Rendlesham Estates plc and others v Barr Ltd

Defective premises – Unfit for habitation – Damages – Claimant owners alleging apartments unfit for habitation – Defendant builders conceding liability for some defects but challenging measure of damages – Whether claimants entitled to represent all owners – Whether defendant’s liability limited to proportion of maintenance charge for each claimant – Whether apartments being unfit for habitation – Whether entire block constituting relevant dwelling for defective premises claim – Claim allowed in part The claimant owners of 120 apartments in two apartment blocks in Concord Street, Leeds, brought an action against the defendant company, which had built the blocks on behalf of the developer, under the Defective Premises Act 1972, alleging that their apartments were not fit for habitation when completed. The two blocks had been built between 2003 and 2006 as part of one development, whose stated purpose was to provide high-quality apartments for young professionals. Problems began as soon as the claimants moved into their apartments, which suffered from leaks, damp, condensation, mould and poor quality finishes to the common parts. Disputes arose over the defendant’s final account and allegations of defects by the developer resulting in an adjudication award in favour of the developer. It appeared that the developer spent little, if any, of the sums recovered in rectifying the defects. The developer then went into administration. Since the claimants had no contract with the defendant, they commenced their action under the 1972 Act, effectively seeking to have the external envelope of the buildings substantially rebuilt, together with the rectification of certain defects within the apartments. The claim was for some £14m. Initially the defendant denied liability for almost everything, but subsequently conceded liability for a few of the defects while disputing the appropriate measure of damages. The claimants argued that they were entitled to maintain the action in a representative capacity on behalf of owners who were not parties. The defendant contended that each claimant was only entitled to recover his or her contribution to the maintenance charge in respect of the cost of any repairs, if the relevant defect had made that claimant’s apartment unfit for habitation. There were also issues about what constituted a “dwelling” for the purposes of the 1972 Act and now, and by what criteria, fitness for habitation was to be determined. Held: The claim was allowed in part. (1) The word “dwelling” was not a term of art and regard had to be had to the object of the legislation in which the word appeared. The relevant question was whether the space said to be the dwelling, or part thereof, formed part of a single unit with those parts of the premises that were lived in. However, the single unit test did not necessarily provide the answer where a house or flat was shared by more than one household. Exclusive possession of a particular space for the purpose of living was a better indicator of what constituted a dwelling. In the present case, the court rejected the suggestion that the two blocks could constitute a dwelling within the meaning of the 1972 Act. In reality each block was a building that contained a number of separate dwellings. The dwelling for the purposes of section 1 was the individual apartment, as described in the lease, possibly together with those parts of the building to which the occupiers of a particular apartment had in practice exclusive access for living, such as their balcony: Andrews v Schooling [1991] 1 WLR 783, Uratemp Ventures v Collins [2001] UKHL 43; [2001] PLSCS 213 and Catlin Estates Ltd v Carter Jonas (a firm) [2005] EWHC 2315 (TCC); [2006] 2 EGLR 139 considered. (2) In the ordinary course of events, a structure would have to be either physically or functionally connected with a relevant dwelling before it could be said that it had been constructed “in connection with” the provision of that dwelling. The application of section 1 of the 1972 Act to any particular piece of work was very fact specific. If the work for the provision of the dwelling was part of a larger development by the same contractor under the same contract to the same specification, it was arguable that all the work done in the course of the development was in connection with the provision of the relevant dwelling. In the present case, since the apartments could not be built without foundations, a roof, a structural frame or suitable access, it was an inescapable conclusion that the work to the structural and common parts of each block represented work carried out in connection with the provision of each apartment in the block. The owner of every apartment had an interest in and a financial responsibility for the maintenance and repair of the structural and common parts of both blocks and each leaseholder had a right of access to the common parts of the other block: Ashville Investments Ltd v Elmer [1989] QB 488 considered.   (3) Under section 1 of the 1972 Act, the work had to be done in a professional and workmanlike manner with proper materials in accordance with the relevant regulations and standards in force at the time. If work was done badly in breach of a relevant building regulation such that a local authority, if aware of the breach, would require it to be rectified before the building was occupied, that would constitute a breach of section 1. (4) There was no cause of action under section 1 unless the building was not fit for habitation. Work that fell short of the standard described in the section did not, of itself, give rise to a cause of action. For a dwelling to be fit for habitation within the meaning of the 1972 Act, it had to be capable of occupation on completion, without any remedial works being carried out, for a reasonable time without risk to the health or safety of the occupants; and be capable of occupation for a reasonable time without undue inconvenience or discomfort to the occupants. If the cause of any risk to the health or safety of the occupants was a failure to carry out maintenance or refurbishment work which would rectify that defect, the builder was not liable: Bole v Huntsbuild Ltd [2009] EWHC 483 (TCC); [2009] PLSCS 93; [2009] EWCA Civ 1146 and Harrison v Shepherd Homes Ltd [2011] EWHC 1811 (TCC) applied. (5) The owner of an apartment which had been rendered unfit for habitation because of a defect in the common parts was entitled to the cost of repairing that defect, or at least the cost of carrying out the repairs necessary to make his flat fit for habitation. If an owner was awarded only his share of the service charge, he would then be dependent on all the remaining leaseholders agreeing to fund the balance of the cost of repair. If they refused, the work might never be done. Parliament could not have intended such a result. Accordingly, a leaseholder’s loss in respect of a particular defect in the common parts was not limited to his proportion of the additional service charge necessary to cover the cost of repairing the defect in question. (6) In relation to the claimants’ apartments, it was clear that, whilst the defects in the construction of the external walls were widespread throughout the blocks, it had not necessarily resulted in every apartment being unfit for habitation. Accordingly, the present could not be a representative action. Alexander Nissen QC and Jonathan Selby (instructed by Walker Morris LLP) appeared for the claimants; Lord Marks QC, Daniel Crowley and Martin Hirst (instructed by DWF LLP) appeared for the defendants; Fiona Sinclair QC and Katie Powell (instructed by Bond Dickinson LLP) appeared for the solicitor defendants. Eileen O’Grady, barrister Click here to read the transcript: Rendlesham Estates plc and others v Barr Ltd