Millharbour Management Ltd & Ors v Weston Homes Ltd & Anor

A potentially important issue is raised in these proceedings as to the circumstances in which a party can effectively secure that it acts as a representative on behalf of other persons who are not parties to the proceedings. CPR Part 19.6 (1) states:

“Where more than one person has the same interest in a claim-

(a)

the claim may be begun; or

(b)

the court may order that the claim be continued,

by or against one or more of the persons who have the same interest as representatives of any other persons who have that interest.”.

There are numerous possible circumstances in which in construction related work recourse might be had to the idea of representative proceedings.

The case relates to a block of 350 flats in the London Docklands area, 41 Millharbour, London E14. One quarter of the flats (88 in number) is “social housing” sold on a 999 year lease to Swan Housing Association Ltd ("Swan"), which in turn sub-lets to tenants. The remainder, comprising some 262 flats, were sold separately to individual persons on 999 year leases. Millharbour Management Ltd ("MML") is the management company for the whole development. The block is in a U shape comprising four "cores" in which there are lifts, stairs and services, although there is a single front reception area from which there are corridors providing horizontal connections between the cores.

Without making any final findings of fact, it appears that the development was carried out between about 2002 and 2005. It is said that certificates of occupation were granted between December 2004 and July 2005. It is said that the Defendants either together or with the Second Defendant acting as agent for the First Defendant carried out the actual development.

It is said that the leasehold sale agreements to the individuals were by way of sale agreements on standard terms which required the Second Defendant to cause the individual "Property and ancillary services to be constructed, converted or erected…and installed as appropriate in a good and workmanlike manner to the reasonable satisfaction of the Buyer…in accordance with....Building Regulations approval and in general accordance with the plans and specifications". The Property is defined broadly as including the inner parts of the demise of the flat together with "any Pipes exclusively serving the Property". This includes the floors but nothing below them, the internal walls wholly within the Property, half of the walls dividing the Property with adjacent flats and the ceilings but nothing above them.

MML was a party to the leases. The standard lease provisions define the Property in the same way as the agreement for sale. The “Estate” is defined as “all land (excluding the Property) and buildings of which the Landlord is or was the Registered Proprietor under Title Numbers EGL364395 and EGL 365040”. The “Building” was defined as being “the building or buildings on the Estate containing the Property, including the external walls…roofs…pipes…all walls and pipes”. MML was identified as having been incorporated to provide services to and for the tenants of the Estate and otherwise manage the Building.

The tenant was obliged to the landlord and to MML to keep the Property in repair and in effect to pay the service charges levied by MML. Clauses 5.10 and 5.11 provided that the tenant would:

“5.10

Permit the Landlord and [MML]…to enter and examine the condition of the Property and thereupon the Landlord or [MML] may serve upon the Tenant notice in writing specifying any repairs necessary to be done and for which the Tenant is directly responsible…

5.11

Permit the Landlord and the Company…at reasonable times on reasonable notice to enter the Property and the Estate or any part thereof to repair alter or amend any part of the Property or the Estate and to make repair maintain rebuild…all…pipes…party structures or other conveniences and services common to any part of the Estate…or serving or used for the Estate…”

MML had obligations set out in Schedule 4 to the leases:

“4.

To maintain and keep in good repair and to renew and replace as appropriate the external walls structure…of the Building any Pipes used in common by the tenant and any tenant of a Private Dwelling…or the Social Housing Area, the External Common Parts the Private Common Parts…

17.

To provide maintain install in or about the Estate any other service or facility as the Company in its absolute discretion considers desirable for the comfort and convenience of the tenants of the Estate…

22.

To take all reasonable steps to abate any nuisance affecting the Buildings or the Estate…”

The lease with Swan contains similar, although not identical, provisions.

It seems (and I make no final findings) that the leases were dated mostly in 2005 albeit the date of demise is backdated to January 2003. There are one or two in November 2004, several in December 2004 and some in 2006 or possibly later.

Typically, each of the non-social housing tenants has to pay a service charge which is calculated by way of a percentage of various heads of expenditure incurred by MML, which is effectively owned by and operated for the benefit of the tenants. Swan in effect pays for such expenditure in an appropriate proportion to reflect the fact that it is the tenant for 88 properties; it lets the 88 properties to individuals on terms which it considers appropriate.

A variety of defects are said by the Claimants in the litigation to exist in the buildings as a whole albeit that they are said to impact upon the use and enjoyment of the buildings. These are:

Extensive remedial works are anticipated. The likely remedial works are estimated to cost some £1.3 m plus VAT. Put in context, this equates to under £4,000 per flat on average at least.

MML through its solicitors first raised complaints in April 2010. In their first letter dated 23 April 2010, they claimed that MML could pursue claims on behalf of the tenants in a representative capacity.

On 30 September 2010, MML, Swan and 42 private leaseholders issued proceedings against the Defendants. The “Brief details of claims” were:

“The First Claimant [MML] claims as a representative party under CPR Part 19.7 for the owners of flats at 41 Millharbour, Isle of Dogs, London E14. ("the development") against all Defendants for breaches of the Defective Premises Act 1972 ("the Act") in relation to the construction of the development, which comprises 352 flats and common parts. It also claims against the Second Defendant both in such capacity and in a direct capacity for breaches of contracts for the sale and purchase of flats in the development regarding the defects left therein (including within flats) after its purported completion, relying upon the Contracts (Rights of Third Parties) Act 1999. The Second and further Claimants, in so far as they have been original purchasers or lessees of the flats in the development claim against the Second Defendant for breach of contract in respect of defects affecting them, and they all claim against all Defendants for breaches of the Act. Defects relate to the provision of hot and cold water and heating to the flats, and a balcony is, the windows and ventilation, skirting boards and sound insulation deficiencies."

Correspondence continued over the next two months between solicitors for the parties. By this stage, unsurprisingly, a number of the leaseholders were original purchasers but others were second or third purchasers.

On 7 December 2010, amendments were made pursuant to CPR Part 17.12 to add another 36 individual leaseholder claimants, to add that MML was also suing additionally or in the alternative as "trustee" for flat owners, and to add defects relating to the "ingress of water and fire insulation". The following was added:

“Elzbieta Urszula Truchan [the original third-named Claimant] claims to be a representative claimant under CPR Part 19.6 on behalf of all owners of all flats at 41 Millharbour in so far as those owners are not at any time also claimants named herein.”

The Claim was served on 27 January 2011, just within the four-month period for service. On 26 January 2011, the Claimants issued their application, now in issue, for the following relief:

“That pursuant to CPR 19.6 (1) (b) this action, in so far as it concerns claims for damages relating to the cost of remedial works organised by the First Claimant, and to be charged to leaseholders through service charges, may be continued by,

a.

Jan Hills, the 43^rd Claimant as representative on behalf of all private leaseholders owners of flat at 41 Millharbour, not being currently Claimants, who entered into a contract of purchase with the Second Defendant;

b.

Elzbieta Urszula Truchan, the Fourth Claimant, as representative on behalf of all private leaseholders owners of flat at 41 Millharbour, not being currently Claimants, who did not enter into a contract of purchase with a Defendant.”

This application was amended on 24 February 2011 to include for two representative Claimants.

This was followed by a detailed witness statement from Mr Brenan of the Claimants’ solicitors on 24 February 2011 from which I have taken most of the factual background. Perhaps importantly, there is no evidence in response from the Defendants.

In broad terms, the Claimants say that for the purposes of CPR Part 19.6 Ms Hills and Ms Truchan have the same interest as those whom they seek to represent and that in all the circumstances, particularly having regard to the overriding objective and the need to save cost and time, the Court should exercise its discretion to permit them to proceed in a representative capacity. The Defendants argue that, although the two individual Claimants do share some common interests with those whom they wish to represent, these common interests do not amount to "the same interest" within the meaning of CPR Part 19.6. If they are wrong about that, they say that for a number of reasons the discretion should be exercised against the representative arrangement continuing, such as the non-sustainability or weakness of certain of the Claimants’ claims, the apparent lack of willingness of some tenants who are to be represented to come forward, lack of particularity in the proposed Particulars of Claim and the possibility that they will be deprived of a limitation defence at least for some parties who have not joined in as an actual Claimant.

I have set out at Paragraph 1 the main part of CPR Part 19.6. It is clear that the Court can direct that a particular party, be it Claimant or Defendant may not act as a representative. Sub-Paragraph (4) makes it clear that, unless the Court otherwise directs, any judgement in which the party is acting as a representative is binding on all persons represented in the claim albeit that it may only be enforced by or against a person who is not a party to the claim with the Court’s permission.

The representative action or claim is one which, jurisprudentially, has been in existence for a long time. Indeed, in an article "The Class Action in English Civil Procedure” by John Sorabji (2009 CJQ Vol 28 Issue 4 page 498), the author suggests with some force that the "class action", popular in the USA, first saw the light of day in England. By 1900, the House of Lords in The Duke of Bedford v Ellis and others [1901] AC 1 addressed the practice adumbrated in the Rules of the Supreme Court (Order XVI r.9) allowing representative actions in a case involving various market stallholders in Covent Garden who sought to argue for themselves and representatively for other similar growers of fruit and other produce that they were entitled to preferential rights. Lord Macnaghten said at pages 7-11:

“In considering whether a representative action is maintainable, you have to consider what is common to the class, not what differentiates the cases of individual members…The old rule in the Court of Chancery was very simple and perfectly well understood. Under the old practice the Court required the presence of all parties interested in the matter in suit, in order that the final end might be made of the controversy. But when the parties were so numerous that you never could "come at justice", to use an expression in one of the older cases, if everybody interested was made a party, the rule was not allowed to stand in the way. It was originally a rule of convenience: for the sake of convenience it was relaxed. Given a common interest and a common grievance, a representative suit was in order if the relief sought was in its nature beneficial to all whom the plaintiff proposed to represent…One parishioner would sue on behalf of himself and all the other parishioners to establish a modus in lieu of tithes…All the growers have the same rights. They all rely on one and the same Act of Parliament as their common charter…”

My Lords, it would be highly improper at this stage of the proceedings to say anything which might prejudge the construction of the Act. That is a matter for the hearing. But…I will venture to make one or two general observations. It was said that the growers are so fluctuating and indefinite a body that it is impossible to tell who is or who is not a grower, especially in these modern times when there are such improved facilities for carriage of goods. I cannot say that I am much impressed with that difficulty. It seems to me that the description of the persons apparently intended to be favoured by the Act is sufficient for all practical purposes. It may be difficult or impossible to compile a catalogue of growers. But there cannot, I think, be much difficulty in determining whether a particular person who claims a preferential right to a vacant stand in the market is a grower or not."

As the law and practice has developed, it has been held that a claimant is entitled to sue in a representative capacity for others and seek damages; the representative claim is not limited to declaratory relief (see for instance EMI Records Ltd v Riley [1981] 1 WLR 923). In Emerald Supplies Ltd and another v British Airways plc [ 2010] Ch 48, the Chancellor applied the Duke of Bedford case in effect in the context of the new provision, CPR Part 19.6, particularly referring to the judgement of Lord Macnaghten. He reviewed some of the earlier cases:

“15.

In Aberconway v Whetnall (1918) 87 LJ Ch 524 Lord Aberconway and two others sought to recover on behalf of themselves and all other subscribers to a fund for the benefit of the defendant the amounts they had collectively subscribed on the grounds that they were induced to do so by misrepresentation. Eve J considered (p.526) that insofar as the claim was made in a representative capacity it was misconceived because it could not be said that:

"...the donors to the fund have a common interest and a common grievance when the very existence of the grievance depends on facts which may differ in each individual case."

16.

Similarly in Smith v Cardiff Corporation (No.1) [1954] 1 QB 210 the claim insofar as it purported to be representative was struck out. The plaintiffs were tenants of the corporation and challenged a scheme of the latter for increasing the rent of its council housing as ultra vires. They claimed to sue on behalf of themselves and all other tenants of the Corporation. But the scheme they sought to challenge provided for differential rents taking into consideration the financial circumstances of individual tenants. Of some 13,000 tenants the rents of only 8,000 would be increased. The representative claim was struck out on the ground that the class of corporation tenant did not have a common interest or grievance and the relief sought was not in its nature beneficial to all members of the class which the plaintiffs claimed to represent.

19.

Prudential Assurance Co Ltd v Newman Industries Ltd [1981] Ch 229 concerned the approval by the members of Newman Industries Ltd in general meeting of an acquisition by Newman of the assets of another company in which its directors were substantially interested. The shareholders' approval was given on the basis of a circular. The action was commenced against the directors by the Prudential as a minority shareholders' action alleging that the circular was tricky and misleading. It sought damages for conspiracy. For reasons it is not necessary to describe the Prudential then sought to amend its writ and statement of claim so as to claim damages on behalf of itself and "on behalf of all the shareholders of [Newman] on July 29, 1975, who, like the plaintiff, have suffered damage and are entitled to damages". Vinelott J considered a number the cases cited to him, including Aberconway and observed that:

"These cases, in my judgment, establish two propositions. First, no order will be made in favour of a representative plaintiff if the order might in any circumstances have the effect of conferring on a member of the class represented a right which he could not have claimed in a separate action or of barring a defence which the defendant could have raised in such proceedings. Secondly, no order will be made in favour of a representative plaintiff unless there is some element common to the claims of all members of the class which he purports to represent."

20.

Vinelott J rejected the submission that in no circumstances could there be a representative action on behalf of a class each of whom had a separate cause of action in damages for tort. In that context he observed (p.255):

"The second condition is that there must be an "interest" shared by all members of the class. In relation to a representative action in which it is claimed that every member of the class has a separate cause of action in tort, this condition requires, as I see it, that there must be a common ingredient in the cause of action of each member of the class. In the present case that requirement is clearly satisfied."

21.

Vinelott J then considered whether, as a matter of discretion, to permit the amendment sought. In relation to its form he said (p.256):

"As drafted the order which the plaintiff seeks in its representative capacity is for a declaration that the plaintiff in its personal capacity as a shareholder in Newman Industries and on behalf of itself and all other shareholders in Newman Industries who like the plaintiff have suffered damage is entitled to damages against the defendants, Bartlett and Laughton, for conspiracy. The practical effect of such a declaration would, it seems to me, be no greater and no less than the effect of declarations, first, that the circular was tricky and misleading; secondly, that the individual defendants conspired to procure its circulation in order to procure the passing of the relevant resolution; and thirdly, that in so doing they conspired either to injure the plaintiff and the other shareholders at that date or to commit an unlawful act, or to induce a breach by the first defendant company of its contractual duty to the shareholders. It would, I think, be better that those declarations, which constitute the common element of any claim by any member of the class for damages for conspiracy, should be so spelt out. Further, I can see no reason for defining the class of shareholders of the first defendant company at July 29, 1975, as being those "who like the plaintiff have suffered damage and are entitled to damages." The words I have cited appear to me to be unnecessary and undesirable. The members of the class who share a common interest in obtaining the declarations I have outlined are shareholders other than the second and fourth defendants as at July 29. A person coming within that class will be entitled to rely on the declarations as res judicata, but will still have to establish damage in a separate action."

23.

In Irish Shipping Ltd v Commercial Union Assurance Co Ltd [1991] 2 QB 206 the relevant class were the 77 underwriters each of whom had entered into separate insurances but on the same terms including one which obliged that underwriter to abide by any judgment obtained by the insured against the lead underwriter. The Court of Appeal considered that the principle of Duke of Bedford applied notwithstanding that some of the represented class might not know of the proceedings or might have an individual defence. The procedure and its effect were described by Purchas LJ (p.238) in these terms:

"Although the judgment is to be binding upon those comprised in the class represented, protection is given to members of the class sued who may have been improperly joined in the class or who may have individual grounds of defence, since the judgment cannot be enforced until the plaintiff has complied with the requirements of Ord. 15, r. 12(3), (4) and (5). (3) However, the effect of rule 12(5) is merely to protect the member of the class sued from having the judgment enforced against him. The judgment is still valid for other purposes such as a counterclaim or other process in which that person may wish to rely upon allegations which will be denied to him by the findings of the judgment, the issues being res judicata for such purposes. It will be seen that there is nothing in the wording of the rule itself which would restrict the wide ambit in which the rule should operate, in line with the old Chancery practice; but there are now built-in safeguards to protect a member of the class who may have particular defences or may be able to distance himself from the class in other respects. This accords with the concept, as I see it, of the old rule, namely a broad rule of procedural convenience to be exercised with a wide but carefully used discretion."

30.

The starting point must be the rule itself. The essential pre-conditions for its operation are evident from the opening words "where more than one person has the same interest in a claim the claim may be begun...". The first pre-condition is that there should be more than one person who satisfies the remaining preconditions. There is no limit to the number of persons in the class to be represented. Presumably it cannot be so large as to constitute the enforcement of public rights by persons who have not sustained special damage; that is the prerogative of the Attorney-General. But the mere fact that in this case the relevant class is both numerous and geographically widely spread is not of itself an objection to a representative action. Nevertheless the more extensive the class the more clearly should the other pre-conditions be satisfied.

31.

The second pre-condition is that those persons have the relevant interest at the time the claim is begun. The rule appears to me to be specific in that respect. It must follow that the submission of counsel for the claimants that the identity of interest need only exist at the time that judgment is given must be rejected. No doubt it is necessary, given the terms of sub-paragraph (4) of rule 19.6, that it exists then but the opening words of sub-paragraph (1) shows that it must exist when the claim is begun as well. Accordingly, identity of interest at the time of judgment in the action would be a necessary condition for seeking to enforce it but would not be sufficient identity at the time the claim was issued.

32.

So the essential question is whether the class the claimants seek to represent had the same interest in the claim as the claimants when the claim was issued on 18th September 2008. The phraseology is the same as that used in the rules under consideration in each of the reported cases to which I have referred. I can see no reason why the words 'the same interest' should not be interpreted in the same way. That was the view of Andrew Smith J in National Bank of Greece and of me in Independiente.

33.

It follows that the principles enunciated by Lord Macnaghten in the Duke of Bedford are to be applied. On that basis the claimants and the class they seek to represent must all have "a common interest and a common grievance" and "the relief sought [must] in its nature [be] beneficial to all" of them. If those conditions are satisfied it matters not that the class of person represented may fluctuate.”

This first instance decision was upheld by the Court of Appeal (reported at [2011] 2 WLR 203). Lord Justice Mummery , with whom the other members of the Court agreed, said:

“63.

This does not mean that the membership of the group must remain constant and closed throughout. It may indeed fluctuate. It does not have to be possible to compile a complete list when the litigation begins as to who is in the class or group represented. The problem in this case is not with changing membership. It is a prior question how to determine whether or not a person is a member of the represented class at all. Judgment in the action for a declaration would have to be obtained before it could be said of any person that they would qualify as someone entitled to damages against BA. The proceedings could not accurately be described or regarded as a representative action until the question of liability had been tried and a judgment on liability given. It defies logic and common sense to treat as representative an action, if the issue of liability to the claimants sought to be represented would have to be decided before it could be known whether or not a person was a member of the represented class bound by the judgment.

64.

A second difficulty is that the members of the represented class do not have the same interest in recovering damages for breach of competition law if a defence is available in answer to the claims of some of them, but not to the claims of others: for example, if BA could successfully run a particular defence against those who had passed on the inflated price, but not against others. If there is liability to some customers and not to others they have different interests, not the same interest, in the action.

65.

In brief, the essential point is that the requirement of identity of interest of the members of the represented class for the proper constitution of the action means that it must be representative at every stage, not just at the end point of judgment. If represented persons are to be bound by a judgment that judgment must have been obtained in proceedings that were properly constituted as a representative action before the judgment was obtained. In this case a judgment on liability has to be obtained before it is known whether the interests of the persons whom the claimants seek to represent are the same. It cannot be right in principle that the case on liability has to be tried and decided before it can be known who is bound by the judgment. Nor can it be right that, with Micawberish optimism, Emerald can embark on and continue proceedings in the hope that in due course it may turn out that its claims are representative of persons with the same interest.”

In my judgement the following general principles can be derived from the wording of the CPR Parts 19.6 and the authorities:

The first question to consider therefore is whether Ms Hills and Ms Truchan have the same interest as those who they seek to represent, namely those who were not and were original purchasers from the Defendants. This does not directly involve a consideration of the separate causes of action which MML alleges through the auspices of the Contracts (Rights of Third Parties) Act 1999 and which Swan has for breach of contract. However, it is clear from the evidence and indeed the draft Particulars of Claim that it will be MML which will undertake the remedial works, using professionals and appropriate contractors as the case may be. The cost of the remedial works will or may then be recovered by way of service charge arrangements from Swan and the individual leaseholders, whether original or subsequent purchasers. The representative order is specifically limited to "claims for damages relating to the cost of remedial works organised by [MML] and to be charged to leaseholders through service charges”.

The nature of the claims is legally different for the two represented classes, albeit that each set of claims relates to exactly the same defects. For those persons who were original purchasers, the claim in legal terms will be the relatively simple one of breach of the terms in the sale agreements that the Second Defendant would construct the Property in a good workmanlike manner, in accordance with Building Regulations and in accordance with the relevant plans and specifications. Thus, if for instance hot water pipes within a particular Property were not insulated and if that is a breach of the Building Regulations or if good workmanship requires such insulation, without more there will be a breach.

For those leaseholders who were not the original purchasers, their claims would be put simply and solely as arising under the Defective Premises Act, which requires by Section 1 as follows:

“(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.”

Similarly, if the failure to provide insulation to hot water pipes breaches this duty, there will be a cause of action against one or other of the Defendants assuming that either can be considered to be a person who took on work relating to the provision of a dwelling in this case.

There is no evidence to suggest other than that the contracts of sale and leases were the same for all original individual purchasers. There is no suggestion on the evidence put before the Court that specific and particular defences will be raised in relation to individual flats, although, of course, it is possible that this may turn out to be the case. Those defects which relate to areas inside the flats are said to be generic. Thus, the hot water pipes within the flats are said not to be insulated properly or at all and the cold water pipes are said on occasions to run warm by reason of the proximity of the un-lagged hot pipes. There is said to be poor noise insulation between flats. Some defects are not present within the flats at all. For example the basement plant defects only give rise to a loss for an individual leaseholder if and to the extent that he or she is charged through the service charge for any necessary work to put right such defects. A further example is said to be excessive heat in the corridors which is said to make it unpleasant for people using the corridors as well as causing heat to rise into higher flats.

In my judgement, Ms Hills and Ms Truchan respectively have the same interest in their respective claims in relation to remedial works organised by MML as those whom they seek to represent (and who are not already Claimants). At any time, the identity of those represented can be established. MML will know any new or current leaseholders and, indeed their names can be found at the Land Registry. It is the same defects, the same causes of action and the same loss in respect of which each representative and those whom they represent do claim and would claim if they were parties. There is no evidence before the Court that that there will be other than generic defences relating to the defects, the causes of action or the loss. Thus, it may be a generic defence to say that certain alleged defects are not defects at all or do not involve any breach of any given duty; it may be a generic defence to say that there is no liability in respect of defects which are not present in given flats. It may for instance, as floated by Counsel for the Defendants, be argued that liability under the Defective Premises Act can only arise if, conjunctively, there is bad workmanship or the use of improper materials which leaves the dwelling in question unfit for habitation. It may be that, if this argument (albeit challenged by the Claimants) is a good one, one or more of the claims under the Defective Premises Act will fail. Another generic defence suggested by the Defendants’ Counsel would be that in some way, because the leaseholders will incur their loss through the service charge, this will prevent them in the law recovering such loss. If that is a good point, that will impact deleteriously on the representative entitlements.

I have assumed from the evidence that the Claimants have not investigated each one of the 350 flats but have based their claims on what, they will argue, is a representative investigation of a number of flats. It will of course then be open to the Defendants to argue that the investigation is not representative and that the problems highlighted are much less widespread. Again, that is, essentially a generic defence, which is not uncommon in this type of claim.

It is suggested by the Defendants that the expert evidence referred to in the evidence before the court suggests that the number of defects only impact upon some of the leaseholders. Thus, it is said that the claims relating to excessive heat vary depending upon where the affected corridors or flats are, so that some leaseholders are not affected, some balconies are not or not yet defective and some flats do not have balconies. Only a tiny sample, it is said, of walls have been tested for noise penetration and some walls are satisfactory and others not. The argument therefore is that the leaseholders do not have the same interest. In my view, this is misguided. It may be a defence to say that those leaseholders who do not suffer from a heat, noise or balcony problem have no cause of action but that defence, if successful,l will representatively bind those leaseholders who are either named Claimants or who are represented by named Claimants. It may be the case that such leaseholders still have to pay their share of the service charge which may include the costs of remedying defects, if any, which do not impact on them or their flats.

The threshold having been established, namely that the representing and represented parties have the same interest in the claims for the cost of remedial works organised by MML and to be charged to them by MML, I turn to the discretion. It is not uncommon in this Court for the owners or occupiers of flats in substantial blocks to raise claims against builders, architects or engineers (of one discipline or another) in relation to defects. It is an extraordinarily cumbersome and costly procedure for hundreds of claimants to be parties to the proceedings, although historically this has happened. It becomes further complicated because, inevitably, leasehold owners move or, sadly, sometimes die during such litigation so that amendments to the parties’ names have to be made. The initial cost of securing instructions from each leaseholder would cumulatively add up to a substantial amount although the existence of an additional 180 Claimants in the proceedings would actually add little or nothing to the merit or demerit of the claims or defences likely to be advanced by the parties. There is no real cost risk to the Defendant of "only" having 78 individual leaseholders for two reasons, the first being that the existing claimants have taken out an After the Event Insurance which provides covers of about £700,000 for the Defendants’ costs. The second is there is almost certainly bound to be a fair amount of equity in the 78 individual properties owned by the named individual Claimants; in any event, there is no suggestion that MML and Swan could not pay any reasonable bill of costs of the Defendants.

If it emerges that there are any particular defences which only applied to individual flats of persons who are not actual named parties, the Defendants are perfectly entitled to raise them and, to the extent that they are established, the Defendants may well benefit. It is of course possible that such defences may not reduce any damages which are recoverable; alternatively, to the extent that damages are recoverable through the medium of the service charge, appropriate declarations can be made to secure that non-party leaseholders to whom the successful defence applies can not enforce the judgement.

I am not particularly impressed with the point made that there must be some leaseholders who do not want to become involved in this litigation as a named Claimant. Whilst there is no direct evidence that this is the case, I assume that MML has tried to inform and interest as many people as possible to become involved and, either through indolence or a very natural concern about becoming involved in any litigation, there are some 180 leaseholders who are not prepared to become involved. It may well be that, if MML fails in its claim and if only individual Claimants succeed, some of the represented persons will not bother to seek payment of their service charge contributions for the works from the Defendants. The fact that a number of persons (who are not yet Claimants) are not particularly keen to become involved in litigation actually represents in many cases, including this one, a good reason for allowing the action to proceed in a representative way.

Draft Particulars of Claim have been prepared but not yet formally served. In broad terms, the facts which I have summarised in this judgement are pleaded together with the causes of action identified above. Particulars of defects are said to be contained in reports prepared by Waterfield Odam & Associates, Halstead Associates, Propitas LLP and Dragonfly Acoustics, two of which were incorporated in the evidence put before the Court. It is said that a ground for disallowing the two specific Claimants from acting in a representative capacity is the lack of adequate particularisation. I however do not see this as a real ground for doing so because, even if (and I make no finding on this) some particularisation is required, that can be ordered by the Court. If the further information provided by the Claimants in some way impacts upon the appropriateness of the orders made under CPR Part 19.6, the Court can, on application, make appropriate orders to protect the Defendants from any unfair or inappropriate impact. Thus, if it emerges that there is a one-off type defect which only impacts, say, on half a dozen flats, the leasehold owners of which are not formally parties to the litigation, such an application could be made.

Finally, it is said that it would be unfair to allow non-party leaseholders to be represented by named Claimants because the effect would be to allow claims which would otherwise be statute barred by way of limitation. The argument is that as at the date of this judgement a number of individual leaseholders’ claims would be statute barred because any liability would have risen more than six years ago. This, it is said, is reflected in the dates of the individual leases which, as the Land Registry entries reveal, start on the 30 November 2004, albeit with the large majority in the April to August 2005 period. There is something in this point in the sense that the making of an order that one party can be representative of another will in usual circumstances in effect date back to the date of issue of the proceedings. It is somewhat comparable to seeking to add in a party by way of amendment, particularly given CPR 19.6(4) makes the judgement binding on all persons represented in the claim unless the court otherwise directs. The practice in relation to allowing or refusing amendments which bring in new claims including claims by new parties which would by the date of the amendment be statute barred is germane. However, there is no real evidence from the Defendants about this although there were some assertions by Counsel. The Land Registry entries simply identify the dates of the leases. When the building or flats were fit to be occupied is unclear. It appears for instance that certificates of occupation from the local authority were given between 21 December 2004 and 25 July 2005.

In my judgement, the issue of limitation can be dealt with by limiting the representative capacity to a given date. That means that some protection can be provided to the Defendants in relation to those leaseholders who are not Claimants but who would otherwise be represented by the two specific Claimants. One then comes to consider what would be an appropriate date. Mr Speaight QC for the Claimants suggests that it should date back to the original date of issue of the Claim because MML expressly purported to act "as a representative party" for all flat owners. In my view, however, that would be the wrong date because it was simply wrong to suggest that MML could ever act as a representative under CPR Part 19.6 or as even more wrongly asserted CPR Part 19.7. The Defendants’ Counsel Mr Friedman QC suggests however that it should be from the date of this judgement. In my view, this is too extreme a position. In my judgement, a fair and reasonable date would be 7 December 2010 when by way of lawful amendment Ms Truchan, a named Claimant, claimed to be a representative claimant under CPR Part 19.6 on behalf of all owners of all flats other than already named Claimants. That represents a fair balance because, although she is not an original purchaser, she purported to act representatively for all non-Claimant leaseholders and it is only by way of amendment to that arrangement that the representative role has been divided. Thus, the representative arrangement runs from 7 December 2010 and it will be open to the Defendants to argue that any causes of action by non-Claimant leaseholders which were barred by limitation by that date would fail. If there are any such causes of action any judgement will not be enforceable by such non-Claimant leaseholders.

It follows from the above that I am prepared to make the order sought in relation to Ms Hills and Ms Truchan. This is to date from 7 December 2010 and, it must be emphasised, it relates only to "claims the damages relating to the cost of remedial work is organised by [MML] and to be charged to leaseholders through service charges”. It is not to relate to any other financial or legal claims which any of the represented parties have or feel they may have against either of the Defendants.