Hunt & Ors v Optima (Cambridge) Ltd & Ors

A contractual obligation to complete a development so that individual premises are fit for occupation and the building complies with regulatory requirements may create separate breaches at different times. A landlord’s covenant to maintain, repair, renew and amend the main structure may extend to correcting design, workmanship and material defects, including renewal or variation where necessary.

A professional consultant issuing a certificate for purchasers owes a duty of care both in carrying out the inspections and in preparing the certificate. Such a certificate may also constitute an enforceable warranty where the parties’ intention and consideration are established. Damages based on reinstatement must reflect a reasonable and proportionate remedial solution.

The claim concerned serious defects in a block of flats developed by Optima. The purchasers claimed against Optima for breach of sale agreements and lease covenants, and against Strutt & Parker and its architect, Mr Egford, arising from professional certificates issued for the flats.

The principal issues included the scope and accrual of Optima’s contractual obligations, the legal effect of the certificates, limitation, liability for defects, and the reasonable measure of remedial damages. The claim also raised whether damages could fund works to common parts and whether specific performance was appropriate.

1. Optima’s contractual obligations. Clause 3.1 imposed a composite obligation containing two effective stages: completion of the individual premises so that they were fit for occupation, and completion of the building so that it complied with planning permissions and the Building Regulations. Separate causes of action could therefore arise when the flat was handed over and when the building as a whole was completed.
2. The lease covenant to maintain, repair, renew and amend the main structure was wider than a conventional obligation merely to remedy physical damage. In context it required Optima to correct relevant design, workmanship and material deficiencies, including renewal or variation where repair was inadequate.
3. Strutt & Parker. Applying the principles of Hedley Byrne & Co Ltd v Heller & Co Ltd [1964] AC 465, Strutt & Parker owed each claimant a duty of care in carrying out the inspections necessary to support the certificates and in issuing the certificates themselves. Mr Egford was not personally liable because he acted as an employee and had not assumed personal responsibility.
4. The certificates were enforceable contractual warranties for the first six claimants. The purchasers’ payment for their flats supplied consideration, although it moved to Optima rather than Strutt & Parker. No enforceable warranty arose for Mr and Mrs Peace, who bought subsequently without an assignment or other consideration, but they had a tortious claim based on reliance on the certificate.
5. Claims based on the warranties ran for six years from the certificate dates. Negligent misstatement claims accrued when the property was acquired, or when the certificate was issued if later. Ms Wyatt’s claims against Strutt & Parker were partly saved by section 14A of the Limitation Act 1980, because she lacked the necessary knowledge of concealed defects until within three years of issuing proceedings.
6. Building control approval did not prevent Optima from being contractually in breach where the works failed to comply with the Building Regulations.
7. Reinstatement was the appropriate general basis for damages, but the remedial scheme had to be reasonable and objectively fair. The court rejected the most extensive acoustic scheme as disproportionate and awarded allowances for materially less disruptive works. Specific performance was refused because of Optima’s unreliability, delay, uncertainty over the works and difficulty of supervision. Damages for common-part works were instead to be paid into a trust arrangement to fund the remedial works.
8. Judgment was entered for the claimants against Optima and Strutt & Parker in the amounts specified at paragraph 266. The claims against Mr Egford and Strutt & Parker LLP failed.

First-instance decision. The judgment does not state any subsequent appellate history.