Zennstrom & Anor v Fagot & Ors

Under section 1 of the Defective Premises Act 1972, the statutory duty applies where work for the provision of a dwelling is arranged in the course of a business consisting of, or including, providing or arranging dwellings. The business must exist when the work is arranged. A person need not previously have developed another dwelling before the duty can arise. Whether a person who rebuilds a home and later sells it acted in such a business is a matter of fact and degree. The court must focus on the person’s intention when the building work was arranged. A later decision to sell is insufficient. The claimants therefore had to prove an intention at that time to sell the rebuilt property as soon as reasonably possible and no more than minimal intended occupation as a home.

The claimants purchased 22 Crowsport from the second and third defendants after they had demolished and rebuilt the property. The property was later alleged to contain serious structural defects and was demolished.

The claimants brought proceedings under the Defective Premises Act 1972, alleging that the vendors had developed the property in the course of a business of providing dwellings. The trial concerned a preliminary issue: whether the second and third defendants owed the statutory duty. The central question was whether, when they arranged for the demolition and rebuilding, they intended to sell the property rather than occupy it as their home.

1. Preliminary issue decided for the second and third defendants. The claimants failed to establish that the vendors owed them a duty under section 1 of the Defective Premises Act 1972.
2. Section 1(4)(a) is prospective. The relevant business must exist when the person arranges for another to take on the work. In this case that point was no later than the date on which the builder agreed to undertake the work, in about August 2007.
3. It is unnecessary for a person to have previously developed a dwelling in the course of the business. A separate company could not be used for each development to avoid the Act. The judge agreed with the reasoning of Latham J in Mirza v Bhandal (unreported, 27 April 1999).
4. The statutory duty concerns the provision of a dwelling. Mere enlargement of an existing dwelling will not ordinarily provide a dwelling, whereas conversion of a single dwelling into flats may do so.
5. Whether an owner who demolishes a home and arranges for another house to be built on the site acts in the course of a business of providing dwellings is a matter of fact and degree. Occupation of the rebuilt property is relevant, although occupation alone does not necessarily exclude the statutory duty.
6. The claimants therefore had to prove that, when the contract for the demolition and rebuilding was made, the vendors intended to sell the property as soon as reasonably practicable after completion and did not intend to occupy it as their home for more than a minimal period.
7. The evidence did not satisfy that burden. The vendors’ previous property transactions, the design and special features of the house, their extensive photographs, the absence of an NHBC certificate, their financial position and their later purchase of a nearby property were consistent with their having built the property as their home. Their later decision to sell could not retrospectively establish that a relevant business existed when the work was arranged.