Rendlesham Estates Plc & Others v Barr Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Edwards-Stuart,Mr. Justice Edwards-Stuart |
| Judgment Date | 28 November 2014 |
| Neutral Citation | [2014] EWHC 3968 (TCC) |
| Docket Number | Case No: HT-13-157 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 28 November 2014 |
[2014] EWHC 3968 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Rolls Buildings, 7 Rolls Buildings
London EC4A 1NL
Mr. Justice Edwards-Stuart
Case No: HT-13-157
Alexander Nissen Esq, QC &Jonathan Selby Esq (instructed by Walker Morris LLP) for the Claimants
Lord Marks QC, Daniel Crowley Esq&Martin Hirst Esq (instructed by DWF LLP) for the Defendants
Ms. Fiona Sinclair QC & Miss Katie Powell (instructed by Bond Dickinson LLP) for the Solicitor Defendants
Hearing dates: 13 th– 16 th January 2014; 22 nd– 24th January 2014; 27 th– 30 th January 2014; 3 rd– 7 th February 2014; 3 rd & 4 th March 2014.
Further written submissions: 28 th March 2014;
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.
Introduction
This is a claim by the owners of 120 apartments in two apartment blocks in Concord Street, Leeds. The Claimants sue the Defendant ("Barr") who built the development. The two blocks were built between 2003 and 2006, as part of one development whose stated object was to provide high quality apartments for young professionals. Many of the apartments were sold off-plan. There are 171 apartments all told, but for various reasons only 120 of them now remain the subject of this litigation.
Unfortunately, the tenders that were initially obtained by the developers, City Wall Limited ("CWC"), came in at significantly more than CWC's budget. CWC was substantially reliant on the Royal Bank of Scotland for financial support and had limited resources of its own.
Barr, a construction company based in Scotland, had decided to enter the market for the construction of residential property in England and indicated that it would be prepared to build the development for a price that was within CWC's budget. However, it made it clear that this would involve making significant reductions to the quality of the finishes. Also Barr proposed to use a steel frame instead of the concrete frame on which previous designs had been based.
CWC accepted Barr's tender. Barr insisted on having a fairly free hand to make the necessary changes to the specification, some of which had to be negotiated with the planning department of the City Council.
The project did not go smoothly. Barr had problems with many of its subcontractors, some of whom were replaced more than once. Practical completion of the South block was achieved in July 2005 and of the North block in January 2006.
When the purchasers moved into their apartments they were very taken aback by what they found. Even one of Barr's own witnesses described the buildings as looking like council blocks from the 1960s. There were problems from the outset. Quite apart from the poor quality of the finishes to the common parts, many of the residents found when, or soon after, they moved in that the intercom system did not work properly and that the covered walkways would flood in heavy rain.
Within two or three years numerous additional problems had begun to manifest themselves. There were leaks above the walkway on the fifth floors, leaks from the penthouse balconies into the flats below, leaks into the voids above the walkway soffits, the appearance of mould and condensation in a number of apartments and in the common parts and, in a great many apartments, there were leaks and excessive mould in the shower cubicles.
In the meantime, there were disputes over Barr's final account and allegations of defects by CWC. Subsequently there was an adjudication in July 2007 which resulted in a decision in CWC's favour, but it seems that CWC spent little, if any, of the sums recovered from Barr in rectifying defects. Not long afterwards, in February 2008, CWC went into administration. By this time over 10% of the apartments were still unsold, so there was a consequent shortfall in the contributions to the management charge and there was no satisfactory management structure in place.
The owners were in a quandary. CWC was in administration and, in any event, it seems that the owners would have faced serious contractual difficulties in suing CWC for misrepresentation in relation to the quality of the finishes or the defects. The owners, of course, had no contract with Barr.
The result is that the Claimants have had to bring this action against Barr under the Defective Premises Act 1972 ("the Act"), alleging that their apartments were not fit for habitation when completed. Not all the owners are claimants and, indeed, some owners who joined in the proceedings initially have withdrawn their claims. This appears to have been the result, in part at least, of the terms of a settlement reached between Barr, CWC's administrators and the Royal Bank of Scotland. I will have to say a little more about this settlement later on in this judgment.
The structure of the judgment
This judgment consists of a main section, together with fifteen appendices, each of which is concerned with a particular type of defect or a specific topic.
The main judgment, which deals with the major issues of principle, is divided into the following sections:
| Section | Paragraph |
| Introduction | 1 |
| The structure of the judgment | 11 |
| These proceedings | 15 |
| The principal areas of dispute | 23 |
| The construction of section 1 of the Defective Premises Act 1972 and the meaning of fitness for habitation | 29 |
| Conclusions on the meaning of section 1 | 82 |
| Representative proceedings | 84 |
| The Claimants' witnesses — owners/residents | 93 |
| The Claimants' witnesses — non-owners/residents | 94 |
| The witnesses called on behalf of Barr | 163 |
| The experts | 191 |
| The ownership of the freehold | 213 |
| Apartment No. 156 | 219 |
| Heads of claim where a breach of duty is not established | 224 |
| The measure of damages | 226 |
| The conduct of the management company | 243 |
| Summary of conclusions in relation to the scope of remedial works | 256 |
| The issue of blight on the value of the properties following remedial work | 276 |
| General damages for distress and inconvenience | 301 |
| Additional heads of loss | 310 |
| Other matters raised by the Claimants | 315 |
| Concluding observations | 318 |
The appendices are as follows:
A Evidence of the owners and occupiers called as witnesses
B Balcony doors
C Basement car parks
D Cause of damp in apartments
E External walls
F Intercom
G Kawneer external glazing
H Penthouse balconies
I Render
J Roofs
K Walkways
L Internal partitions, doors, etc
M Shower trays
N Results of opening up
O Thermal imaging
P Heads of claim where a breach of duty is not established
The evidence of the owners and occupiers who were called as witnesses is summarised at Appendix A. The evidence of other witnesses is summarised in the main judgment.
These proceedings
The Claimants are effectively seeking to have the external envelope of the building substantially rebuilt, together with the rectification of certain defects within the apartments. The claim is for some £14 million.
Initially Barr denied liability for almost everything, but it has now conceded liability for a few of the defects whilst disputing the appropriate measure of damages.
A difficulty is presented by the fact that only 120 out of the 171 apartments are owned by the Claimants in the action. One point taken by Barr in its defence is that each owner is only entitled to recover his or her contribution to the maintenance charge in respect of the cost of any repairs, and then only if the relevant defect has made that owner's apartment unfit for habitation. For example, Barr contends that only the owners of apartments on the top floors are in a position to make a claim about defects in the roof because, whatever the state of the roof, it will not make apartments at lower levels unfit for habitation. Yet Barr also contends that the claims of the owners of the affected apartments on the top floors are limited to their proportion of the part of the service charge attributable to the cost of repair of the roof. If this argument is correct, there will always be a substantial shortfall in any recovery.
There are also serious issues about what constitutes a "dwelling" for the purposes of the Act and how, and by what criteria, fitness for habitation is to be determined.
There has been a direction that this hearing would determine the issues relating to what were described as "purely internal defects" by reference to eight lead apartments, together with issues relating to the common parts. The parties have selected four lead apartments each and the evidence in relation to the internal defects in the apartments has, in accordance with the direction, been largely confined to defects in the lead apartments. In addition, three witnesses (known as "additional B2 witnesses") gave evidence about the condition of the apartments which they owned or occupied. In relation to the common parts, there has been no limitation on the evidence which can be called, save that there was a direction limiting the number of B2 witnesses. Accordingly, where defects in the common parts, such as the external walls, have resulted in damp or mould within non-lead apartments, it is open to the court on this hearing to make findings in relation to those apartments.
However, having heard the evidence of the experts and considered the numerous reports and schedules, I do not consider that it is possible to make a finding about the fitness for habitation of non-lead apartments (at least, so far as the effect of the presence of mould...
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