Holding & Management (Solitaire) Ltd v Ideal Homes North West Ltd. & Ors

Terms are implied into a construction-related lease only where necessary to give the contract business efficacy or because they went without saying. A separate contractual regime, express exclusions, or conflict with obligations owed to another party may make implication inappropriate. A subsequent owner ordinarily has no tort duty claim for economic loss against the original builder, absent exceptional circumstances or an assumption of responsibility. A party may discharge an assumed duty by appointing a competent independent consultant and adopting reasonable recommendations. Limitation estoppel requires a clear and unequivocal promise not to rely on limitation. Damages for a failed remedial scheme ordinarily comprise wasted remedial expenditure and consequential additional costs, not the cost of correcting the original defects.

The claimant, the freehold owner of residential properties, claimed the cost of remedying defective external render from the original contractor, a company that carried out a later remedial scheme, and a related company involved in 2002. The claims were advanced in contract, tort, limitation estoppel and loss of a chance.

The central issues were whether quality obligations could be implied into the leases, whether the defendants owed duties to prevent economic loss, when any causes of action accrued, whether limitation was defeated by estoppel, and what loss was legally recoverable.

1. Contractual implication. The original contractor’s lease covenants were specific and limited. The wider construction obligations were dealt with, or may have been dealt with, under a separate contract with the former freeholder and under NHBC arrangements. Clause 7.6 also excluded implied obligations in favour of the lessees. Applying Trollope & Colls v North West Metropolitan Regional Hospital Board [1973] 1 WLR 601, the alleged obligations were neither necessary for business efficacy nor terms that went without saying. They could not be implied in favour of the claimant.
2. Even if the alleged terms existed, there was no sufficient evidence of a warranty that Fletton bricks were fit for their particular purpose, and the evidence did not establish that the render defect made the properties unfit for human habitation. Any contractual claim would also have accrued when the first lease was completed and would have been statute-barred. The claimant could not recover remedial costs which, under the lease regime, were payable by the lessees.
3. Tort. Under D & F Estates v Church Commissioners [1989] AC 177 and Murphy v Brentwood District Council [1991] AC 398, the original contractor owed no duty to a subsequent owner to prevent economic loss arising from defective construction. The remedial contractor did not assume responsibility because it gave no assurance as to the efficacy of the works and relied on an apparently competent consultant.
4. If a duty had existed, it was discharged by appointing Mr Aspin and following recommendations that were reasonable on their face. There was no applicable special-risk exception to the independent-contractor principle.
5. Any claim arising from the 1995–1996 remedial scheme accrued when damage occurred and was statute-barred. By March 2000 the claimant had sufficient knowledge for section 14A of the Limitation Act 1980. No clear and unequivocal promise to waive limitation was made.
6. Loss caused by a failed remedial scheme would be its abortive cost and possibly increased costs, not the cost of a proper scheme addressing the original defects. No such loss was proved. The claims against all three remaining defendants were dismissed.