Civil procedure – Striking out claim – Damages – Claimant management companies seeking damages for loss arising from defects in blocks of flats – Defendant developer applying to strike out claim/for summary judgment – Whether defendant in breach of covenants in leases as landlord – Whether defendant in breach of duty under Defective Premises Act 1972 – Whether defendant owing common law duty of care – Application granted
Manchester City Council was the freehold owner of land on which the Sportcity Living complex was built consisting of 350 apartments in a number of blocks. The claimants were the management companies of the blocks. The defendant was the property developer which built the complex. The land was demised by three leases each of 250 years to AMEC, which sub-demised the individual apartments by a series of underleases to which the defendant and the relevant management company were parties, in addition to the proposed sublessees of the apartment in question. In October 2008, AMEC assigned each of the headleases to the relevant management company and the claimants acquired the rights of AMEC in relation to the blocks of apartments.
In 2013, the claimants’ agent discovered problems with the cladding on the blocks of apartments. The defendant attended the complex in 2014 and 2017 and undertook some works. The claimants issued proceedings alleging life-threatening defects in the design and/or construction of the cavity barriers and fire-stopping measures in the properties. They asserted three separate causes of action: breach of covenant under the leases; under the Defective Premises Act 1972; and for breach of a duty of care in tort owed to the claimants.
The defendant applied to strike out the claim pursuant to CPR part 3.4(2)(a) as disclosing no reasonable grounds; alternatively, for summary judgment under CPR part 24. The defendant accepted that it carried out the development and owed a duty in respect thereof under the 1972 Act. It denied any breach of duty and said that any claim became statute-barred before the commencement of proceedings. The defendant denied that it was the landlord for the purpose of the leases or that any actions as an agent of the landlord gave rise to an obligation to the claimants. Finally, the defendant denied that it owed the alleged common law duty of care and any breach of such a duty, and said that the losses alleged were pure economic loss with the consequence that any duty which the defendant did have did not extend to such losses.
Held: The application was granted.
(1) The fact that the leases gave the defendant rights which would typically be exercised by a landlord did not, without more, mean that the defendant was to be seen as being the landlord in circumstances where the leases defined the parties and identified the landlord. The relevant covenants were expressed as being made by the “landlord”, which was a defined term under the leases. The defendant was a separate and differently defined term. It was a party to the leases but not to those covenants.
There was no tenable approach to construction of the leases which could result in the conclusion that those covenants were made by the defendant. The provisions had to be seen in the context of the leases and, when read as a whole, the terms of the leases made it abundantly clear that they were being granted by AMEC and not by the defendant. There was no realistic prospect that further material as to the rights and obligations of the defendant and AMEC between themselves would affect the proper interpretation of the leases or the conclusion as to the presence or absence of obligations owed by the defendant to the claimants under them.
(2) The approach of the Court of Appeal in Alderson v Beetham Organisation Ltd [2003] EWCA Civ 408; [2003] 1 WLR 1686 made it clear that where further work was done there was a fresh cause of action in respect of that work in respect of which time ran from when the work was done but that neither the performance of further work nor a failure to perform such work operated to revive an existing but statute-barred cause of action; the court proceeded on the footing that the effect of section 1(5) of the 1972 Act was that the potential consequence of further remedial works was to give rise to a new cause of action with time running from the date of those further works or omission rather than to restart the limitation clock in respect of the original works.
The limitation provisions provided by section 1(5) arose at distinct stages, in relation to specific causes of action. The person subject to the obligations created by section 1(1) of the Act was required to see that the work for which he was responsible was done in a workmanlike or professional manner, with proper materials, so that when completed the dwelling was fit for habitation. If thereafter he carried out additional work to rectify the work already done, although section 1(5) did not say so expressly, the statutory obligation relating to the standard and quality of workmanship and materials applied equally to the remedial work as it did to the original work.
Hence there were two separate causes of action, the first relating to the quality of the original building work and the second to the quality of the remedial work. For the purposes of the first cause of action, time started to run when the dwelling was completed and, for the second, when the remedial work was finished. The same conclusion followed from the words of section 1(5), the natural reading of which was that it was the cause of action in respect of the further works which accrued on the completion of those works. There might be claims in respect of the defendant’s acts or omissions in 2014 and 2017 but those were separate causes of action.
(3) In the common law tort claim, the claimants sought damages for the alleged breach of duty. The authorities compelled the court to conclude both that the losses were pure economic loss and that they were irrecoverable. It followed that that element of the claim failed to disclose reasonable grounds of claim: Murphy v Brentwood [1991] 1 AC 398 followed.
(4) It followed that the defendant was entitled to summary judgment in respect of the claims under the leases and the 1972 Act and the common law tort claim fell to be struck out.
Andrew Singer QC (instructed by Linder Myers Solicitors) appeared for the claimants; Toby Watkin (instructed by Mills & Reeve LLP) appeared for the defendant.
Eileen O’Grady, barrister
