Gareth Owen Wilson & Ors v Laing O’Rourke Wales and West Limited & Anor [2025] EWHC 1315 (TCC)

[2025] EWHC 1315 (TCC)Case No HT-2019-CDF-000012IN THE HIGH COURT OF JUSTICEBUSINESS AND PROPERTY COURTS IN WALESTECHNOLOGY AND CONSTRUCTION COURT (KBD)Venue Cardiff Civil Justice Centre, 2 Park Street, Cardiff, CF10 1ETDate 30 May 2025
Before
HIS HONOUR JUDGE KEYSER KCsitting as a Judge of the High Court
Between
(1) GARETH OWEN WILSONClaimants(2) SHEILA MARGARET WILSONClaimant(3) SHEILGAR INVESTMENTS LIMITEDClaimant(4) – (42) THE FURTHER CLAIMANTS LISTEDClaimantON THE CLAIM FORMClaimant
Andrew Singer KC and Jonathan Ward (instructed by Howard Kennedy LLP) for DefendantThe First Claimant (acting in person) for himself and the Second and Third ClaimantsDavid Sawtell (instructed by Walker Morris LLP) for all other ClaimantsJessica Stephens KC (instructed by RPC LLP) for Part 20 DefendantsHearing Hearing date: 8 May 2025
Approved JudgmentThis judgment was handed down remotely at 10.30am on 30 May 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives..............................HIS HONOUR JUDGE KEYSER KC
[1]By an application notice dated 12 March 2025 the defendant (“Redrow”) has applied to strike out the claims for losses at paragraph 51 of the Schedule of Loss of the first, second and third claimants pursuant to CPR Part 3 or, alternatively, for the summary dismissal of those claims pursuant to CPR Part 24.[2]The substantive litigation concerns alleged fire-safety and other defects at the Celestia development in Cardiff (“the Development”), which was constructed in around 2004 to 2007. Redrow was the developer, and it engaged the first Part 20 defendant as the design-and-build contractor. The first to forty-first claimants sue as past or present leaseholders of flats at the Development and claim damages for breaches of their leases and under section 1 of the Defective Premises Act 1972 (“the 1972 Act”). The forty-second claimant (“CMCL”) is the management company of the Development. Very recently, Redrow and CMCL have agreed a works licence that will permit Redrow to carry out a comprehensive programme of remedial works in relation to the fire-safety issues.[3]The first and second claimants, Mr and Mrs Wilson (“the Wilsons”), were the leaseholders of two flats at the Development, having taken an assignment of the lease of one flat in 2012 and of the lease in another flat a little later. They paid the purchase price of each flat outright, without the need for mortgage finance. They say that in 2019 they had intended to transfer one of the flats to the third claimant, a company which they own and control, but that the discovery of additional fire-safety defects caused them not to do so. (It is now common ground that the third claimant has no claim of its own and should be removed from the proceedings.) In November 2024 the Wilsons transferred one flat to one of their three children and the other flat to another of their children, in each case as a gift. Thus they no longer own flats at the Development.[4]At the case management conference on 3 September 2024 I gave directions for, among other things, the service of schedules and counter-schedules of loss. At that stage, all the claimants were represented by Walker Morris LLP, on whose instruction they were represented by Mr David Sawtell. By the time of service of the claimants’ schedules of loss, however, the first, second and third claimants were representing themselves, as they are now. (The first claimant is a solicitor, though he does not have a current practising certificate.) The present application directly concerns only the defendant and the first, second and third claimants. Mr Sawtell, who continues to represent the other claimants, appeared at the hearing of the application principally to protect their interests. Neither he nor Ms Jessica Stephens KC, who appeared on behalf of the Part 20 defendants, made oral submissions at the hearing. Redrow has continued to be represented by Mr Andrew Singer KC and Mr Jonathan Ward. Strike-out and Summary Judgment: the Law Strike-out: Part 3

Strike-out and Summary Judgment: the Law

[5]CPR rule 3.4 provides in part:
“(2) The court may strike out a statement of case if it appears to the court— (a) that the statement of case discloses no reasonable grounds for bringing … the claim; … (c) that there has been a failure to comply with a rule, practice direction or court order.” (a) that the statement of case discloses no reasonable grounds for bringing … the claim; … (c) that there has been a failure to comply with a rule, practice direction or court order.”
[6]CPR Part 3 is supplemented by Practice Direction 3A, which provides in part: “1.2 The following are examples of cases where the court may conclude that particulars of claim (whether contained in a claim form or filed separately) fall within rule 3.4(2)(a):(1) those which set out no facts indicating what the claim is about, for example ‘Money owed £5000’,(2) those which are incoherent and make no sense,(3) those which contain a coherent set of facts but those facts, even if true, do not disclose any legally recognisable claim against the defendant. … 1.5 A party may believe they can show without a trial that an opponent’s case has no real prospect of success on the facts, or that the case is bound to succeed or fail, as the case may be, because of a point of law (including the interpretation of a document). In such a case the party concerned may make an application under rule 3.4 or apply for summary judgment under Part 24 (or both) as they think appropriate.” (1) those which set out no facts indicating what the claim is about, for example ‘Money owed £5000’, (2) those which are incoherent and make no sense, (3) those which contain a coherent set of facts but those facts, even if true, do not disclose any legally recognisable claim against the defendant.[7]It is common ground that, when considering an application advanced on the basis of r. 3.4(2)(a), the court ought to assume that the facts relied on by the claimant are true. But those, of course, are the pleaded facts; note para 1.2 of the Practice Direction, as well as the words of the rule itself. If the court thinks that the failure of the statement of case to set out necessary facts can be remedied by amendment, and that to permit an amendment is a more proportionate response than an order for strike-out, it has a discretion to take the former course.

Summary judgment: Part 24

[8]CPR rule 24.3 provides, so far as relevant to this application:
“The court may give summary judgment against a claimant … on the whole of a claim or on an issue if – (a) it considers that the party has no real prospect of succeeding on the claim … or issue; and (b) there is no other compelling reason why the case or issue should be disposed of at a trial.” (a) it considers that the party has no real prospect of succeeding on the claim … or issue; and (b) there is no other compelling reason why the case or issue should be disposed of at a trial.”
[9]Many cases have explained the correct approach to applications for summary judgment. The classic summary of the principles is that of Lewison J in EasyAir Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15], approved by the Court of Appeal in Global Asset Capital Inc v Aabar Block SARL [2017] EWCA Civ 37, [2017] 4 WLR 163. Other significant summaries or discussions of the relevant principles include: ED&F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472 at [8]–[10] (Potter LJ);; Elite Property Holdings Ltd v Barclays Bank Plc [2019] EWCA Civ 204 at [41]-[42] (Asplin LJ, dealing with the similar test for permitting amendment of a statement of case); Skatteforvaltningen v Solo Capital Partners LLP [2020] EWHC 1624 (Comm) at [3]-[4] (Andrew Baker J); Foglia v The Family Officer Ltd [2021] EWHC 650 (Comm) at [11]-[18] (Cockerill J); Lex Foundation v Citibank NA [2022] EWHC 1649 (Comm) at [33]-[39].[10]I have regard to what was said in these cases but do not need to set out the relevant dicta here. The following summary will suffice. Summary judgment will be given against a claimant on a claim or issue only if the court is satisfied that the claim or issue has no real, as opposed to fanciful, prospect of success; a claim or issue that is merely arguable but carries no degree of conviction will not have a real prospect of success. The court will not conduct a mini-trial and, where necessary, will bear in mind that full disclosure has not yet taken place and that there might be more evidence to come. Accordingly, where there are disputed questions of fact, it will not generally attempt to determine where the probabilities lie. However, the court ought to carry out a critical examination of the available material and is not bound to accept the mere say-so of anybody; where it is clear that a factual case is self-contradictory or inherently incredible or where it is contradicted by the contemporaneous documents, the court, after careful consideration of the evidence that is currently before it and having regard to the nature of such further evidence as might reasonably be expected to be available at trial, is entitled to reject that case even on a summary basis. The court will not be dissuaded from giving judgment by mere Micawberism—the unsubstantiated hope that “something might turn up”. Importantly, where the claim turns on a point of law that can properly be determined on the available evidence, the court is entitled to go ahead and determine it. The complexity of litigation is not itself a reason for refusing summary judgment: the circumstances may be such that determination of the case is impossible without a trial; on the other hand, it might be possible to analyse the case sufficiently at an early stage and thereby avoid the unnecessary time and expense of the continuation of litigation until trial. In all cases, r. 24.2(b) falls to be considered in principle.

Damages: the Law

[11]The Wilsons rely on two causes of action: breach of leasehold covenants; and breach of the duty under section 1 of the 1972 Act.[12]Damages for breach of contract are designed to place the wronged party in the position he would have been in if the contract had been performed according to its terms. The proper measure is “such as may fairly and reasonably be considered arising naturally, i.e. according to the usual course of things” from the breach or “such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it”: Hadley v Baxendale (1854) 9 Exch 341; see also Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528; and Koufos v C Czarnikow Ltd, The Heron II [1969] 1 AC 350; and URS Corporation Ltd v BDW Trading Ltd [2025] UKSC 21, at [33]. (For present purposes, it is unnecessary to delve further into refinements of the formulation or to enter into a discussion of any complications introduced by the decision of the House of Lords in The Achilleas [2008] UKHL 48, [2009] 1 AC 61.)[13]Damages for breach of the duty under section 1 of the 1972 Act were considered by Ramsey J in Harrison v Shepherd Homes Ltd [2011] EWHC 1811 (TCC), where in the context of the facts of that case he said this:
“208. As the Claimants state, those Claimants with contractual claims are entitled to damages for breach of contract and the starting point is set out in the well known passage in the judgment of Parke B in Robinson v Harman 1 Exch 850 at 855: ‘that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same position, with respect to damages, as if the contract had been performed.’ 209. The Claimants submit that the same rule applies to breach of the 1972 Act so that the Claimants are to be put in the position they would have been in if the breach had not occurred, that is, if the duty under section 1(1) of the 1972 Act had been fulfilled. They refer to the decision of the Court of Appeal in Bayoumi v Protim (1998) 30 HLR 785 at 791 where it was stated that the damages recoverable under the 1972 Act will include damages which are the natural consequence of the breach and to the decision in Bella Casa Ltd v Paxton [2005] EWHC 2807 where the court confirmed at [28] to [30] that general damages for loss of use are recoverable under the 1972 Act. They also refer to Keating onConstruction Contracts (8th edition 2006) where it states at paragraph 15-007 that all reasonably foreseeable losses that are the natural consequence of the breach are recoverable, which may include economic loss as well as consequential economic loss. Accordingly, the Claimants say that they are entitled to claim all the sums set out in their primary or secondary cases either as damages for breach of the sales contract, for breach of Section 2 of the Buildmark Cover or for breach of the 1972 Act. 210. The Claimants did seek to argue that because the obligation under Section 2 of the Buildmark Cover was ‘to put right any Defect or Damage” this altered the approach because it led to damages for remedying the defect, not for instance diminution in value. I do not consider that there is any difference between damages for breach of an obligation to carry out work properly in the first place or to remedy defects when it comes to the approach. Neither obligation, in my judgment, leads to a limit on the proper approach at law to assessing damages for defective buildings. 211. By the end of the hearing SHL [the defendant] accepted that the approach to quantum does not differ dependent on whether there is liability for breach of the sales contracts, Section 2 of the Buildmark Cover or section 1 of the Defective Premises Act 1972. 212. I therefore proceed on the basis, which I consider to be the correct basis, that there is no distinction to be drawn for present purposes between the approach to damages for the three heads of liability under the sales contracts, Buildmark Cover or the 1972 Act.”
[14]A similar approach was taken by Jefford J in Vainker v Marbank Construction Ltd [2024] EWHC 667 (TCC), where she said:
“339. Mr Fowler’s further submission on this issue is that the design intent or appearance of the balustrades is not a proper consideration if the only claim that can now be brought against SCd [the third defendant] is one under the DPA [the 1972 Act]. SCd’s contention is that the claimants can only be entitled to the cost of remedial works necessary to make the House fit for habitation, that is to comply with the Building Regulations. No authority was cited for this proposition and the DPA itself says nothing about recoverable damages. In my judgment, the proposition is wrong. Although the duty under section 1 is construed as a duty to achieve the outcome that the dwelling is fit for habitation, there is a constituent element of the duty which is to see that the work that is undertaken is done in a professional manner. Where the defendant has failed to see that the work is done in a professional manner and the result is that the dwelling is not fit for habitation, there is nothing in the statute to limit the damages recoverable in respect of the failure to see that the work is done in a professional manner to the minimum necessary to put the dwelling into a habitable condition. The damages should more naturally reflect the failure to see that the work was done in a professional manner. In this case, that failure resulted in the installation of toughened rather than toughened and laminated glass – and if the latter had been installed the House would have been fit for habitation. The recoverable damages should, therefore, be the cost of making the dwelling fit for habitation in the way it would have been had the services been supplied in a professional manner.”
[15]Keating on Construction Contracts (12th edition) summarises the law as follows at 15-017 (footnotes omitted):
“This [i.e. measure of damages] is not dealt with by the Act. However, it has been held that the damages are not limited to the ‘minimum necessary’ to make the dwelling fit for habitation, but may extend to the cost of ‘making the dwelling fit for habitation in the way it would have been had the services been supplied in a professional manner’. General damages for loss of use consequent upon a breach under the Act have been awarded. Thus, it is submitted that all reasonably foreseeable losses that are the natural consequence of the breach are recoverable, which may include economic loss, as it is now understood, as well as consequential economic loss. However, general damages for loss of use of capital whilst the property is uninhabitable are not, it would seem, recoverable.”
[16]Since the hearing of the present application, the Supreme Court has handed down its judgment in URS Corporation Ltd v BDW Trading Ltd. In his skeleton argument, Mr Wilson said:
“The formulation of the Wilsons’ schedule of loss is based on the analysis of the law in [the Court of Appeal’s] judgment and the arguments in the hearing in the Supreme Court. It would be preferable for a decision to be made on these claims after the Supreme Court delivers judgment.”
In fact, no party has asked to make further submissions in the light of the decision handed down on 21 May 2025. Having considered the judgments of the Justices, I do not think that they materially affect the law relevant to this application.

The Claimed Loss

[17]Paragraph 25 of the re-re-re-amended particulars of claim (for convenience, “the POC”), filed on behalf of all the claimants and drafted by Mr Sawtell, sets out the heads of loss alleged on the part of the leaseholder claimants. Paragraph 25.1B alleges loss in respect of the obligation under the leases to contribute by way of service charges to the costs incurred by CMCL in consequence of the defects at the Development. Paragraph 25.2 provides:
“Further, the Claimants have suffered (the quantum of which will be confirmed by the service in due course of a schedule of loss in respect of each Claimant): 25.2.1 Diminution in the value of the Flats and will suffer such diminution notwithstanding the remedy of the defective works; 25.2.2 Loss of rental income; 25.2.3 Damage to their health by reason of the development of mould and damp within the Flats; 25.2.4 Inconvenience and distress. 25.2.5 Decanting costs (including the costs of alternative accommodation and storage) if the Claimants have to be decanted from the buildings during the remedial works.”
[18]Redrow accepts that the schedules of loss served on behalf of the leaseholder claimants represented by Walker Morris LLP are largely consistent with the case advanced in the POC and it has not applied for any relief in respect of those schedules.[19]Paragraph 51 of Mr and Mrs Wilson’s Schedule of Loss sets out their claimed losses in a table in two parts: the first part states particular figures with reference to each flat in turn; the second part sets out unparticularised losses. The preceding paragraphs of the Schedule of Loss set out the factual basis for the claims made in the table. For convenience, I shall reproduce the table as an appendix to this judgment. The heads of claim in the first part of the table are as follows:• Total Capital Losses• Investment Loss• Re-investment Loss• Service Charge Loss The heads of claim in the second part of the table are as follows:• Rental Income Loss• Secured Borrowing Loss• Interest Loss• Indemnity• Taxation/IHT[20]Redrow does not seek an order striking out the claims for Service Charge Loss and for Interest Loss. However, it does seek an order striking out the other heads or summarily dismissing them. The first point it makes is that none of those other heads is pleaded in the POC. Mr Singer readily accepted that, in an appropriate case, this point might be answered by permitting an amendment of the particulars of claim. However, he submitted that the heads of claim advanced in the present case were either for clearly unrecoverable or purely speculative or imaginary losses or advanced so vaguely and unclearly that they could not support an amendment, even if (as is not the case) an amendment were sought. I shall consider the heads of claim one by one. For the precise formulation of the claim in each case, I refer to the Appendix. The Challenged Heads of Claim Total Capital Losses

The Challenged Heads of Claim

[21]This is the largest single head of (quantified) claim, amounting to £317,000 in total for the two flats. Paragraph 50 of the Schedule of Loss defines “Total Capital Losses” to mean “the ‘2016 Losses’, and the 2019 Losses and the ‘2024 Losses’ together.” (Mr Wilson acknowledges that each of those three losses should read Capital Losses.) To understand what this means, one must refer to a series of further definitions. “23. ‘2016 Capital Losses’ means the difference between the 2016 Defective Market Value the 2016 Clear Market Value.24. ‘2016 Clear Market Value’ means the estimated market value of the Flats on the 2016 Loss Date on the assumption the Flats did not have the 2016 Defects (or other defects) and on the basis the Flats were suitable security for secured lending.25. ‘2016 Defects’ means defects identified by [surveyor] and/or referred to in Parkman’s information packs as provided to prospective sellers/purchasers from [date] 2016.26. ‘2016 Defective Market Value’ means the net market value of the Flats on the 2016 Loss Date with the 2016 Defects on the assumption that the Flats were not suitable security for secured lending and after deduction of exceptional sale costs including the extra costs incurred at auction sales.27. ‘2016 loss date’ means the date from which the Managing Agents of Celestia, William Parkman and Daughters Limited started to issue information packs referring to the 2016 Defects - [March] 2016.28. ‘2019 Capital Losses’ means losses additional to the 2016 Losses, being the difference between the 2019 Clear Market Value and the 2019 Defective Market Value.29. ‘2019 Clear Market Value’ means the assumed value of the Flats on the 2019 Loss Date on the assumption that they were not suitable security for secured lending and suffered from the 2016 Defects only.30. ‘2019 Defects’ means all fire defects referred to in Enforcement Notices issued by SWFRS in 2019.31. ‘2019 Defective Market Value’ means the net market value of the Flats on the 2019 Loss Date with the 2016 Defects and the 2019 Defects on the assumption that they were not suitable security for secured lending and after deduction of exceptional sale costs including the extra costs incurred at auction sales.32. ‘2019 loss date’ means the Date on which compartmentation and other fire defects were identified at Celestia.33. ‘2024 Capital Losses’ means losses additional to the 2016 Losses and the 2019 Losses, being the difference between the 2024 Clear Market Value and the 2024 Defective Market Value.34. ‘2024 Clear Market Value’ means the assumed value of the Flats on the 2024 Loss Date on the assumption that they were not suitable security for secured lending and suffered from the 2016 Defects and 2019 Defects only.35. ‘2024 Defects’ means the defects in the soil pipe system as referred to in paragraph xx of the AAAPOC.36. ‘2024 Defective Market Value’ means the net market value of the Flats on the 2024 Loss Date with the 2016 Defects, the 2019 Defects, and the 2024 Defects on the assumption that they were not suitable security for secured lending and after deduction of exceptional sale costs including the extra costs incurred at auction sales.37. ‘2024 loss date’ means [date] being the date of intrusive investigations into the soil stacks in Celestia revealing systemic defects as referred to in paragraph xx of the AAAPOC.”[22]Mr Wilson submitted that this head of claim falls within paragraph 25.2.1 of the POC. I do not agree. Whereas there are claims that leaseholders can properly advance under paragraph 25.2.1, this is not one of them. In my judgment, the Capital Losses are spurious. Mr and Mrs Wilson are seeking to claim damages representing alleged diminutions in value of the flats at specific past dates on the basis of defects identified at those dates, despite the fact that they retained the flats thereafter. The flats were not sold on these dates or, indeed, at all. The alleged losses were not sustained. This head of claim will be struck out.

Investment Loss

[23]Paragraph 44 of the Schedule of Loss defines “Investment Loss” to mean “the difference in value, between the dates of acquisition and the dates of disposal, of the Flats as an investment compared with an average return on an investment in residential property classed as suitable for secured lending on ordinary market terms within the Cardiff area.”[24]In my judgment, this head of claim is clearly unrecoverable. First, although analytically different, it represents a duplicative claim of that for Total Capital Losses. (I accept that this need necessarily not be determinative. Mr Wilson made clear that he accepted the possibility of double recovery and did not seek to recover more than once for the same loss. He said that the trial judge could ensure that there was no double recovery and suggested that the two heads of claim might be treated as alternatives.) Second, the head of claim is wrong in principle, because it seeks damages based on a return that might have been made on a different investment. To put the matter broadly: if the leaseholders have valid claims resulting from previously unknown defects in the flats, they are entitled to damages reflecting the consequences of the defects; this will typically be diminution in value, and it may also include loss of use value and something to represent the disturbance resulting from the defects and any remedial works. Thus, a claim for diminution in value is permissible, but the claim for Investment Loss is not.

Re-investment Loss

[25]Paragraph 45 of the Schedule of Loss defines “Re-investment Loss” to mean “the difference in performance, between the dates of acquisition and the dates of disposal, of the Flats as an investment as compared with an average return on an investment in residential property classed as suitable for secured lending on ordinary market terms within the Greater London area.”[26]In my judgment, this, again, is unrecoverable as a head of loss for reasons already given. All manner of investments might perhaps have produced better rates of return than did flats in the Development. Mr and Mrs Wilson chose to buy the flats. They are in principle entitled to claim for the losses resulting from the defects but not to claim for the possible profits from a road not taken.

Rental Income Loss

[27]Paragraph 47 of the Schedule of Loss defines “Rental Income Loss” as follows:
“47.1 the difference between the total gross income which is estimated would have been receivable received by the Claimants from sub-letting the flats in good habitable condition and the gross income actually received (or estimated to be receivable hereafter) by the Claimants; and 47.2. any Council Tax paid or payable by the Claimants because either of the Flats was or will be untenanted for any period, from the date of the Claimants’ purchase of the Flats until either the date of sale or the completion of repair of the defects, whichever is sooner.”
[28]The Schedule of Loss does not quantify this head of claim; instead, it promises particulars upon receipt of expert evidence. This, in my view, is a give-away. In principle, actual loss of rental income is capable of being a recoverable head of loss; it is pleaded in paragraph 25.2.2 of the POC. However, the actual receipt of lower rent is primarily a matter of fact. Mr and Mrs Wilson do not make any positive averment that, by reason of the defects, they have been unable to obtain higher rents that would otherwise have been available. Nor do they purport to be able to quantify the alleged losses. What they say is this:
“20. On 11 July 2014, 339 Vega House was rented out at £895 per calendar month. On 16 October 2014 354 Vega House was rented out at £1,350 per calendar month. Rental income for the Flats in November 2024 was £1,125 and £1,700 per calendar month respectively. Both flats are rented fully furnished. Prior to the most recent tenancy, 354 Vega House was refurbished with high quality furnishings including installing granite worktops in the kitchen. 21. The Office for National Statistics shows consistent growth in rental values in Cardiff since 2016, with a 9.8% rise in the year to October 2024 alone. The Wilsons have been conscious of the Defects, particularly in Vega House and have been reluctant to increase rents in line with the Cardiff market. Further analysis is required to quantify rental losses and will be supplied in accordance with the directions as to the provision of expert evidence.”
The trouble with this is that it advances a claim on a hypothetical basis, by reference to what rent could have been sought in differing factual situations. However, the starting point for a claim for lost rental income must be a factual case: that the owner was unable to let the flat at all or was able only to let it at a reduced rent. No such case is advanced. An expert can do no more than opine as to whether or not higher rents could have been obtained. The position on the averred facts is that the Wilsons did not actually seek higher rents or receive advice that they could not seek them; they simply decided to request rents below those indicated by the market. I repeat that loss of rental income is in principle a valid head of claim. But, if the Wilsons wish to pursue it, they must particularise an actual loss and seek permission to amend.

Secured Borrowing Loss

[29]Paragraph 48 of the Schedule of Loss defines “Secured Borrowing Loss” to mean “losses resulting from the Claimant’s inability to raise capital by way of secured borrowing on the Flats for re-investment”. The following further paragraphs are especially relevant to this head of claim. “9. The Wilsons bought both the Flats for cash. At the time of the purchases, the Flats would have been mortgageable because the Defects were substantially unknown. The Wilsons’ expectation was that this situation would continue, and that mortgage finance could be raised at a later date, particularly when they required cash. … 11. The Wilsons’ rationale for their investment in the Flats was: 11.1. An investment in residential property (as opposed to a different investment) would provide a natural hedge against their children’s future need for a property to live in. 11.2. Cardiff (as opposed to other locations) was a place they knew; it was convenient, and forecasts for the future growth of property prices in Cardiff were good. 11.3. They would be able easily to realise the value in the Flats (by sale or remortgage) to provide finance to their children to purchase (rather than rent) property to live in once their children were established in secure employment.” 11.1. An investment in residential property (as opposed to a different investment) would provide a natural hedge against their children’s future need for a property to live in. 11.2. Cardiff (as opposed to other locations) was a place they knew; it was convenient, and forecasts for the future growth of property prices in Cardiff were good. 11.3. They would be able easily to realise the value in the Flats (by sale or remortgage) to provide finance to their children to purchase (rather than rent) property to live in once their children were established in secure employment.”[30]Several points can be made about this head of claim. First, it is not pleaded. Second, there is no averment of fact in the POC that would support it. Third, no averment of fact is made, even in the Schedule of Loss, that would support the existence of such a loss as a matter of fact. It is not said that the Wilsons attempted to raise finance, or wanted to do so, but were unable to do so. Fourth, the actual averments made are that Mr and Mrs Wilson purchased the first of their flats in 2012 and that in 2019 they intended to transfer one of the flats to their company, the third claimant, but decided against doing so when the defects were discovered. Fifth, the alleged loss, as defined in paragraph 48, is inconsistent with the stated intention in paragraph 11. I regard Redrow as correct to characterise the head of claim as “opportunistic” and as “rel[ying] entirely on the benefit of hindsight.” Sixth, in the circumstances, the alleged loss is clearly too remote. It is no part of the Wilsons’ case that they made anyone aware of any reinvestment plans.

Indemnity

[31]This head of claim relates to the risk that sub-tenants, who rented the flats from the Wilsons, may claim restitution of the rent they paid on the grounds that the flats were unfit for human habitation. The head of claim is said to rest on the decision of the Divisional Court in Coastal Housing Group Ltd v Mitchell [2024] EWHC 2831 (Ch), [2025] 1 WLR 1517. That case considered issues arising under the Renting Homes (Wales) Act 2016, which came into force on 1 December 2022. In particular, the court held that occupiers under housing contracts under the Act who had not been given electrical condition reports, as mandated by the legislation, had not been required to pay rent. (There is a pending appeal against that decision.) The case turned on the interpretation and application of two sets of regulations made under the Renting Homes (Wales) Act 2016, namely the Renting Homes (Supplementary Provisions) (Wales) Regulations 2022 and the Renting Homes (Fitness for Human Habitation) (Wales) Regulations 2022, which came into force simultaneously with the Act.[32]Mr Singer observed that, even if there were some underlying merit in this head of claim, no possible claim for an indemnity is shown. At best, Mr and Mrs Wilson could have a claim for damages in respect of the risk of suffering loss by reason of restitutionary claims made against them by former tenants. This is correct, though by itself it would not be fatal to the claim, because the court could permit the claimed relief to be recast as damages. However, I consider that the head of claim should be struck out. The fact that the claim is not pleaded in the POC means that no facts have been advanced to show that the risk of claims by previous tenants is a real possibility. The legal basis of the claim is also unclear. Mere reference to the Coastal Housing Group case will not suffice, because none of the defendants in that case had actually withheld rent, and the court was not asked to decide whether occupiers who had paid rent they were not required to pay might have a valid counterclaim for repayment of rent. If the Wilsons wish to advance a claim for damages representing the value of the risk of liability to third parties in respect of repayment of rent, they should formulate the claim properly and quantify it and apply for permission to amend.

Taxation/IHT

[33]The explanation of this head of claim is in paragraph 22 of the Schedule of Loss:
“22. The sale of the Flats at an earlier date would have enabled the Wilsons to gift the proceeds to their children to buy a home. Rises in value of those homes would not have been subject to VAT. In addition, the Wilsons are now 68 and 63 respectively and gifts at an earlier point would have lessened the risk that those gifts would be subject to IHT on the death of the Wilsons. Insurance is available to cover such risk.”
[34]The first and second sentences of paragraph 22 are not (at least, for me) easy to understand. I am not sure that I understand the case being advanced in them much better after the hearing. It appears to be contended that an early transfer of the flats to the children would have brought greater financial benefit to the children. That may or may not be so. But the children are not parties to the claim. Further, any claim ought to have been quantified. Further still, the head of claim is not pleaded.[35]The second and third sentences of paragraph 22 are contending, I think, that the defects in the Development meant that the Wilsons could not realise the value of the flats by selling them and were thus prevented from minimising the values of their estates at an earlier date, and that they have thereby incurred the risk of an increased inheritance tax liability on the estates. The quantum of the loss is said to be the cost of buying an insurance policy in respect of that risk. In my judgment, this is not a recoverable head of loss. First, it is not pleaded. Second, it is plainly too remote. There is no reason at all why a developer should be liable in respect of the consequences of a purchaser’s tax planning. (I note, incidentally, that this head of claim is, at the very least, in tension with the basic measure of damages, be that expressed in terms of diminution of value or cost of remedial works. So far as financial losses are concerned, the basic measure of damages seeks to correct the fact that the purchaser has too little by way of monetary value. This head of claim, by contrast, is premised on the purchaser having too much.) Third, the head of claim seems to me to make no sense on its own terms. If the Wilsons were concerned about the inheritance tax position, they could have transferred the flats earlier. I appreciate that they are saying that, were it not for the defects, they could have sold the flats and given the proceeds to the children. But this supposes that the Wilsons did not need to keep the flats or the proceeds for themselves. So a decision to retain the flats until recently was simply a choice they made and has nothing to do with being prevented from divesting themselves of value.[36]Accordingly, the final entries in the second part of the table will be struck out.

Conclusion

[37]The application succeeds.[38]The claims in the table in paragraph 51 of the Schedule of Loss will be struck out, except for Service Charge Loss and Interest Loss.[39]The claim of the third claimant will be summarily dismissed. Appendix: Paragraph 51 of the Schedule of Loss Part 1 Loss Claimed 339 Vega House 354 Vega House Total Capital Losses £118,000 £199,000 Investment Loss £51,400 £87,000 Re-investment Loss £29,700 £50,300 Service Charge Loss £8,989.11 £14,032.05 Total £208,089.11 £350,062.05 Part 2 Rental Income Loss To be confirmed following service of expert evidence. Secured Borrowing Loss Based on raising a 50% mortgage and re-investing the capital in further property with a 50% mortgage, the Wilsons would have increased their capital gain by 100%. Interest Loss Interest as referred to in paragraph 26 of the Re-Re-Re-Amended Particulars of Claim Indemnity Following the decision in Coastal Housing Group Ltd v Mitchell & Anor [2024] EWHC 2831 (Ch), there is a real risk that tenants (Contract Holders) who have rented the Flats from the Wilsons will be able to reclaim rent paid at least since 1 December 2022, when the Renting Homes (Wales) Act 2016 came into force, as a result of the Flats being unfit for habitation. Taxation/IHT CGT liability – TBC Cost of IHT insurance premium

Cited in 1 later judgment