Is there a maximum award for general damages arising under contract?

The case of Rendlesham Estates Plc v Barr Ltd [2014] EWHC 3968 (TCC) is a bit off the housing law beaten track and as a result I have only recently got round to reading it properly. It concerned s.1, Defective Premises Act 1974, which is the statutory provision that enables any person with an interest in a dwelling to sue the person responsible for building the dwelling, or carrying out any work in connection with the dwelling, where the dwelling is not fit for human habitation when the work is completed.

The main issue in Rendlesham was whether the common parts of an apartment block could be construed as part of a person’s dwelling. In answer to that question it was held that a dwelling for the purposes of s.1, in this particular case, were the individual apartments together, possibly, with their balcony. However, the work done to the structural and common parts was work done in connection with the provision of each of the apartments and so was caught by s.1. As a result, some of the apartment owners were able to sue the developers for damages for distress and inconvenience arising from damp and mould growth caused by the defects to the structure where it was found that the apartments were unfit for human habitation.

It is, however, interesting for another reason. When considering the level of damages to award the apartment owners for the damp and the mould Edwards-Stuart J said this:

“[304]… In the recent decision of the Court of Appeal in West v Ian Finlay & Associates [2014] BLR 324 , the court said that awards of this type should be modest and subject to a maximum of about £3,000 per annum (at current prices). That case involved the failure of damp proofing work and whilst the remedial work was carried out the claimants lived in a nearby rented house. The court considered that £2,000 per annum would have been an appropriate rate for Mrs. West and £1,500 per annum an appropriate rate for Mr. West. The stress and anxiety suffered by Mrs. West was described by the court as “undoubtedly significant”, but not at the top of the scale.”

It was at this point – 304 paragraphs into the judgment -that my interest was piqued. What did the court mean by “awards of this type”? Was this cap just to apply to s.1, DPA74 cases or more widely? In particular I was thinking about its application to disrepair claims under s.11, Landlord and Tenant Act 1985. Was there an important Court of Appeal authority that us housing lawyers had missed?

As a result I had a look at the West case. That was another case where the issue was defective workmanship in a dwelling that had resulted in a damp problem. The cause of action was contractual, however, rather than under s.1, DPA 1974. In West, the Court of Appeal relied on an earlier decision of the TCC (AXA Insurance UK Plc v Cunningham Lindsay UK [2007] EWHC 3023 (TCC)) as authority for the proposition that the maximum award of general damages for distress and inconvenience arising under a contract was £3,000. No other authority was cited.

I was also not familiar with AXA Insurance either so I read that as well. That case concerned a claim for damages arising from subsidence in a residential property. In assessing the level of damages for distress and inconvenience Aikenhead J was referred to three cases: Watts v Morrow [1991] 1 WLR 1421 (which was a disrepair claim), Ezekiel v McDade [1994] 43 Con LR 45  and Hoadley v Edwards [2001] PNLR 4 (which were both professional negligence claims against surveyors). The proposition that as a general rule only £3,000 per annum could be recovered was distilled from the awards made in those three cases rather than from a particular point of principle. Nor does it appear that Aikenhead J was referred to either Wallace v Manchester CC (1998) 30 HLR 1111, English Churches Housing Group v Shine [2004] HLR 42 or Earle v Charalambous [2007] HLR 8. In all of those three cases  the Court of Appeal had no difficulty with a tenant being awarded general damages that exceeded £3,000 per annum.

Accordingly, while West is a decision of the Court of Appeal and purports to apply to the award of general damages in any contractual claim, I don’t think lawyers acting for tenants in disrepair claims need to be overly worried. It is very hard to reconcile with the three Court of Appeal disrepair cases and shouldn’t be difficult to distinguish in the event it is a case that landlords seek to rely on. It is a case, however, to be aware of in the event that it starts cropping up in settlement negotiations.

 

 

About S

S is a barrister, based in London, who practices predominantly in housing and local government law.
Posted in Disrepair, Housing law - All.

3 Comments

  1. Oh damn, S, you had to find this. That TCC line of cases has been a ticking time bomb, which I have been very quiet about. They are, I think, quite simply wrongly decided and arguably per incuriam. Now, I guess, we are going to have that fight sooner rather than later!

  2. Pingback: Is there a maximum award for general damages arising under contract? – NearlyLegal | Current Awareness

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