HT-2019-CDF-000012 - [2025] EWHC 1315 (TCC)

The Wilsons rely on two causes of action: breach of leasehold covenants; and breach of the duty under section 1 of the 1972 Act.

Damages for breach of contract are designed to place the wronged party in the position he would have been in if the contract had been performed according to its terms. The proper measure is “such as may fairly and reasonably be considered arising naturally, i.e. according to the usual course of things” from the breach or “such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it”: Hadley v Baxendale (1854) 9 Exch 341; see also Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528; and Koufos v C Czarnikow Ltd, The Heron II [1969] 1 AC 350; and URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21, at [33]. (For present purposes, it is unnecessary to delve further into refinements of the formulation or to enter into a discussion of any complications introduced by the decision of the House of Lords in The Achilleas [2008] UKHL 48, [2009] 1 AC 61.)

Damages for breach of the duty under section 1 of the 1972 Act were considered by Ramsey J in Harrison v Shepherd Homes Ltd [2011] EWHC 1811 (TCC), where in the context of the facts of that case he said this:

“208.

As the Claimants state, those Claimants with contractual claims are entitled to damages for breach of contract and the starting point is set out in the well known passage in the judgment of Parke B in Robinson v Harman 1 Exch 850 at 855: ‘that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same position, with respect to damages, as if the contract had been performed.’

209.

The Claimants submit that the same rule applies to breach of the 1972 Act so that the Claimants are to be put in the position they would have been in if the breach had not occurred, that is, if the duty under section 1(1) of the 1972 Act had been fulfilled. They refer to the decision of the Court of Appeal in Bayoumi v Protim (1998) 30 HLR 785 at 791 where it was stated that the damages recoverable under the 1972 Act will include damages which are the natural consequence of the breach and to the decision in Bella Casa Ltd v Paxton [2005] EWHC 2807 where the court confirmed at [28] to [30] that general damages for loss of use are recoverable under the 1972 Act. They also refer to Keating onConstruction Contracts (8th edition 2006) where it states at paragraph 15-007 that all reasonably foreseeable losses that are the natural consequence of the breach are recoverable, which may include economic loss as well as consequential economic loss. Accordingly, the Claimants say that they are entitled to claim all the sums set out in their primary or secondary cases either as damages for breach of the sales contract, for breach of Section 2 of the Buildmark Cover or for breach of the 1972 Act.

210.

The Claimants did seek to argue that because the obligation under Section 2 of the Buildmark Cover was ‘to put right any Defect or Damage” this altered the approach because it led to damages for remedying the defect, not for instance diminution in value. I do not consider that there is any difference between damages for breach of an obligation to carry out work properly in the first place or to remedy defects when it comes to the approach. Neither obligation, in my judgment, leads to a limit on the proper approach at law to assessing damages for defective buildings.

211.

By the end of the hearing SHL [the defendant] accepted that the approach to quantum does not differ dependent on whether there is liability for breach of the sales contracts, Section 2 of the Buildmark Cover or section 1 of the Defective Premises Act 1972.

212.

I therefore proceed on the basis, which I consider to be the correct basis, that there is no distinction to be drawn for present purposes between the approach to damages for the three heads of liability under the sales contracts, Buildmark Cover or the 1972 Act.”

A similar approach was taken by Jefford J in Vainker v Marbank Construction Ltd [2024] EWHC 667 (TCC), where she said:

“339.

Mr Fowler’s further submission on this issue is that the design intent or appearance of the balustrades is not a proper consideration if the only claim that can now be brought against SCd [the third defendant] is one under the DPA [the 1972 Act]. SCd’s contention is that the claimants can only be entitled to the cost of remedial works necessary to make the House fit for habitation, that is to comply with the Building Regulations. No authority was cited for this proposition and the DPA itself says nothing about recoverable damages. In my judgment, the proposition is wrong. Although the duty under section 1 is construed as a duty to achieve the outcome that the dwelling is fit for habitation, there is a constituent element of the duty which is to see that the work that is undertaken is done in a professional manner. Where the defendant has failed to see that the work is done in a professional manner and the result is that the dwelling is not fit for habitation, there is nothing in the statute to limit the damages recoverable in respect of the failure to see that the work is done in a professional manner to the minimum necessary to put the dwelling into a habitable condition. The damages should more naturally reflect the failure to see that the work was done in a professional manner. In this case, that failure resulted in the installation of toughened rather than toughened and laminated glass – and if the latter had been installed the House would have been fit for habitation. The recoverable damages should, therefore, be the cost of making the dwelling fit for habitation in the way it would have been had the services been supplied in a professional manner.”

Keating on Construction Contracts (12^th edition) summarises the law as follows at 15-017 (footnotes omitted):

“This [i.e. measure of damages] is not dealt with by the Act. However, it has been held that the damages are not limited to the ‘minimum necessary’ to make the dwelling fit for habitation, but may extend to the cost of ‘making the dwelling fit for habitation in the way it would have been had the services been supplied in a professional manner’. General damages for loss of use consequent upon a breach under the Act have been awarded. Thus, it is submitted that all reasonably foreseeable losses that are the natural consequence of the breach are recoverable, which may include economic loss, as it is now understood, as well as consequential economic loss. However, general damages for loss of use of capital whilst the property is uninhabitable are not, it would seem, recoverable.”

Since the hearing of the present application, the Supreme Court has handed down its judgment in URS Corporation Ltd v BDW Trading Ltd. In his skeleton argument, Mr Wilson said: “The formulation of the Wilsons’ schedule of loss is based on the analysis of the law in [the Court of Appeal’s] judgment and the arguments in the hearing in the Supreme Court. It would be preferable for a decision to be made on these claims after the Supreme Court delivers judgment.” In fact, no party has asked to make further submissions in the light of the decision handed down on 21 May 2025. Having considered the judgments of the Justices, I do not think that they materially affect the law relevant to this application.