Millharbour Management Ltd and others v Weston Homes Ltd and another

Development – Defects – Statutory breach – Claimant leaseholders seeking to represent leaseholders not party to proceedings – Whether claimants having same interest as parties to be represented – Whether court properly exercising discretion to allow representation — Application grantedThe defendants carried out a development of 350 flats, 88 of which were held by the second claimant housing association under a 999-year lease and used for social housing. The remaining 262 flats were sold to individuals also on 999-year leases. The first claimant was the management company for the development; the others were individual private leaseholders. The claimants alleged that the development suffered from defects that affected their use and enjoyment of the buildings. Extensive remedial works were anticipated at an estimated cost of £4,000 per flat.In September 2010, the first and second claimants and 42 private leaseholders issued proceedings against the defendants for damages under the Defective Premises Act 1972. In January 2011, an application was made, pursuant to CPR 19.6(1)(b), for an order permitting the third and fourth claimants to act as representatives on behalf of the remaining leaseholders who were not then taking part in the proceedings.The claimants argued that, for the purposes of CPR 19.6, the third and fourth claimants had the same interest as those whom they sought to represent and that having regard to the overriding objective and the need to save time and money, the court should exercise its discretion to allow them to proceed in a representative capacity. The defendants argued that the common interests shared by the third and fourth claimants with those whom they wanted to represent did not amount to “the same interest” within CPR 19.6. they contended that the court’s discretion should be exercised against the continuance of the representative arrangement owing to: (i) the non-sustainability or weakness of some of the claims; (ii) the unwillingness on the part of a number of tenants to come forward; (iii) the lack of particularity in the particulars of claim; and (iv) the possibility that they would be deprived of a limitation defence against parties that were not joined as claimants.Held: The application was granted. The court would make the order sought in respect of the third and fourth claimants. However, it would be limited to claims for damages relating to the cost of remedial work organised by the first claimant and to be charged to leaseholders through the service charges.Before a party could claim in a representative capacity for other parties, it had to have the same interest in the claim as those to be represented. The question of whether and the extent to which parties had the same interest could be answered only by reference to the facts of the particular case, albeit that it would be necessary to determine, inter alia, whether the representing and the represented parties had the same cause of action or liability, subject to the relevant facts.Once it was clear that the interest was the same, the court had a discretion to allow the relevant party to act or to continue to act in a representative capacity. The court also retained a discretion at even after the judgment to direct that it was not binding or was not be enforced should it emerge that one or more of the represented persons did not have the same interest: Duke of Bedford v Ellis [1901] AC 1 considered.In the instant case, the third and fourth claimants had the same interest in respect of the remedial works as those whom they sought to represent and who were not existing claimants. The identity of those represented could be established at any time. There was no evidence before the court of anything other than generic defences to the defects, the causes of action or the loss. Thus, it might be a generic defence to say that certain alleged defects were not defects at all or did not involve breach of any given duty.With regard to the court’s discretion, it was not uncommon for the owners or occupiers of flats in substantial blocks to raise claims against builders, architects or engineers in respect of defects. The process whereby hundreds of claimants were to be parties to proceedings was cumbersome and further complicated because leaseholders might move or die during the litigation necessitating amendments to the parties’ names. The initial cost of securing instructions from each leaseholder would cumulatively comprise a substantial sum, although an additional 180 claimants in the proceedings would add little to the merit or demerit of the claims or defences advanced by the parties. There was no real cost risk to the defendants of having only 78 individual leaseholders. The existing claimants had taken out after the event insurance that provided cover of around £700,000 for the defendants’ costs. Moreover, there was likely to be a substantial equity in the 78 individual properties owned by the named individual claimants and there was no suggestion that the first and second claimants could not pay the defendants’ reasonable costs.Anthony Speaight QC (instructed by Cubism Law) appeared for the claimants; David Friedman QC and James Leabeater (instructed by MacFarlanes) appeared for the defendants.Eileen O’Grady, barrister