CA-2025-001477 - [2025] EWCA Civ 1360

Discussion and Conclusion

Mr Butler was plainly right to say that, as a matter of general principle, whether or not the flats were actually sold or retained is prima facie irrelevant to the existence of a traditional diminution in value claim: see paragraph 25(c) above. But, on analysis, that point is of no assistance to Mr Butler when considering whether or not the judge was right to strike out Disputed Head 1. On the contrary, in my view, the judge was right to strike it out. There are a number of reasons for that.

First, I consider that paragraph 25.2.1 of the RRRAPOC (paragraph 6 above) was doing nothing more than asserting what I have called a ‘blight’ claim. The words of the pleading indicate that: it is a claim for diminution “notwithstanding the remedy of the defective works” (ie residual diminution). That is certainly how the defendant interpreted the plea, because paragraph 29(a) denies that the claimant “will suffer diminution in the value of the flats notwithstanding the remedy of any defective work”

Furthermore, the argument that the diminution in value claim in paragraph 25.2.1 was more than a blight claim is contradicted by the RRRAPOC as a whole. As I have said, diminution in value in this sort of case is conventionally measured by the cost of remedial works. No claim for remedial costs is advanced, nor could it be. The only reference to remedial costs is in the context of the service charge claim at paragraph 25.2.1 Accordingly, even if the ‘Total Capital Losses’ claim can somehow be taken as a conventional diminution in value claim, it is contrary to the RRRAPOC and therefore illegitimate. There would have to be a proposal to amend the RRRAPOC, and no such application has been made.

Secondly, none of the essentials of the Wilsons’ new claim, as advanced at the appeal hearing by Mr Butler and summarised in paragraph 33 above, are pleaded in the Schedule of Loss. The date of November 2024, as the date the flats were gifted to their daughters, is pleaded in passing in the introductory preamble. It is not otherwise said to have any relevance to the Schedule of Loss. No losses of any kind are identified by reference to that date or that event. On the contrary, the losses are identified by reference to the three earlier dates when defects in the building became known. That is an entirely different case which Mr Butler did not seek to support. So another complete answer to Mr Butler’s new case on diminution in value is that it is not pleaded in the Schedule of Loss either.

Moreover, in whatever form they took, any amendments would essentially involve the deletion of what is presently pleaded and the setting up of a new and different claim. The existing claim, by reference to the three irrelevant dates, would have to be deleted in its entirety (because they are not now said to trigger a loss) before any consideration could be given to the new claim based on the November 2024 gifting.

Thirdly, the pleading of that new claim (that the Wilsons suffered loss when they gifted these flats to their daughters, notwithstanding what we know to be an imminent and comprehensive package of remedial works), is a novel claim in law. The London Corporation and Zurich were examples of cases where the wrongdoer was seeking to take advantage of other coincidental events to avoid paying for the damage it had done. But in the present case the defendant is emphatically not doing that; instead it is carrying out the remedial works at no cost to the owners. I am aware of no authority, and Mr Butler was unable to point to one, in which it had been agreed that a contractor would carry out extensive remedial works free of charge, but was also liable for a conventional diminution in value claim as if that remedial work had not been (and was never going to be) carried out.

Accordingly, not only is the new claim not pleaded anywhere, but its formulation is not a straightforward exercise. What is the loss that was suffered by the Wilsons when they gifted the flats to their daughters? How is that to be assessed if they were gifted for nothing? How could the defendant be liable to the Wilsons and/or their daughters under the DPA for the necessary remedial work to put the flats right, and also be liable to the Wilsons for the diminution in value calculated on the basis that the flats were defective when they gifted them? How is that the same as if the Wilsons had sold the flats at a loss in November 2024, when any purchasers at a lower figure may be regarded as having already been compensated for the defects (because they had paid less than they would otherwise have done for the flats), so would not necessarily be entitled to have the works to their flats done free of charge? Does it give rise to the defendant being in double jeopardy? What is the basis for any claim based on unreasonable delay in the defendant’s agreement to carry out the works?

Those are all questions which any pleader would have to have in mind when they tackled the putative new claim outlined at the appeal hearing by Mr Butler. In the absence of a proposed pleading, and applying the words of Tugendhat J in Kim v Park, the complexity of the new case and the unhappy history of the Wilsons’ claims so far, mean that there is currently no reason to believe that the Wilsons would be in a position to plead their putative new claim convincingly. A court could only reach a concluded view on that issue when it saw any proposed amendment.

Moreover, none of this should be taken to suggest that, if they produced a convincing pleading, the Wilsons would then obtain permission to amend. The trial is due in March next year, with detailed steps, such as the exchange of witness statements and experts’ reports, due to take place imminently. The potential effect on the timetable of any proposed amendment would be front and centre of any court’s consideration of that application.

In my view, although the judgment at [22] is perhaps a little too succinct for its own good, the point that the judge was making was, on analysis, entirely right. He was not saying that, as a matter of general principle, the flats would have had to have been sold before there could be a diminution in value claim. Instead he was simply responding to the dates pleaded by the Wilsons (being dates when defects were identified), and explaining that, in the absence of any crystallisation of loss on those dates, they were irrelevant to any assessment of damage in circumstances where remedial works are now going to be carried out by the defendant. Although he did not spell it out, it is tolerably clear that the judge thought that the Wilsons might have had at least an argument that they had suffered damage if they had sold the flats at a loss on any of those dates (ie before the remedial works were agreed), but since they did not, and the remedial works are now going to be carried out, the claim as pleaded in the Schedule of Loss could not succeed. Mr Butler’s articulation of the putative new case accepts that the three pleaded dates as to discovery of defects were irrelevant to any valid claim. So the judge has been proved right, not wrong, by the further consideration of Disputed Head 1 by both Mr Butler and this court.

For completeness, I should repeat that all the claimants in this case, including the Wilsons, were entitled in principle to claim residual diminution in value (blight). But that is not what is being asserted here: as Mr Butler accepted, this claim has nothing to do with the residual consequences of the remedial works that will be carried out.

Accordingly, for those reasons, I consider that the judge was right to strike out Disputed Head 1.