Bole & Anor v Huntsbuild Ltd

LORD JUSTICE PILL: Lord Justice Dyson will give the first judgment.

LORD JUSTICE DYSON: This appeal raises issues as to the meaning and application of Section 1 of The Defective Premises Act 1972, ("the 1972 Act").

By his judgment of 30 March 2009, HHJ Toulmin CMG QC held that the second defendant ("RMA"), was in breach of Section 1 of the 1972 Act, and awarded the claimants damages, which he assessed in the sum of £218,616.91.

RMA appeals with the permission of Waller and Carnwath LJJ.

Section 1 of the 1972 Act provides:

RMA are a firm of structural engineers. Huntsbuild Limited ("Huntsbuild") has at all material times been a building contractor. By a contract made on 19 September 2001, Huntsbuild agreed to construct and sell a house to the claimants. RMA were retained by Huntsbuild to carry out or arrange for the carrying out of the site investigations, and to advise and design the foundations for the dwelling. It is not in dispute that RMA owed a duty to the claimants pursuant to Section 1 of the 1972 Act. The dwelling was built and sold to the claimants. They first noticed cracking in 2002. It was eventually discovered that the cracking and other defects that they reported to Huntsbuild were attributable to the fact that the foundations had been badly designed.

In these proceedings, the claimants contended before the judge that the defects of which they complained were all caused by ground heave, which in turn was caused by the fact that, owing to a defective design, the foundations were not deep enough. Thus, they said, RMA were in breach of Section 1 of the 1972 Act, because they had failed to see that the work which they had taken on, the design of the foundations, had been done in a professional manner, so that as regards that work, the dwelling was fit for habitation when completed. RMA denied the breach of duty, contending that such defects as existed in the dwelling did not cause it to be unfit for habitation.

In a detailed and careful judgment, the judge set out all the relevant facts. Early in his judgment, he considered the 1972 Act and in particular, the question of what is meant by "unfit for habitation."That question arose in this case because RMA contended that none of the defects made the dwelling unfit for habitation. At most, they said, the defects were ones which the claimants were entitled to have remedied, but they did not make the dwelling unfit for habitation.

The judge referred to the Law Commission Report, (Law Com No. 40) "Civil liability of vendors and lessors for defective premises," published in December 1970, paragraph 34 of which, he said, was crucial in construing the phrase "unfit for habitation" in Section 1 of the 1972 Act. That paragraph is in these terms:

Having referred to a number of authorities and to Section 604(1) of The Housing Act 1985, the judge said:

He then set out the facts in considerable detail and referred to the experts' reports. At paragraphs 133 to 164, he set out the conclusions of the party's experts. On many issues they were in agreement. They agreed that if a full raft underpinning were to be undertaken, the remedial works would be likely to take between 6 and 12 months to complete. They also agreed that although the foundations towards the centre of the house were inadequate to prevent heave at the time of construction, the heave movement was unlikely to cause the dwelling to reach a structurally dangerous condition, and the risk of collapse was low. There was disagreement, however, as to the amount of heave yet to occur.

At paragraph 158 to 164, the judge set out the evidence as to the consequences of the cracking which he found to exist;

The experts did not agree what remedial works were necessary. At paragraph 169 to 173, the judge made detailed findings in relation to certain cracking and warping. He said that it was agreed between the experts that, at the least, further extensive work was required to be done now and that unless the underpinning solution was adopted, further remedial work would be necessary in the future (paragraph 175).

He then said:

At paragraphs 180 to 188, the judge considered the cost of the appropriate remedial works. There was no disagreement between the experts as to the repairs that were necessary to remedy the visible defects. They disagreed, however, on what, if anything, should be done about the foundations. Mr Allen, for the claimants, said that a piled foundation solution should be implemented forthwith.

Mr Edward for the defendant said that this was unnecessary. The repairs to the superstructure should be carried out now and any future repairs, which would be minor, carried out when necessary.

The judge resolved this issue at paragraph 188 as follows:

In summary, therefore, the judge found that the dwelling was unfit for habitation. As to damages, he found that the piled raft solution was the appropriate solution to remedy the defects in the foundations and the claimants should be awarded the agreed cost of remedying all the visible defects.

Accordingly, he awarded £214,116.91, plus £4,500 by way of general damages.

The first ground of appeal is that the judge applied the wrong test, alternatively took into account irrelevant considerations in deciding that the dwelling was unfit for habitation, in that:

The second ground of appeal is that the judge wrongly found that the dwelling was unfit for habitation, without properly considering or explaining how the items of damage claimed rendered the dwelling unfit for habitation.

The third ground of appeal is that the judge wrongly took, as the measure of damages, the cost of repairing all damage arising from RMA's failure to carry out work in a professional and workmanlike manner: ie the cost of repairing all the damage caused by the ground heave.

Instead, he should have awarded no more than the cost of rendering the property fit for habitation.

The fourth ground of appeal is that the judge's finding that the defective foundations had rendered and/or would render the dwelling unfit for habitation, was made without any proper basis in fact.

Mr Hussain submits that the fact that repairs would take several months to carry out and that the occupier would have to vacate the dwelling is irrelevant to whether it is unfit for habitation. He illustrates this submission by the following example: suppose, he says, that a specification requires an upstairs bathroom and a downstairs kitchen and marble flooring throughout the building; and suppose further that the contract administrator acts unprofessionally, with the result that the bathroom is built downstairs, the kitchen upstairs and wooden flooring is installed throughout the building. Mr Hussain submits that despite these defects, which no doubt the owners or occupiers would regard as serious, the dwelling is fit for habitation and there can be no liability under the 1972 Act. That conclusion is not undermined, even if the cost of the remedial works is substantial and it may be necessary for the occupiers to vacate the dwelling for a considerable period of time during the works. By analogy, Mr Hussain submits that the cracks which the judge found to exist in the dwelling in the present case did not render it unfit for habitation.

He also submits that the judge erred in holding that liability arises under section 1 for defects in quality that render the dwelling unsuitable for its purpose. In reaching this conclusion, he says that the judge wrongly relied on paragraph 34 of the Law Commission report and pages 193 to 195 of the speech of Lord Bridge in D and F Estates and Church Commissioners for England 1989, 1 Appeal Cases 177. An example of the way in which he submits the judge's error infected his judgment is to be found at paragraph 174 of the judgment:

I reject these submissions. I cannot accept that the fact that it would be necessary for the claimants to vacate the dwelling for a substantial period during the carrying out of the remedial works is irrelevant. In some cases, it may be irrelevant. It may be that in the rather unrealistic example given by Mr Hussain to illustrate his point, the fact that the owners would have to vacate the dwelling for 12 months during the carrying out of the remedial works would be irrelevant to the question whether the defects render the dwelling unfit for habitation. It will always depend on the facts of the particular case. But in a case where the defect is fundamental to the stability of the dwelling, and does not raise a merely cosmetic or stylistic issue, the fact that it is necessary to vacate for a long period, while the remedial work carried out, is likely to be highly material to whether the defect renders the dwelling unfit for habitation. In my judgment, the judge was not only entitled, but right to regard the fact that it would be necessary for the claimants to vacate for about 12 months during the remedial works, as material. Mr Hussain has cited no authority in support of the proposition that the duration of the remedial works, and the fact that it would be necessary for the claimants to vacate the dwelling while the remedial works are carried out, is necessarily and in every case, irrelevant. In my judgment, in many cases it will be a highly relevant indicator of whether the defect or defects have rendered the dwelling unfit for habitation.

As for the other alleged error in the judge's reasoning, 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. That was clearly the view of the judge. What other purpose could he have had in mind when he said at paragraph 38(ii) that unfitness for habitation extends to defects of quality, rendering the dwelling unsuitable for its purpose, as well as to "dangerous defects" and again, when he said at paragraph 38(iii) that unfitness for habitation relates to defects rendering the dwelling dangerous or unsuitable for its purpose?

At paragraphs 38(iv) and 179, he equated "unsuitable for purpose," with, "unfit for habitation."As I have said, the purpose is the purpose of habitation. I do not think that anything is added by introducing the concept of unfitness for purpose. The phrase "unfit for habitation" is not esoteric or obscure, and no light is shed on its meaning by saying that it is the same as unfit for purpose.

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.

For all these reasons, I would reject the first ground of appeal.

Mr Hussain submits that the correct test to determine whether a dwelling is unfit for habitation is whether, in the absence of any remedial works, the dwelling would be fit for habitation. If an item of damage does not and will not render a dwelling unfit for habitation, there can be no liability for that item under the 1972 Act. He submits that the judge should have considered each of the defects on the agreed schedule, and determined whether it rendered the dwelling unfit for habitation. Mr Hussain accepts, as he must, that the judge did consider some of the individual defects. See, for example, paragraphs 158 to 164, which I have already set out.

He accepts that the judge, at least inferentially, concluded that these defects contributed to the dwelling being unfit for habitation, but he submits that the judge was at fault, in failing to consider each of the defects relied on by the claimants, and decide whether individually, or taken in conjunction with other defects, they rendered the dwelling unfit for habitation.

I do not agree. The judge was not obliged to approach the question of whether there had been a breach of Section 1 in this case, by considering each defect individually and asking whether that defect, or indeed, that defect taken in conjunction with other individual defects, rendered the dwelling unfit for habitation. He was entitled to ask himself whether the dwelling as a whole was unfit for habitation. The judge found that it suffered from a fundamental defect, namely inadequate foundations. There was what the judge described at paragraph 170 as "widespread cracking" which was the result of ground heave, which in turn was attributable to the inadequacy of the foundations. Some cracks, when viewed as individual cracks, were more serious than others. The cracks referred to in paragraphs 158 to 163 were, of themselves, quite serious and even when considered on their own, arguably rendered the dwelling unfit for habitation. Other cracks and defects were in themselves less serious, nevertheless, all the defects, including all the cracks as well as warped doors, et cetera, were the result of the ground heave and ultimately inadequate foundations. In reaching his conclusion that the dwelling was unfit for habitation, the judge took into account all the defects and the fact that they were caused by a fundamental defect: namely, the inadequacy of the foundations.

In my judgment, the judge was entitled and indeed right so to conclude. I reject the submission that he was obliged to analyse the effect of each individual defect on the fitness for habitation of the dwelling. Mr Hussain cited no authority to support his argument that the judge was obliged to undertake such an exercise in a case where all the defects were attributable to the same fundamental defect in the design of the dwelling.

Mr Hussain submits that the judged erred in awarding damages for the cost of repairing all the damage caused by the ground heave, without considering whether the repairs were necessary to render the dwelling fit for habitation. He says that the proper measure damages for breach of the Section 1 duty is the loss suffered by the claimant as a result of the dwelling being unfit for habitation. It is not the loss suffered as a result of the defendant's failure to see that the work taken on was done in a professional, or workmanlike manner. Mr Hussain submits that the judge adopted the wrong approach to the measure of damages. For example, the judge award damages for the cost of removing, adjusting, packing, refixing, rehanging and staining wardrobe doors and frames in two bedrooms. The wardrobe doors no longer closed properly as a result of the heave. Mr Hussain submits that the fact that the wardrobe does not close properly does not render the dwelling unfit for habitation. He gives other similar examples. He says that the judge should have considered each pleaded item of damage and awarded damages in respect of it, only if he was satisfied that it rendered the dwelling unfit for habitation.

It will be seen that this ground of appeal is closely related to the second ground of appeal.

I accept Mr Hussain's general submission that damages may only be rewarded in respect of damage that is contemplated by the statute, see Gorris and Scott 1874 Law Reports 9 Exchequer 125 and Clerk and Lindsee on Torts, 19th edition paragraph 9-52. I accept, therefore, that the claimants were only entitled to foreseeable loss and damage flowing from the fact that the dwelling unfit for habitation. But I cannot accept that this leads to the conclusion that the judge should have awarded the claimants less than the agreed cost of remedying all the defects that were attributable to the inadequate foundations.

For the reasons already mentioned, the judge was entitled to hold that what rendered the dwelling unfit for habitation was the fact that the foundations were fundamentally defective, and that this defect had caused widespread defects in the superstructure and indeed all the visible defects on which the claimants relied.

In these circumstances, he was entitled to conclude that the cost of remedying all the defects attributable to defective foundations was a foreseeable consequence of the breach of Section 1.

The fourth ground is that there is no factual basis for the judge's finding that the defective foundations had rendered and/or would render the dwelling unfit for habitation. It may be that this ground of appeal was subsumed in the first and/or second grounds of appeal. At all events, Mr Hussain did not develop this as a second ground.

In my judgment, there is nothing in this point. For the reasons given earlier, the judge was entitled to conclude that the existence of fundamental defects in the foundations, coupled with the visible defects in the superstructure caused by the result of ground heave, was a sound reason for holding that the dwelling was unfit for habitation.

For all these reasons I would reject all four of the grounds of appeal and would dismiss this appeal.

LORD JUSTICE LONGMORE: I agree.

LORD JUSTICE PILL: I also agree. Are there any applications?