Gareth Owen Wilson & Ors v Laing O’Rourke Wales and West Limited & Anor

On an application under CPR Parts 3 and 24, pleaded facts are assumed to be true for strike-out purposes, but the court may determine a properly arguable point of law summarily. A claimant may recover losses naturally arising from defects, including diminution in value, loss of use and disturbance, but not profits from a different investment or losses based only on hypothetical opportunities. A claim for lost rent requires a factual case that the property could not be let, or could be let only at a reduced rent. Speculative, remote, unpleaded or inadequately particularised heads of loss may be struck out, while a properly pleaded and factually supported claim may remain amendable.

The claimants were leaseholders of flats in a Cardiff development alleged to contain fire-safety and other defects. The first and second claimants had bought the flats for cash and later transferred them as gifts to two children. They claimed damages for breach of leasehold covenants and under section 1 of the Defective Premises Act 1972.

The defendant applied to strike out, or summarily dismiss, several heads of loss in the first and second claimants’ schedule. The application concerned capital loss, investment loss, reinvestment loss, rental income loss, secured borrowing loss, indemnity, and taxation or inheritance-tax losses. Service charge loss and interest loss were not challenged. The third claimant’s separate claim was also addressed.

1. Applicable procedural tests. For CPR rule 3.4(2)(a), the court assumed the truth of the pleaded facts, but not unpleaded facts appearing elsewhere. If missing facts could be supplied by amendment, amendment might be more proportionate than strike-out. Under CPR rule 24.3, summary judgment required the claim to have no real, rather than fanciful, prospect of success and no other compelling reason for trial. The court would not conduct a mini-trial, but could reject a self-contradictory, inherently incredible or documentary-inconsistent case after critical examination of the available material. A legal issue suitable for determination on the evidence could be decided summarily.
2. Measure of damages. Contract damages aim to place the claimant in the position that performance would have produced. The same broad compensatory approach applied to the statutory duty under section 1 of the Defective Premises Act 1972. Recoverable losses could include diminution in value, loss of use and disturbance caused by defects or remedial works. They were not limited to the minimum cost of making a dwelling habitable.
3. Heads of loss. Capital losses based on alleged diminution at historic dates were struck out because the flats were not sold and the alleged losses were not sustained. Investment and reinvestment losses were unrecoverable because they duplicated the capital-loss claim and sought the profits of alternative investments not made. Rental loss was potentially recoverable, but the claimants had to plead and particularise an actual inability to let, or an actual reduction in rent caused by the defects. Secured borrowing loss was unpleaded, unsupported by factual averment, dependent on hindsight and too remote.
4. The proposed indemnity for possible repayment claims by tenants was struck out. The claimants had not pleaded facts showing a real risk, had not identified a clear legal basis, and could not rely merely on Coastal Housing Group Ltd v Mitchell. A properly formulated and quantified damages claim might require an amendment application. The taxation and inheritance-tax claim was unpleaded, too remote, insufficiently intelligible and concerned the consequences of personal tax planning.
5. The application succeeded. The challenged claims were struck out except for Service Charge Loss and Interest Loss. The third claimant’s claim was summarily dismissed.