Gareth Owen Wilson & Anor v HB (SWA) Limited

In defective-construction litigation, a claimant may recover diminution in value, usually measured by reasonable remedial cost, and may also recover residual diminution (blight) after agreed works, actual rental loss, and other proved, non-remote consequential loss. A schedule of loss cannot introduce a head of damage absent from the statement of case. Each claim must identify an actual loss, state its causal basis, and provide sufficient particulars and quantification. Hypothetical returns on alternative investments, unpleaded financing opportunities, and tax-planning consequences are not recoverable merely because defects affected marketability. Where a pleading is materially deficient and no realistic cure is shown, the court may strike it out.

The appellants were two of 41 leaseholders claiming damages from the respondent developer’s successor for defective construction. Their claims relied on contract and section 1 of the Defective Premises Act 1972. A management company had agreed a works licence with the respondent, so no claim remained for the cost of remedial works.

The High Court struck out seven heads of loss in the appellants’ Schedule of Loss: capital loss, investment loss, re-investment loss, rental income loss, secured borrowing loss, indemnity, and taxation or inheritance-tax loss: [2025] EWHC 1315 (TCC). The appellants argued that sale was unnecessary for diminution in value and that several claims should have been permitted to proceed by amendment. The central issues were whether the claims were pleaded, legally recoverable, sufficiently particularised, and whether the case-management decision should be disturbed.

The Court of Appeal unanimously dismissed the appeal.

1. Applicable approach. The court endorsed the judge’s summary of strike-out and summary-judgment principles under the Civil Procedure Rules 1998. The court focuses on the pleaded case, asks whether the claim has a real rather than fanciful prospect of success, avoids a mini-trial, but may critically examine the available material and determine a suitable point of law. Amendment is discretionary. Where no proposed amendment is supplied, and there is no reason to believe the defect can be cured, the court may strike out: Kim v Park [2011] EWHC 1781 (QB).
2. Construction damages. The ordinary measure for defective work is diminution in value, usually assessed by the reasonable cost of reinstatement. Traditional diminution remains possible where repair is uneconomic or disproportionate. In these circumstances, damages for breach of contract and section 1 of the Defective Premises Act 1972 were unlikely to differ materially.
3. Capital loss. Sale is not generally required before a diminution-in-value claim accrues. However, the pleaded claim concerned historical defect-discovery dates, not residual blight. Since the flats were retained and comprehensive remedial works would be carried out at no cost, those dates did not establish the alleged loss. The gifting-based case advanced orally was novel, unpleaded, and raised unresolved assessment and double-recovery issues.
4. Other heads. Alternative-investment and re-investment returns were hypothetical and not distinct losses. Rental loss was recoverable in principle, but required particulars of actual rent, the rent that could have been obtained, and the difference. The judge’s decision to strike out and await a proper substitute pleading was an open case-management decision. The secured-borrowing claim was unpleaded, unsupported by facts showing an attempted or intended borrowing, dependent on hindsight, and too remote. The indemnity claim was abandoned following Beacon Cymru Group Ltd v Mitchell [2025] EWHC 2477 (Ch). The taxation or inheritance-tax claim was fundamentally unpleaded and unquantified; remoteness and foreseeability were left undecided.

Popplewell and Phillips LJJ agreed with Coulson LJ’s reasons.

• Court of Appeal (Civil Division): The appeal was dismissed unanimously. Coulson LJ gave the reasons, with Popplewell and Phillips LJJ agreeing: [2025] EWCA Civ 1360.
• High Court of Justice, TCC: His Honour Judge Keyser KC struck out seven disputed heads of loss in the appellants’ Schedule of Loss: [2025] EWHC 1315 (TCC).