Strange & Ors v Westbury Homes (Holdings) Ltd & Anor

Where contractual building works are defective, the reasonable cost of remedial work may include the cost of a comprehensive single-contractor package. A claimant need not accept a piecemeal arrangement requiring it to coordinate contractors and excluded work, particularly where the proposed arrangement is not offered as a complete remedy.

Damages may also be awarded for a residual diminution in the value of property after satisfactory remedial work. This head of loss is available for residential as well as commercial property, but requires cogent evidence that a diminution will remain. The assessment is made at trial or on completion of the works; it does not depend on a present intention to sell.

Westbury contracted to sell three newly built houses and to complete their construction in a thorough and workmanlike manner. It admitted that the brickwork was damaged and poorly executed. The claimants sought the cost of agreed remedial works, residual diminution in value after those works, and damages for inconvenience and distress.

HHJ Cockcroft accepted quotations from Milton Construction Ltd for the remedial works and awarded £5,000 for residual diminution in value in respect of each property. Westbury appealed against the remedial-cost and diminution awards. The central issues were whether the Milton quotations represented the reasonable cost of repair and whether a modest residual diminution was recoverable despite the intended repairs and no immediate plan to sell.

1. The appeal was dismissed unanimously. Dyson LJ gave the principal judgment, with which Wall LJ and Sir Anthony May agreed.
2. The judge had been entitled to treat the Milton quotations as the reasonable cost of the agreed remedial works. The decisive consideration was that Milton offered a comprehensive package with responsibility for the whole scheme. Gunpoint’s rates excluded important work and would have required the claimants to arrange supplies, ancillary work and project management. Westbury had not offered an equivalent complete package. In those circumstances, it was reasonable for the claimants to prefer a single contractor, particularly given the unsuccessful earlier repair attempts.
3. The judge’s references to the claimants’ confidence in Milton and to possible disputes over responsibility were relevant to that assessment. The Court of Appeal rejected the complaint that the judge had wrongly reversed the burden of proof or relied materially on an unsupported suspicion about Gunpoint.
4. A residual diminution in value following satisfactory remedial work is, in principle, a recoverable head of loss if established by the evidence. The Court accepted the approach illustrated by George Fischer Holding Ltd v Multi Design Consultants Ltd [1994] ORB 775. There is no principled distinction between commercial and residential property. Nor does the absence of a present intention to sell prevent assessment at trial or when the remedial works are completed.
5. The evidence justified a modest award. The judge had explained that disclosure of the defect and litigation history, coupled with a remote risk of recurrence, could depress the price. His assessment of £5,000 per property was permissible and was not an impermissible guess. The Court stressed that such an award requires cogent evidence and will depend on the facts of the individual case.

• Court of Appeal (Civil Division): Appeal dismissed: [2009] EWCA Civ 1247.
• Queen’s Bench Division, Leeds District Registry: HHJ Cockcroft awarded the claimants the cost of remedial works based on the Milton quotations and £5,000 per property for residual diminution in value.