Rushton and Another v Worcester City Council
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE POTTER |
| Judgment Date | 22 May 2001 |
| Neutral Citation | [2001] EWCA Civ 824,[2001] EWCA Civ 367 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | B2/00/0272,Case No: B2/2000/0272 CCRTF |
| Date | 22 May 2001 |
[2001] EWCA Civ 367
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION) ON APPEAL
FROM THE COUNTY COURT AT WORCESTER
(MR RECORDER RUNDELL)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Potter and
Lord Justice Jonathan Parker
Case No: B2/2000/0272 CCRTF
B2/2000/6506 FC2
Alexander Hill-Smith Esquire (instructed by Everatt & Co, Worcester), for the appellants
Giles Harrison-Hall (instructed by Hulme & Co, Worcester), for the respondent
INTRODUCTION
This is the judgment of the court. The appeal concerns the purchase by the first claimant and her son, the second claimant, of 33, Durham Road, Ronkswood, Worcester, ("the property") under the "Right to Buy" scheme contained in Part V of the Housing Act 1985 ("the 1985 Act"). The property was a three-bedroom semi-detached house in which the first claimant and her husband had lived for many years and which, following his death, she was anxious to purchase to secure the future of their son, the second claimant. Pursuant to s.126 of the 1985 Act, the first claimant was entitled to the maximum 60% discount upon the open market value of the house and consequently was offered it at what appeared to be a bargain price of £9,800. Unfortunately, it turned out to be a disastrous purchase. As a result of what the trial judge held to be both a breach of the council's statutory duty under s.125(4A) of the 1985 Act and an actionable misrepresentation under s.2(1) of the Misrepresentation Act 1967 ("the 1967 Act"), the council failed to disclose to the claimants at the time of sale certain defects in the property which rendered it valueless so far as any re-sale by the claimants was concerned.
The council now appeals from the judgment and order of Mr Recorder Rundell on 15 th February 2000, whereby he awarded to the claimants damages of £25,686 together with interest thereon, at the same time granting to the council permission to appeal. The council contends that the judge erred in various of the findings which he made on liability and in assessing the damages. In relation to damages, the council contends that the "costs floor" provisions in s.131 of the 1985 Act should have been applied in reduction of the claimants' damages and in that respect, the council makes application to rely upon two documents which were not relied upon or produced at trial, namely 'The Housing (Right to Buy) (Cost Floor) (England) Determination 1998' and a circular letter from the Housing Policy and Ownership division of the Department of the Environment dated 10 th September 1998 drawing attention to the Determination.
THE PROPERTY
The property was a system-built house of Orlit type, constructed in 1948 using pre-cast reinforced concrete (PRC) frames, joined by secondary pre-cast beams the whole frame being clad in pre-cast reinforced concrete panels with an inner block-work lining connected to the outer skin with metal cavity ties. At the time of the purchase such properties were well known to local authorities to suffer from potential defects, two of which are relevant in this case. The first and more common defect is that of "carbonation" of the concrete used in the construction of the house i.e. a chemical process causing the concrete to develop increased porosity so that moisture can penetrate the concrete over the years, causing eventual rusting and corrosion of the steel reinforcements which in turn reduce the tensile strength in the steel beams. This recognised defect had caused various system-built properties, including Orlit houses, to be designated as 'defective' under regulations made under the 1985 Act which set up a compensation scheme. Carbonation of the type described did not always occur, but, when it did, it was readily apparent by spalling of the concrete surrounding the reinforcements. Property owners could repair the damage, though in the case of the main structure such repair work was costly.
The second defect was one likely to be found in PRC houses which were built using high alumina cement (HAC). It did not fall within the statutory compensation scheme. This defect, or rather the process by which it might occur, was generally known as "conversion". Conversion is a process causing weakness in the compressive strength of concrete and was particularly important in the case of Orlit houses because of the manner in which they were built whereby the secondary beams were joined to the main frame of the house by "stitch joints" formed by intermeshing protruding steel reinforcement from the main frame and the secondary beam encased in the concrete. As a result of the process of conversion, the HAC could lose compressive strength to the extent that there might be total failure of a stitch joint or joints leading to possible collapse within the building. The process of conversion in relation to HAC is a defect discrete from the process of carbonation earlier described, but can contribute to it because conversion, as well as reducing the compressive strength of the HAC, increases the porosity of the concrete, thus exacerbating the process of carbonation and its corrosive effect upon the steel.
THE RELEVANT HISTORY
In 1972, British Standard 110 "Structural Use of Concrete" recommended against the use of HAC. In August 1974, the Estates Gazette reported three cases of building collapse in the previous eighteen months through failure of concrete beams incorporating HAC and stated:
"Any building where HAC concrete beams have been used must now be regarded as suspect"
In September 1982, the Department of Environment sent a letter to all local authorities including the council in relation to Orlit dwellings. It said that HAC had been used in some in situ joints in the structural frames of a number of these dwellings and that there was a small risk that failure of one of the joints, where no alternative means of support was available, could cause a beam to fall. The letter, which was addressed to all local authorities, stated:
"You are asked to bring this letter and annex to the attention of any of your tenants who may be in the process of buying an Orlit dwelling or who enquire about doing so in the future."
On 8 th February 1983 the Minister for Housing and Local Government made a statement to the effect that any prospective purchaser of a PRC dwelling built in the 1940s and 1950s should pay particular attention to the condition and durability of the structure before proceeding and that local authorities should certainly do so before valuing a house for sale. A circular letter from the Department of Environment followed, again addressed to all local authorities which stated:
"You will see from the Minister's statement that he wishes local authorities and other public owners of such houses to pay particular attention to the condition and durability of the structure on valuing such houses for sale …. . Structural components are very often concealed. Their present condition and future performance may be very variable and are capable of being assessed only by expert investigation. The Minister's statement should be drawn to the attention of all prospective purchasers of these dwellings immediately."
In 1983 the council instructed the Building Research Establishment to investigate three properties, one of which was an Orlit house at 21, Durham Road. The result showed a high level of carbonation in the beam stitches together with conversion of the HAC to an average extent of 65% plus or minus 5%. On 11 th October 1983 the Senior Housing Inspector wrote to the City Housing Manager saying:
"the houses in Durham Road would appear to present quite a problem due to their HAC content in the stitch joints. The depth of carbonation would appear to be deeper than the depth of the steel with the result that higher risk of corrosion failure is to be expected … . I would not recommend that sales proceed with houses similarly constructed to those in Durham Road which have a High Alumina Cement stitch joint"
The council then instructed LG Mouchel & Partners, Consulting Engineers, to report on the council's Orlit houses, in relation to which Mouchel selected seven Orlit houses, including two in Durham Road. Their report dated August 1984 dealt largely with the general problem of carbonation. However, it included the observation:
"The concrete in the in situ stitches, however, was of a comparatively poor quality and easily cut out. It was fully carbonated and tests reveal that high alumina cement had been used and was 55% converted … . The concrete frame has in all instances been found to be in sound condition and unlikely to show serious defects in the near future. Nevertheless, the stitch joints have been found to be of poorer quality highly carbonated concrete containing high alumina cement…. . There is, therefore, every possibility that future deterioration will occur we suggest that the structure of a similar sample of these houses i.e. approximately 10% should be re-inspected after a period of ten years."
It is to be observed that, as the judge pointed out, Mouchel did not make clear that conversion of the HAC was a separate and distinct fault from carbonation, to which the main thrust of the report was directed. When on 12 th September 1984, the City Architect reported the matter to the council, his report essentially repeated the content of the Mouchel report. The topics of carbonation and the adverse state of the in situ stitch joints containing high alumina cement were thus not treated as distinct topics beyond what appeared in that report. However, the judge...
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