Summary
In Mallas v Persimmon Homes Limited, the Technology and Construction Court (TCC) considered the appropriate measure of damages for defective building works, both in contract and under the Defective Premises Act 1972 (DPA). In reaching its decision, the TCC addressed the application of the 30-year retrospective limitation period under the DPA, clarified the scope of the ‘fit for habitation’ standard, and reaffirmed the importance of proportionality and cost-effectiveness in selecting remedial schemes.
Background
Mr Mallas, the claimant, purchased a newly built house on a residential estate from the defendant developer, Persimmon, in September 2015.
Not long after moving in, Mr Mallas became concerned by cracking and other indications of structural movement at the property. Investigations revealed that, among other things, the house had been constructed on foundations that were too shallow for the prevailing ground conditions.
Mr Mallas issued a claim for the cost of ‘curing’ the alleged defects, and by the time of trial Persimmon had admitted breach of clause 1 of the sale contract, which warranted that the property had been ‘built in a good and workmanlike manner’ and in accordance with building regulations.
What remained for the court was to determine the scope and extent of the remedial works required. Three remedial schemes had been proposed: (i) full demolition and rebuild, (ii) demolition and rebuild retaining and reusing the existing timber frame (both put forward by the claimant), or (iii) underpinning the existing structure with a piled raft foundation (as proposed by the defendant).
The decision
Limitation and liability under the DPA
The court noted that the duty under section 1(1)(a) of the DPA, whereby those who take on work for or in connection with the provision of a dwelling must ensure that the work is done in a workmanlike or professional manner, with proper materials, so that the dwelling is fit for habitation, closely mirrored the contractual warranty, such that that the DPA claim did not provide any substantive additional benefit to the claimant.
Nevertheless, the court confirmed: (i) first, that the claim was not time-barred, due to the 30-year retrospective limitation period under section 4B of the Limitation Act 1980 (inserted pursuant to section 135 of the Building Safety Act 2022). The defendant accepted that this accurately reflected the current state of the law, particularly in light of BDW Trading Ltd v URS Corporation Ltd. Further, (ii) that a dwelling was fit for human habitation if, on completion, it is "capable of occupation for a reasonable time" without either "risk to the occupants health or safety" or "undue inconvenience or discomfort" (Vainker v Marbank Construction Ltd).
The porch to the property required supports to prevent collapse, and the court considered this to be an ongoing risk to safety that meant that the property was unsafe and unfit for human habitation, i.e. that the state of the porch constituted a breach of s.1 DPA. This was the case even though the claimant had been living in the property for more than nine years since completion. Notably, the porch had separate shallow foundations to the rest of the house, and the court did not consider that the foundation issues elsewhere, while serious, met the threshold for unfitness under the DPA, as they did not pose a direct safety risk.
Measure of loss
The judgment provides a clear reaffirmation of the principles governing damages for defective premises and summarises the key principles, drawn from decisions like McGlinn v Waltham Contractors Ltd and Axa Insurance v Cunningham Lindsey. These are:
(i) damages are generally based on the reasonable cost of repair or reinstatement as the foreseeable consequence of defective work, unless this is disproportionate to the benefit gained;
(ii) claimants must act reasonably in carrying out repairs or reinstatement;
(iii) where two equally effective remedial schemes exist, the claimant is obliged to put in hand the cheaper scheme; and
(iv) any improvements or betterments resulting from the works should be deducted from the recovery.
The court awarded damages reflecting the cost of remedial works based on the defendant’s proposed scheme (i.e. underpinning), finding that this would adequately remedy the defects at a proportionate cost. Consistent with the established principles, the court found that demolition and rebuilding are justified only where the building is ‘dangerous or structurally unsound’, and that the defendant’s scheme offered a reasonable solution.
Analysis and implications
The decision offers important guidance on claims for defects in residential properties, whether brought in contract and/or under the DPA.
For the purposes of DPA claims, a property will be considered unfit for human habitation if its defects pose a real risk to health or safety, or result in significant inconvenience. Whilst not every defect in a building’s design or construction will give rise to liability under the DPA, developers (and others involved in the design and construction of a dwelling) should note that, where liability does arise, claims that would previously have been time-barred may now be brought under the extended 30-year retrospective limitation period.
This case also clarifies that proportionality is key: even where defects are admitted, the scope of the remedial works must be justified and cost-effective. If a claimant chooses to rebuild to a higher standard than is strictly necessary, its claim must exclude any betterment. Ultimately, this case serves as a reminder that the courts will scrutinise the necessity and proportionality of proposed remedial schemes, favouring practical and cost-effective solutions over more extensive works unless those works are clearly justified.
