Wilson v HB (SWA) Ltd [2025] EWCA Civ 1360: Schedules of Loss cannot expand the pleadings; in agreed no‑cost remediation cases only residual “blight” is potentially recoverable

Introduction

This Court of Appeal decision arises from fire safety and other defects at the Celestia Development in Cardiff. Forty-one leaseholders and the management company (CMCL) brought claims against the developer’s successor (HB (SWA) Ltd) for breach of contract and under section 1 of the Defective Premises Act 1972 (DPA). Crucially, the defendant and CMCL agreed a licence and entered a contract for a comprehensive programme of remedial works at no cost to leaseholders, meaning the litigation did not include a claim for the cost of those works.

The appeal concerned the personal Schedule of Loss filed by two leaseholders, Mr and Mrs Wilson, which departed dramatically from the framework pleaded on behalf of all claimants in the Re-Re-Re-Amended Particulars of Claim (RRRAPOC). His Honour Judge Keyser KC in the TCC struck out seven of nine heads of loss in the Wilsons’ Schedule; only service charge and interest remained, and loss of rent was accepted in principle but struck out pending proper particulars. The Wilsons appealed; the Court (Coulson, Popplewell and Phillips LJJ) dismissed the appeal.

The decision delivers two key messages of wider importance:

• First, a schedule of loss cannot be used as a Trojan horse to introduce damages claims not set up in the statement of case; robust case management permits strike out in the absence of a properly drafted amendment.
• Second, where the developer will carry out comprehensive remedial works at no cost, conventional historic “diminution in value” claims untethered to a sale are not recoverable; the only potentially viable capital loss is residual post-remediation diminution (so‑called “blight”).

Summary of the Judgment

The Court upheld the TCC’s strike-out under CPR 3.4 and summary judgment principles under CPR 24. It endorsed the judge’s encapsulation that the Court will not indulge “Micawberism”—a speculative hope that something will turn up—particularly where heads of loss are either:

• unpleaded (raised for the first time in the schedule),
• inherently unrecoverable (e.g., “investment” or tax-planning losses),
• wholly unparticularised or speculative, or
• too remote.

On damages, the Court noted there is no material difference between damages for breach of contract and under the DPA in this context. Where remedial works are being provided at no cost, claimants cannot recover the cost of works, and historic date-based “diminution” figures tied to the discovery of defects (without sale) do not represent recoverable loss. What may remain is a properly pleaded and proven “residual diminution (blight)” after remediation.

The Court also clarified that if a party invites leniency to amend a defective pleading, the court ordinarily expects a proposed draft amendment before granting indulgence (Kim v Park). No such draft was provided here; striking out was therefore an orthodox, proportionate case management response.

Analysis

Precedents Cited and Their Influence

• CPR 3.4 and PD 3A; CPR 24. The Court endorsed the judge’s summary of the tests for strike out and summary judgment. The Court emphasized a critical examination of the material, avoiding mini-trials but rejecting inherently incredible or self-contradictory cases, and determining points of law where possible.
• Kim v Park [2011] EWHC 1781 (QB): The Court reaffirmed that, where a pleading is defective but potentially curable, tribunals may permit amendment—but commonly only where there is reason to believe the defect can be cured, demonstrated by the proffering of a draft amendment or substantive material. None was offered here; the exception did not apply.
• Harrison v Shepherd Homes [2012] EWCA Civ 904; Bayoumi v Protim Services Ltd (1996) 30 HLR 785; and Ramsey J’s first-instance decision in Harrison [2011] EWHC 1811 (TCC). The Court accepted there is no material difference in the measure of damages between contract and DPA in this setting.
• On damages for defective work:
  • Hoenig v Isaacs [1952] 2 All ER 176 (traditional diminution in value),
  • East Ham BC v Bernard Sunley [1966] AC 406; Dodd Properties v Canterbury CC [1980] 1 WLR 433; Darlington BC v Wiltshier [1995] 1 WLR 68 (reasonable cost of reinstatement as the usual measure),
  • Applegate v Moss [1971] 1 QB 406; Ruxley Electronics v Forsyth [1996] AC 344 (contexts where cost of cure is disproportionate; diminution may apply or be nil),
  • The London Corporation [1935] P 70 and Manchikalapati v Zurich [2019] EWCA Civ 2163 (diminution measured by cost of repairs accrues regardless of sale or subsequent events; defendants cannot rely on “accidental circumstances” such as impecuniosity).
  The Court deployed these authorities to clarify that, in cases where the contractor or developer will perform remedial works at no cost, the cost-of-cure measure is unavailable and historic “diminution” claims based on discovery dates (without sales) are not recoverable. However, residual post-remediation diminution (“blight”) may remain recoverable (Thomas v TA Phillips; George Fischer v Multi Design; Strange v Westbury Homes).
• Loss of use and investment-type losses: Calabar Properties v Stitcher [1984] 1 WLR 287; Bella Casa Ltd v Vinestone [2005] EWHC 2807 (TCC) (special damages founded on a notional “use value” or market-wide investment comparators are generally disfavoured), and Earl Terrace Properties v Nilsson Design [2004] BLR 273 (a narrow, fact-specific success for loss of use of money not replicated here).
• Beacon Cymru Group Ltd v Mitchell [2025] EWHC 2477 (Ch): Interpreting the Renting Homes (Wales) Act 2016. As a result, the Wilsons abandoned their “Indemnity” head; the Court took no issue further.

Legal Reasoning

The Court’s reasoning moves in three steps: the procedural posture, the measure of damages in the presence of no‑cost remediation, and the fate of each disputed head of loss.

1) Procedural posture: strike out and summary judgment

• A schedule of loss cannot introduce new causes of action or novel heads of loss inconsistent with or absent from the pleaded particulars. Doing so risks confusion, unfairness, and prejudices the defence. Here, virtually all disputed heads sat outside paragraph 25.2 of the RRRAPOC and were unparticularised.
• Permission to amend is a discretion exercised on principled grounds: the court typically requires a proposed amended pleading to be put forward. The claimants provided none, either below or on appeal. With trial fixed for March and key steps imminent, the judge’s refusal to indulge speculative future repleading was unimpeachable case management.
• The Court endorsed the TCC’s rigorous approach: where claims are obviously unsustainable or too remote on the pleaded facts, allowing them to limp on to trial is a misuse of resources.

2) Substantive damages: what remains recoverable when the developer will remediate at no cost?

• The classic position is that diminution is usually measured by reasonable cost of cure; but if the owner will not incur that cost (because the developer has agreed to do the works at no cost), that measure falls away.
• Historic “loss dates” keyed to discovery of defects do not create a recoverable capital loss absent a sale. The Court stressed that the pleaded “total capital losses” by reference to 2016/2019/2024 discovery dates were irrelevant to damage calculation in a no‑cost remediation case, and were properly struck out.
• Residual diminution in value post-remediation—“blight”—remains a recognized head of loss in principle; it was expressly pleaded for all claimants in the RRRAPOC, but the Wilsons’ schedule was not making that claim.
• A novel “gift-based” diminution claim was floated on appeal (the Wilsons gifted the flats to their daughters in 2024). This was not pleaded, raised difficult questions of principle (including risks of double recovery/double jeopardy where recipients also enjoy free remediation), and lacked authority. It could not rescue the schedule.
• Damages for DPA and contract coincide here; no different measure applied.

3) Disposition of the seven disputed heads

• Total Capital Losses (Head 1): Struck out. The schedule overcomplicated matters by positing three “loss dates” upon discovery of defects without sale. In a no‑cost remediation case, those dates were irrelevant to loss; no residual blight case was pleaded. The late “gift” theory was unpleaded, novel, and raised unresolved double recovery problems.
• Investment Loss (Head 2) and Re‑investment Loss (Head 3): Struck out as unrecoverable and duplicative. Market-wide comparators or hypothetical returns on different investment choices are not an appropriate measure of loss for specific defective flats and risk the Calabar/Bella Casa prohibition on “use value” style constructs.
• Rental Income Loss (Head 4): Recognised as a valid category in principle (and within paragraph 25.2.2 of the RRRAPOC), but the schedule failed to state facts: rents actually charged over time; rents obtainable but for defects; and the difference. The judge was entitled, as a matter of case management, to strike out now rather than hold the door open pending a proper pleading.
• Secured Borrowing Loss (Head 5): Struck out. Unpleaded, unsupported by fact (no attempt or desire to raise finance was alleged), inconsistent with the Wilsons’ stated intentions, and plainly too remote. Rebadging it as a “reminder to a valuer” did not convert it into a recoverable head of loss.
• Indemnity (Head 6): Not pursued following Beacon Cymru; no further analysis required.
• Taxation/IHT (Head 7): Struck out. Unpleaded, unquantified, too remote (developers are not liable for the consequences of an owner’s tax planning), and conceptually incoherent on its own terms. The late attempt to recast it as delayed gifting due to defects was unpleaded and could not be entertained at this stage.

Impact and Significance

The judgment will resonate across residential building-defects litigation—especially cladding and fire safety claims—where developers or contractors agree to carry out remediation at no cost to leaseholders.

• Damages scope in no‑cost remediation cases:
  • Claimants cannot run large “historic” diminution claims pegged to defect‑discovery dates unless crystallised by a sale. The law will not treat a retained asset that will be repaired at no cost as having suffered compensable capital loss at earlier points.
  • The capital head that may remain is residual post‑remediation diminution (“blight”), which must be properly pleaded and evidenced.
• Litigation discipline:
  • Schedules of loss must track the particulars of claim. New heads require an amendment, usually supported by a draft. Courts will not allow schedules to become free‑standing vehicles for novel or speculative damages theories.
  • Where a head of loss is theoretically valid (e.g., loss of rent), courts can nonetheless strike out a defective schedule unless proper particulars are promptly provided.
  • Claims framed as “investment returns,” “reinvestment opportunities,” or tax‑planning impacts are likely to be rejected as remote or conceptually inapt absent exceptional facts.
  • Approaching trial, the timetable matters: late, unformulated pivots (e.g., from “historic loss dates” to “gift‑based” diminution) will rarely be indulged.
• DPA vs contract: The Court’s restatement that the measure of damages is materially the same under contract and the DPA in this context reduces scope for pleading niceties to expand quantum.

Complex Concepts Simplified

• Diminution in value, cost of cure, and blight:
  • Diminution in value: the property is worth less because of defects. Traditionally measured by cost of reasonable repairs.
  • Cost of cure: the reasonable cost to fix the defects—usually the practical measure. It is not available where the claimant will not bear that cost (e.g., developer fixes at no charge).
  • Residual diminution (“blight”): even after proper repairs, a stigma can depress open market value; that residual drop can be recoverable if proven.
• Strike out vs summary judgment:
  • Strike out (CPR 3.4): the pleading discloses no reasonable grounds, is an abuse, or is otherwise defective. Focuses on the pleadings.
  • Summary judgment (CPR 24): the claim or defence has no real prospect of success and there is no other compelling reason for trial. The court can decide clear points of law on the available material.
• Pleadings vs schedules of loss:
  • Pleadings (e.g., Particulars of Claim) set out the legal basis and essential facts of the claim. They define the issues.
  • Schedules of loss put numbers and particulars to the pleaded heads. They cannot create new heads or legal bases. If a new head is sought, a formal amendment is required.
• Remoteness and foreseeability:
  • Damages must not be too remote—they must be of a kind reasonably contemplated when contracting or within the scope of a duty.
  • Losses derived from hypothetical alternative investments, refinancing that was never attempted, or tax‑planning strategies typically fall on the “too remote” side unless exceptional facts are proven.
• Double recovery/double jeopardy concerns:
  • If the current owner is compensated in price on a sale, and the buyer also gets free remediation, the wrongdoer faces double exposure. Courts are alert to these structural risks when assessing novel claims (e.g., diminution upon a gift where remediation is also provided).

Conclusion

Wilson v HB (SWA) Ltd confirms and sharpens two core principles. Procedurally, a schedule of loss cannot expand the pleaded case; absent a cogent draft amendment, courts will strike out unpleaded, speculative or remote heads. Substantively, where comprehensive remediation will be provided at no cost, claimants cannot recover historic, date‑anchored “diminution” figures unconnected to a sale; the capital loss that may remain is residual post‑remediation blight, properly pleaded and proved. Investment‑style, refinancing, and tax‑planning losses were (rightly) treated as non‑recoverable on these pleadings. Loss of rent remains a viable category but must be particularised with facts and figures.

Key takeaways:

• Align schedules tightly with the particulars of claim; if new heads are intended, seek permission with a draft amendment.
• In no‑cost remediation cases, focus capital claims on residual blight, not historic discovery dates.
• Particularise special damages (e.g., rent) with actual data; avoid market‑wide generalities.
• Expect robust case management: obviously remote or speculative heads will be stopped early.

The judgment strengthens discipline in high‑volume building safety litigation and steers parties toward principled, fact‑grounded quantification, while preventing duplication and remoteness from distorting damages.