Miss Elaine Naylor & Others v Roamquest Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice O'Farrell DBE,Mrs Justice O'Farrell |
| Judgment Date | 10 March 2021 |
| Neutral Citation | [2021] EWHC 567 (TCC) |
| Docket Number | Case No: HT-2019-000112 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 10 March 2021 |
[2021] EWHC 567 (TCC)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
Royal Courts of Justice
Rolls Building
Fetter Lane, London, EC4Y 1NL
Mrs Justice O'Farrell DBE
Case No: HT-2019-000112
Siân Mirchandani QC (instructed by Leigh Day) for the Claimants
Simon Goldstone (instructed by Howard Kennedy & IBB Law LLP) for the Defendants
Hearing date: 20 th November 2020
Further submissions in writing: 25 th November 2020 & 2 nd December 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
The matter before the Court is the application by the Defendants to strike out parts of the claim, and/or for summary judgment in respect of those parts, on the basis that the Statement of Case discloses no reasonable grounds for bringing those claims, they have no real prospect of success and there is no other compelling reason for a trial.
Background facts
This claim arises out of a mixed residential and commercial development, comprising eleven tower blocks, known as New Capital Quay in Greenwich London. The Claimants are leasehold owners of one or more of the flats in six of the tower blocks. The First Defendant was the developer and freehold owner of the property. The Second Defendant carried out the design and construction of the development.
The development was carried out between 2009 and 2014. The external envelope of the tower blocks was constructed using aluminium composite (Alucobond) cladding and timber rainscreen cladding with Kingspan K15 insulation.
Following the Grenfell Tower fire in June 2017, the Building Research Establishment (“BRE”) carried out testing on the external envelope of the development. That testing disclosed that it had no flame retardant properties and therefore failed to comply with applicable Building Regulations.
The Claimants have the benefit of an NHBC Buildmark Policy in respect of their flats. By letter dated 9 July 2018 the NHBC accepted the claim under the Policy for the remedial scheme required, including replacement of the Alucobond cladding, Kingspan insulation and cavity barriers, together with the ‘waking watch’ scheme put in place to ensure safety of the residents pending completion of the remedial works.
The Defendants commenced the remedial works in 2018 or 2019 (the parties are in dispute as to when the works were started). Completion of the same is anticipated by August 2021.
Proceedings
On 31 July 2019 the Claimants commenced these proceedings, seeking damages against the Defendants. There are 124 Claimants, the leasehold owners of 82 flats across six of the tower blocks. The Claimants allege against the Defendants breach of the applicable Building Regulations, breach of contract and breach of statutory duty (under the Defective Premises Act 1972).
The Claimants do not pursue any claim in respect of the cladding replacement works or the costs of the ‘waking watch’ scheme, to the extent that these have been accepted by the NHBC under the Buildmark Policy. However, they seek damages in respect of their uninsured losses, such as increased building insurance premiums, lost rental income, alternative accommodation costs and damages for distress and inconvenience.
The Claimants also make a claim in respect of additional defects, as set out in paragraph 69 of the Particulars of Claim:
“Subsequent to further (non-intrusive) inspections carried out in 2019, the following further defects were detected and/or are reasonably suspected as being included in the construction of the Buildings of the Development. These amounted to defects and/or further breaches of the said requirements of the Building Regulations 2000. The Schedule of Defects provides a full list of these defects, their location, the statutory requirements that apply and particulars of the alleged breaches thereof, as well as the proposed remediation works and estimated cost of remediation (including the rain screen cladding which is item 1) …”
The Schedule of Defects includes alleged defects in the cladding, cavity barriers and fire stopping and states that the estimated cost of rectification works is £5,787,698.
The loss and damage claimed includes the following at paragraph 119:
“(1) Additional remedial works costs outside NHBC cover: the Buildmark Policy only covers “necessary repairs”. Prior to further information and/or disclosure relating to the ‘as built’ remedial works and/or an opportunity for further expert inspection of the Buildings where remediation works are scheduled to be undertaken and/or are ongoing, the Claimants do not presently know whether the NHBC Works will include (or have included) full remediation of the defects noted in respect of the fire breaks or compartmentalisation measures, (which also amount to breaches of the Building Regulations), as more fully particularised above and in the Schedule of Defects, other than where those defects are immediately behind the ACM cladding or timber cladding.
(2) Accordingly the Claimants claim the cost of works associated with the remediation of such other defects. The Schedule of Defects is the best estimate the Claimants can currently give in respect of those likely costs.
(3) Diminution in value: Further to (1) or alternatively, (in which case the diminution in value must take account of the costs of remediating the matters complained of under (1) as well as the effect of the Cladding), prior to completion of all remedial works across the Development (and not merely the Buildings relevant to this claim) the value of the Claimants' flats has been diminished. Immediately after the Grenfell fire reportedly lenders were refusing to lend on such buildings, and valuers were being instructed to value flats in such developments at £nil. Other lenders adopted an approach of trying to balance their clients' risk of having to share in the cost of recladding via the Service Charge, with supporting their existing customers. As a result there was a loss of liquidity in the sales market, and the development of a period of Material Valuation Uncertainty as defined by RICS (in RICS Valuation — Global Standards, the Red Book under Valuation Practice Guidance – Applications, VPGA10).
(4) This stagnation and uncertainty persisted until December 2019 when the RICS and the Council for Mortgage Lenders (CML) jointly produced a protocol for valuers and lenders considering flats in tall buildings and developments with Category 3 ACM cladding. The said protocol provides for lenders and valuers to agree that valuations of such properties should be at Market Value as defined by RICS with a retention to cover the potential cost (or share of the cost) of remediation.
(5) The overall effect of these matters is that the flats have lost the ability to be sold (or re-mortgaged) at a proper market value. This means the flats are valued at a discount from their “unaffected” Market Value …
(6) Added to this discount there is the impact of the ongoing remedial works at the Development, on the ability for the flats to be sold at a proper market value …
(7) A further source for uncertainty in the valuation of these flats is the question of how long any stigma will apply, (even after completion of the remedial works) and whether the damage to the standing of the Development (in comparison with other premium located riverfront developments) is permanent or transitory. An element of diminution in value now arises because of this.
(8) The resulting discount to reflect diminution in value is therefore dependent on all of the above matters. The Claimants' individual claims for diminution in value are set out in the Schedules of Information. The range of diminution in value for the flats owned by the Claimants is between £15,160 and £99,673, although the majority lie between £20,000 and £40,000.”
The Defendants dispute the claims made by the Claimants, including the claims for additional defects, as summarised at paragraph 23 of the Defence of the First Defendant (also adopted by the Second Defendant):
“… the Claimants now… claim damages of approximately £5.8m to reflect the supposed costs of re-doing all of the Replacement Works to all of the blocks in which they have flats. This claim is brought on the basis of a concern that the new cladding might not comply with Building Regulations. The claim is not legitimate because:
(1) They do not positively assert a single example whereby the Replacement Works do not or will not comply with Building Regulations.
(2) In the event that the Replacement Works were to contravene Building Regulations the costs of re-doing the Replacement Works would be met by insurers. The NHBC confirmed to residents in January 2020 that they should be contacted in the event an issue arose with the completed works.
(3) There is no legal basis on which any group of tenants, let alone the small minority of the tenants that form the Claimants in these proceedings, are entitled to such relief.”
The Defendants also dispute the diminution in value claim at paragraph 24 of the Defence:
“The second largest claim in terms of value is the claim for diminution in value. Notwithstanding that it is duplicative of these speculative defects claim (in that it would result in double recovery), it is in any event presented on an entirely...
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