelling to be fit for habitation, it must, on completion:  “be capable of occupation for a reasonable time without risk to the health and safety of the  occupants: where a dwelling is or is part of a newly constructed building, what is a reasonable time will be a question of fact (it may or may not be as long as the design life of the  building); and be capable of occupation for a reasonable time without undue inconvenience or  discomfort to the occupants.”

He provided some useful criterion for determining fitness for habitation which included:

“When considering whether or not an apartment is fit for habitation, its condition has to be considered at the date when the work was completed (which I  consider extends to the end of any relevant defects liability period).”

“The fact that a particular defect which renders an apartment unfit for habitation could be  remedied at relatively modest cost, does not of itself mean that there is no breach of duty under  Section 1. That is relevant only to the measure of damages.”

He also considered that the apartment must be fit for habitation by all types of person who might  reasonably  be expected to occupy it (including for example, pregnant women or babies) and that it  was not right to consider the defects in isolation but instead whether the dwelling as a whole was unfit for habitation (which may include defects not evident at completion). He did  however note that the application of the proposed criterion would be very fact- specific.

The Court found that each of the eight lead apartments were unfit for habitation due to the variety  of defects to the apartments and to the common parts. However, the Court found that the claim could  not be pursued as a representative action as proof would be required for each individual apartment  (and indeed, what rendered one apartment unfit for habitation may not affect another).

Barr conceded liability for some of the defects but disputed the sum of damages claimed. It argued  that each owner’s claim for the cost of works should be limited to the share  of the cost of works  that the owner would pay by way of additional service charges. The Court disagreed and found that  each of the eight owners was entitled to the full cost  of repairing the defects. Justice  Edwards-Stuart commented that Barr’s argument would lead to an unjust result in so far as awarding an owner only its share of the service charge would make the occurrence of the  works dependent on other owners agreeing to fund the balance. Should they refuse, the works would  never be carried out. The Court eliminated Barr’s risk in respect of multiple recoveries by holding  that the Court’s award was to be conditional on the sum being enforced against Barr only once.

The Claimants were therefore entitled to (i) the costs of rectifying the defects, (ii) a sum which  represented the blight on the value of the apartments and (iii) damages for distress and inconvenience.

Conclusion

The judgment in Rendelsham Estates Plc & Others v Barr Ltd shows that there may be some 
circumstances in which  the absence of a contractual claim will not prevent owners from recovering 
damages from a building contractor. The DPA will however continue to be limited to defects which 
render a building unfit for habitation and so in practice, only more serious cases will lead to a 
recovery in these
circumstances.