Damages In Respect Of Defective Work, Loss Of Amenity, Distress And Inconvenience

In the case of Harrison and Others v (1) Shepherd Homes Ltd, (2) National Housebuilding Council & (3) NHBC Building Control Services Ltd, [2011] EWHC 1811 (TCC), one of the issues, Mr Justice Ramsey had to consider was the proper measure of damages in respect of defects allegedly arising from defective and inadequate piled foundations

The Facts

Shepherd Homes Limited (Shepherd) entered into separate sales contracts with each purchaser in respect of 94 houses on a development on a former landfill site in Hartlepool. The properties were constructed between September 2001 and February 2004. Defects appeared in a number of the properties and it soon became apparent that this was a development wide problem caused by defective/inadequate piled foundations. The home owners started proceedings against Shepherd. The properties had cover under the Buildmark scheme operated by the National House Building Council and the supervision of the work was carried out by NHBC Building Control Services Limited.

The Issues

The key issues raised at trial included Shepherd's obligations under the sales contracts (including Shepherd's express or implied obligations, and whether the Unfair Terms in Consumer Contracts Regulations 1999 and the Unfair Contract Terms Act 1977 applied to the sales contracts), whether the owners had complied with the notice requirements under the NHBC Buildmark cover, whether Shepherd was liable under the Defective Premises Act 1972, the proper measure of damages in respect of the defects and whether the owners were entitled to damages for loss of amenity, distress and inconvenience.

The decision is lengthy (121 pages) and wide-ranging. For this reason, this case note deals only with the proper measure of damages in respect of the defects (in particular whether this should be based on reinstatement costs or diminution in value) and whether the owners were entitled to damages for loss of amenity, distress and inconvenience.

The Decision

The court identified the following general principles when considering an award of damages for defective premises and any associated damages for loss of amenity, distress and inconvenience:

There will generally be an award of the cost of reinstatement provided that reinstatement is reasonable; Reinstatement will be unreasonable if the cost of reinstatement would be out of all proportion to the benefit to be obtained; The question of reasonableness has to be answered in relation to the particular contract...