Andrew Butler KC and Hugh Rowan appear in important new Court of Appeal decision on damages in defective premises claims

Andrew Butler KC and Hugh Rowan have appeared in an important Court of Appeal decision on the measure of damages in claims for defective premises. The decision also touches on the permitted scope of a Schedule of Loss

The background to Wilson -v- HB (SWA) Ltd. [2025] EWCA Civ 1360 was somewhat unusual; the Claimants, acting in person, had produced a Schedule of Loss in accordance with a direction given by the Court after many years of litigation. The Defendant had applied to strike most of the Schedule out, and the Court at first instance (HHJ Keyser KC, sitting as a Judge of the TCC in Cardiff) had acceded to that application. The Claimants obtained permission to appeal, and only at that juncture did they instruct Andrew and Hugh.

Andrew and Hugh were therefore tasked with defending a Schedule of Loss produced by litigants acting in person, and largely struck out by the first instance judge, but despite what the Court of Appeal described as “resilient efforts” to do so, Coulson LJ, with whom Popplewell and Phillips LJJ agreed, was ultimately unpersuaded that the Court at first instance fell into error.

Key Principles

Nevertheless Coulson LJ, largely drawing on Andrew and Hugh’s submissions, set out the over-arching principles governing the assessment of damages in a defective premises claim. The relevant part of his judgment (excluding the authorities cited) can be paraphrased as follows:

(a) Where there is defective or incomplete construction work, a claimant is entitled to claim the amount by which the work is worth less by reason of the defects;

(b) Diminution in value is usually best measured by reference to the reasonable cost of reinstatement works, but a traditional diminution in value claim may still be appropriate, such as where the building cannot be economically repaired or where any remedial works would be disproportionate;

(c) A claim for the reasonable cost of remedial work accrues whether or not the asset in question is subsequently sold or destroyed; a defendant cannot take advantage of the impecuniosity of owners who could not afford to carry out the remedial works and claim that they had suffered no loss;

(d) In a case where it has been agreed that the original contractor can return to carry out the remedial works, the owners cannot claim the cost of those remedial works as damages: they will never incur the cost of such works, or a liability for those costs, so they cannot recover damages by reference to them;

(e) But that does not mean that the owner will not suffer a residual diminution in value, even after the remedial works have been completed. This is commonly known as “blight”; and,

(f) In addition, a claimant will normally be able to recover (subject to proof) loss of any rental income and any other special damages which are not too remote and which can be properly identified as flowing from the breaches.

The Decision

The Wilsons’ primary contention was that, although repairs to the flats were now anticipated (albeit after many years of disrepair), they had assigned title while the flats had still been in an unrepaired state, and were therefore entitled to claim diminution in value. The problem the Wilsons faced was that, on the Court’s reading of their Particulars of Claim, itself by now in its fifth iteration, this went beyond what was pleaded in it. (Indeed, another important take-away from the decision – which seems likely to find expression in the White Book at some stage – is that it is “impermissible” for a Schedule of Loss to go beyond the scope of what the Court called “the parent pleading”. For it to do so, the Court held, is a recipe for “muddle and confusion”.)

In fact, and on the Court’s interpretation of the Schedule of Loss, the contention went beyond that document as well. Additionally, the Court held, it was not obvious that it even could be pleaded, because an “imminent and comprehensive” package of remedial works was now planned, which once completed would be likely to eradicate any diminution in value. As the Court observed, no decided authority addressed the situation where damages were sought from a wrongdoer who intended to do the repairs. It is unfortunate, however, that the Court did not grapple with the position of an owner who disposes of his or her title at a time when value in the asset is diminished, even if repairs are subsequently intended.

Summary

In the event, the Wilsons’ appeal was dismissed; but the summary of the law provided by Coulson LJ will doubtless be of use to practitioners called upon to advise in this often difficult area, in which decided cases are surprisingly few in number, and authoritative statements of principle even rarer.

A copy of the decision can be found here.