Ioannis Mallas v Persimmon Homes Limited & Anor

For defective building work, damages are generally assessed by the reasonable cost of repair or reinstatement. Demolition and rebuilding is an exceptional remedy. It is unlikely to be reasonable where a substantially cheaper and effective remediation scheme exists, or where demolition is sought merely because undiscovered defects or damage might exist. A claimant must prove the damage relied on, particularly where reasonable opening-up investigations were available. Concerns about incomplete construction information or possible latent defects do not justify a maximalist remedy without supporting evidence. Under section 1 of the Defective Premises Act 1977, an ongoing safety risk from inadequate construction may render a dwelling unfit for human habitation, even if the feared harm has not yet occurred.

The claimant purchased a newly built house from the defendant under a contract warranting construction in a good and workmanlike manner in accordance with planning permission, building regulations and the new-home warranty standard. The parties accepted that the foundations were inappropriate for the ground conditions and that the defendant was liable for breach of contract. The claimant also pursued a claim under section 1 of the Defective Premises Act 1977.

The principal dispute concerned the proper remedial scheme and the resulting damages. The claimant sought demolition and reconstruction of the superstructure, relying on possible latent damage, missing as-built information and alleged generally poor construction. The defendant proposed underpinning with a piled raft, retaining the superstructure. The court also considered the garage, footpath, retaining wall, project costs and consequential losses.

1. Liability. The defendant breached clause 1 of the contract by constructing the house on foundations inappropriate for the ground conditions. The porch was also unsafe because of inadequate foundations. That ongoing safety risk meant that the dwelling was not fit for human habitation under section 1 of the Defective Premises Act 1977, although the inadequate foundations beneath the house itself did not make the house unfit because the resulting movement did not create a safety risk or undue inconvenience or discomfort. The limitation issue was governed by section 4B of the Limitation Act 1980, as amended by section 135 of the Building Safety Act 2022.
2. Measure of damages. The court adopted the ordinary cost-of-repair or reinstatement approach. The cost of demolition and rebuilding would be recoverable only if that were a reasonable course of action. It would generally be unreasonable where another substantially cheaper and effective scheme was available. The claimant was also required to plead and prove each head of loss.
3. Proof of alleged damage. The claimant had not proved damage to the structural timber frame or other structural elements. Reasonable opening-up works could have established whether such damage existed, but had not been undertaken. The court would not assess damages on the basis of speculative damage or “known unknowns”. Similar concerns about missing as-built drawings, possible fire-safety defects and alleged poor construction did not justify demolition. Any established defects could be investigated and locally repaired.
4. Remediation. The defendant’s underpinning scheme, involving a piled raft and retention of the house superstructure, was the appropriate basis for damages. It was modified to include underpinning the detached garage, because the garage also required foundations protected from ground heave. Local repairs, rather than piled foundations or rebuilding, were appropriate for the footpath and dwarf retaining wall.
5. Quantum. The court allowed provisional estimated project costs of £385,543 including VAT, together with £27,700 for alternative accommodation and £10,000 aggravated damages, giving a provisional total of £423,243. A final damages order and costs directions were deferred for a further hearing.