Andrews v Schooling

An interim payment of damages requires satisfaction that the claimant will obtain judgment for substantial damages. A likelihood of success is insufficient. Unconditional leave to defend is inconsistent with that conclusion, although a shadowy defence may justify conditional leave tied to an interim payment.

Section 1 of the Defective Premises Act 1972 applies both to defective work and to a failure to undertake necessary work. A dwelling may be unfit for habitation when completed because it lacks an essential attribute, even if the resulting problem becomes apparent only later.

The claimant acquired a long lease of a converted ground-floor flat containing a cellar. She alleged that moisture from the cellar caused severe dampness and rendered the flat unfit for habitation. Her claims against the first three defendants included breach of section 1 of the Defective Premises Act 1972 and common law negligence.

Master Prebble gave the defendants unconditional leave to defend and refused an interim payment. On appeal, a deputy High Court judge ordered a £7,500 interim payment, having found that the claimant was likely to succeed under the 1972 Act. The defendants appealed. The claimant obtained leave to appeal out of time against the unconditional leave to defend.

The central issues were whether section 1 covered a failure to undertake necessary work, whether the evidence established that the claimant would succeed at trial, and what interim payment was just.

1. Disposition. The defendants’ appeal against the £7,500 interim-payment order was dismissed. The claimant’s appeal against the grant of unconditional leave to defend was allowed. Leave to defend was made conditional upon payment of £7,500 to the claimant. Beldam LJ and Sir Denys Buckley agreed with Balcombe LJ, making the decision unanimous.

2. Interim-payment threshold. Balcombe LJ applied British and Commonwealth Holdings v Quadrex [1989] QB 842. Under Order 29, rule 11, the court must be satisfied that the claimant will obtain judgment for substantial damages. A finding that success is merely likely does not suffice. An outstanding order granting unconditional leave to defend is therefore inconsistent with an interim-payment order. Where the defence is shadowy, however, leave may be made conditional upon an interim payment.

3. Omissions under the 1972 Act. Section 1 of the Defective Premises Act 1972 extends to failures to undertake necessary work as well as work performed defectively. Section 1(4) was conclusive. A person who arranges for another to undertake work may be treated as having taken it on despite performing no physical work. The statutory scheme therefore draws no distinction between acts of commission and omission. Section 1(2), concerning work undertaken in accordance with another’s instructions, also supported that construction.

4. Fitness at completion. A dwelling may be unfit for habitation when work is completed because it lacks an essential attribute, such as a roof or damp-proof course. It is immaterial that the practical consequences do not become apparent until later.

5. Application. The claimant’s expert evidence established that the flat was unfit for habitation and that the cellar’s dampness contributed substantially to the unhealthy conditions. The first three defendants had filed no contrary evidence. Even the fourth defendant’s expert accepted that humid cellar air probably contributed to the condensation. The court was therefore satisfied that the claimant would recover for breach of section 1 at trial. Given the estimated remedial costs and the claimant’s inability to finance the work, £7,500 was a reasonable interim payment.

1. Court of Appeal: The defendants’ appeal against the £7,500 interim-payment order was dismissed. The claimant’s appeal against unconditional leave to defend was allowed, and leave was made conditional upon payment of £7,500.

2. High Court, Queen’s Bench Division: Mr Gareth Williams QC, sitting as a deputy High Court judge, ordered the first three defendants jointly and severally to make a £7,500 interim payment. He had applied a likelihood-of-success standard.

3. Master: Master Prebble granted all defendants unconditional leave to defend and refused an interim payment.