Bella Casa Ltd v Vinestone Ltd and others

Defective refurbishment works — Claim for loss of use of property — General damages — Basis upon which damages awarded — Recoverability of service charges and utility payments The first defendant, as the head lessor of a property, granted a long lease to the claimant, and agreed to refurbish the premises. The second and third defendants were, respectively, the architect and the contractor engaged in carrying out the refurbishment. The claimant considered that the refurbishment was incomplete and defective. It brought proceedings against the defendants, both in contract and under the Defective Premises Act 1972, claiming damages for loss of use of the property up to the date upon which remedial works had been completed. It maintained that the property had, in the meantime, been unfit for human habitation. The third defendant also brought a Part 20 claim against a glazing sub-contractor that had carried out part of the refurbishment works. A preliminary issue was tried as to whether three items claimed, and argued by the claimant to be consequential upon the loss of use, were recoverable in principle. These were: (i) interest on the balance of the purchase price up to the date of completion of the remedial works; (ii) service charges on the property up to that date; and (iii) utility bills, including water, electricity and satellite television charges, incurred in respect of that period. The claimant argued that it had incurred those costs but had received no value for them. The defendants contended that the items did not represent loss consequential upon any breach of duty because they would have been incurred in any event. Held: A loss of use claim in a building case was founded upon a claimant’s inability to occupy its property resulting from defects in the property, or the carrying out of remedial works to remedy those defects, or both. A claim for special damages for loss of use required detailed evidence of alternative accommodation, lost rent and the like. General damages fell within the general compensation awarded by the court for a claimant’s loss of enjoyment of its property, and, as such, were traditionally recoverable only by a natural person in a modest amount. Upon completion of remedial works, no loss of capital value arising from the defects had been suffered. A claim for loss of use was not a claim for loss of use of the purchase price of the property, or for loss of the consideration received for that purchase price: Calabar Properties Ltd v Stitcher [1983] 2 EGLR 46; (1983) 268 EG 697 applied; Applegate v Moss [1971] 1 QB 406 and Owners of no 7 Steam Sand Dredger v Owners of Steamship Greta Holme [1897] AC 596 distinguished. Accordingly, the claimant could not recover in respect of the first item claimed. However, it might, in principle, be able to recover special damages in respect of the service charges and utility bills on the basis that they had been incurred without tangible benefit owing to the fact that the property had been unfit for human habitation throughout the relevant period. Such a claim would be subject to questions of causation, proof and mitigation. Finola O’Farrell QC (instructed by Gordon Dadds) appeared for the claimant; the first defendant did not appear and was not represented; Steven Walker (instructed by Fishburnes) appeared for the second defendant; Rachel Ansell (instructed by Hannah & Mould) appeared for the third defendant; Justin Mort (instructed by Winward Fearon) appeared for the Part 20 defendant. Sally Dobson, barrister