Citation: Harrison and Others v (1) Shepherd Homes Ltd (2) National House Building Council (3) NHBC Building Control Services Ltd  EWHC 1811 (TCC)
Keywords: Claims under contracts of sale, remedial works, defective foundations in new build properties, implied terms, Unfair Contract Terms Act 1977, Defective Premises Act 1972, fitness for habitation, quantum.
Properties were constructed between 2002 and 2004 at a housing estate, which was formally a landfill site. The properties built on the estate were subject to contracts of sale. A buildmark warranty scheme was provided for Shepherd Homes Ltd (SHL), which was operated by NHBC and any works carried out were supervised by NHBC Building Control Services Ltd (NBCS).
In 2003, a number of defects became visible at the properties. At one such property, one Claimant observed cracking in the walls and gave oral notification to SHL. Following this notification, more defects were discovered at other properties. Expert civil and structural engineers were brought in to discover the root cause of the defects and found issues with the piling. In 2007, judgment went against the piling contractor for not observing due care and skill in the construction of the piling. In 2008, the Claimants commenced proceedings in relation to five properties. Most claims were under the contracts of sale and Section 1 of the Defective Premises Act 1972.
Additionally, claims were also brought under the buildmark cover. The duty under the Act put forward by the Claimants was that it contained three aspects, namely (1) work was done in a workmanlike/professional manner, (2) with proper materials, and (3) that each dwelling was fit for habitation. Conversely, SHL argued that the Act only gave rise to a single duty to obviate breach of the first two aspects unless breach was found for the third aspect. The Claimants also argued that the sales contract had been breached in respect of Clause 7.1 (“…made ready for occupation…”) as well as corresponding implied terms.
Held (Ramsey J)
The provision regarding fitness for habitation under Section 1 of the Defective Premises Act 1972 was a measure of the standard required in performance of the relevant duty. This section of the Act only gives rise to a single duty, therefore no breach had occurred.
Under the buildmark cover notice had to be given and it was not necessary that such notice be written. Correspondence by SHL’s solicitors subsequent to notice being provided by the Claimants effected a waiver by election by the time that SHL used the notice points as a defence due to their unequivocal knowledge of the notice provisions under the contract. It was therefore irrelevant if oral notice had not been sufficient or if written notices had not been sufficient constructive notice. Additionally, the piles had not been constructed in accordance with design assumptions and SHL could not rely on a failure by the Claimants to give notice.
It was clear on the facts that there had been breaches of the sales contracts and SHL would be liable to all Claimants, with the exception of two subsequent purchaser claimants under the contracts of sale. SHL would also be liable under the buildmark cover and the 1972 Act.
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