NATIONAL HOUSE-BUILDING COUNCIL v VASCROFT CONTRACTORS LIMITED

Strike-out and summary judgment are exceptional remedies. The court must assume pleaded facts are true for strike-out purposes and must be certain that the case is bound to fail. A developing area of law should ordinarily be resolved after findings of fact. A defence remains arguable where documentary and witness evidence could establish an estoppel, invalidate or qualify the apparent effect of registration, show defective notification or denial of access, or affect the reasonableness of an insurer’s settlement.

A defective pleading should generally be amended where the defect can be cured without injustice. An insurer seeking indemnity for a settlement need not necessarily establish direct liability to the recipient, but the reasonableness of the settlement may remain a triable issue.

NHBC sought indemnity from Vascroft under the Buildmark Cover scheme for sums paid in settlement of defects alleged in basement extension works. Vascroft defended the claim on grounds including estoppel arising from NHBC’s design appraisal, invalidity of the apparent transfer of the property and the resulting cover date, lack of notification within the Section 2 cover period, denial of access to carry out remedial works, and the unreasonableness of the settlement.

NHBC applied under CPR 3.4(2)(a) and CPR 24.1 to strike out parts of the defence or obtain summary judgment. The central questions were whether the pleaded defences had a real prospect of success and whether any pleading deficiencies justified striking out rather than amendment.

1. Applicable standards. The court applied the principles governing strike-out and summary judgment. A pleading may be struck out where it discloses no legally recognisable defence, but pleaded facts are assumed to be true. The court must be certain that the case is bound to fail. Summary judgment requires a realistic, more than fanciful, prospect of success, assessed in light of evidence reasonably available at trial. Short points of law may be decided where the evidence is sufficient.
2. Estoppel. Vascroft’s case that NHBC’s appraisal and approval of the basement design created an estoppel by representation was inadequately pleaded, but arguable. The letter and subsequent documents could support a representation extending beyond building-control inspection to approval of designs for Buildmark purposes. The separation between NHBC and NHBC Building Control Services Limited was not conclusive at this stage. Reliance and detriment required assessment against the full factual matrix. Vascroft was therefore permitted to amend its defence.
3. Cover and ownership. The Buildmark Cover started on 12 June 2014, when NHBC agreed after final inspection that the property substantially complied with its requirements. The identity of the owner did not depend on a valid completed sale because the definition included a prospective owner and the completed acceptance form identified Ethiel. The pleaded alternative start date had no real prospect of success.
4. However, registration of Ethiel as proprietor was not necessarily conclusive. The evidence that Saterix had been dissolved raised an arguable issue under sections 58(1) and 58(2) of the Land Registration Act 2002, including whether a registration requirement remained outstanding.
5. Other issues. The alleged absence of valid defect notification, denial of access for remedial works, and the reasonableness of NHBC’s settlement were supported by evidence or arguable factual issues and had to be determined at trial. The possible absence of liability to the settlement recipient or an allowance for a reduced sale price could bear on reasonableness.
6. Parts of the defence concerning the incorrect Section 2 start date and release from obligations were struck out. The estoppel pleading could be amended, and the remaining identified defences were retained.