Property is one of the most valuable assets many of us will ever own in our life time, consequently we invest a lot of time, money and effort into the acquisition and upkeep of it. It therefore stands to reason that when things go wrong, such as defective building works, in addition to the direct financial concerns that such issues bring, a great deal of distress and anxiety ensues.

The traditional approach for breach of contract is that damages are awarded to compensation for financial losses arising from breach. However, if losses have manifested themselves in physical inconvenience or discomfort, where the purpose of the contract was to provide freedom from distress and peace of mind, the courts have allowed some recovery for these non-pecuniary losses.

This in essence means that a claim for distress and anxiety would be more likely to succeed in a residential context, because as stated by Lord Justice Bingham in Watts v Morrow [1991], “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 a contrary result is procured instead. If the law did not cater for this exceptional category of case it would be defective”.

It should be noted however, that an award for damages of this nature will be a modest sum – in the above case it amounted to £750 per claimant for the two years of distress they endured. As time has gone on, and more cases have progressed through the court system this figure has increased so that in 2014 the maximum was to be around £3,000 per year.

This was applied in the case of West & Anor v Ian Finlay & Associates (a firm) [2014], including an adjustment for inflation and following the position set out in AXA Insurance UK v Cunningham Lindsey [2007]. The AXA case allowed claimants to receive a modest amount of damages for inconvenience, distress and discomfort caused by breaches of contract up to a maximum of £2,500 in 2007.

Whilst it is unlikely that in the majority of cases the court will award damages at the higher end of the spectrum, it does allow a person some small recognition for the distress and anxiety they have endured. Maybe in the future the cap on these damages will increase, which may serve as a motivator for members of the property industry, in order to avoid the financial burden of a very upset client.

We will be keeping an eye out for future developments on the cap, so watch this space.