Harrison & Ors v Shepherd Homes Ltd & Ors

Factual and Procedural Background

This appeal concerns damages awarded to property owners whose homes suffered damage due to negligent piling design and construction on an estate of 94 new houses built between 2002 and 2004 by the appellants ("Company A"). The estate was constructed on a former landfill site, requiring extensive piling. The piling contractor ("Company B") failed to exercise reasonable care, resulting in settlement of piles and significant cracking in at least 57 houses. The damage rendered many houses unmortgageable or only saleable at reduced prices. Litigation between Company A and Company B occurred between 2005 and 2007, with Company B admitting negligence. In 2008, 71 homeowners ("the houseowners") brought proceedings against Company A and two other defendants, the latter two not participating in trial or appeal. A trial was held on 10 representative "lead cases" to facilitate settlement of other claims. The trial before Judge [Ramsey] took place in July 2010, with judgment delivered on 11 July 2011. The appeal challenges aspects of the judgment concerning the measure of damages awarded to the houseowners.

Legal Issues Presented

1. Whether the judge was correct to create an intermediate category of houses between "probably mortgageable" and "probably unmortgageable".
2. The appropriateness of the percentage figure used for diminution in value damages for houses deemed "probably mortgageable", including those in the intermediate category.
3. Whether the judge properly awarded an additional head of damages for future remedial work over 20 years, in addition to diminution in value damages.
4. Whether the judge erred in refusing to admit further expert evidence relating to the sale of a comparable property after trial.

Arguments of the Parties

Appellant's Arguments

• The intermediate "twilight zone" category of houses was unsupported by evidence; all such houses should have been classified as "probably mortgageable," leading to lower diminution in value damages.
• The judge improperly rejected valuation figures provided by their expert and should have accepted those figures for diminution in value.
• The award of damages for two further sets of remedial work over 20 years resulted in double recovery, as these costs were already factored into the diminution in value damages.
• The judge wrongly refused to admit further expert evidence concerning the actual sale of a comparable property, which was highly relevant to mortgageability and valuation issues, causing prejudice.

Respondent's Arguments

• The judge correctly recognized uncertainty regarding mortgageability and appropriately created an intermediate category reflecting this.
• The judge properly exercised discretion in determining the diminution in value percentage, considering the limited market and lack of sufficient comparable sales.
• The judge avoided double recovery by excluding future remedial work costs from diminution in value damages and awarding them separately after expert agreement.
• The judge’s refusal to admit further evidence was a reasonable case management decision; the sale added no materially new information and further evidence would have prolonged proceedings unnecessarily.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court upheld the judge’s creation of an intermediate category of houses reflecting uncertainty about mortgageability, as mortgageability depends on the terms of individual structural engineer reports, which vary by property and expert. It rejected the appellant’s argument that all such houses should be classified as "probably mortgageable".

Regarding diminution in value, the judge accepted the principle of the capital comparison valuation method for mortgageable houses but rejected the appellant’s expert figures due to insufficient comparable sales and a limited market. The judge selected a 32.5% diminution figure within a reasonable range supported by the evidence, which the court found was not outside the bounds of judicial discretion.

On the additional damages for future remedial work, the judge proceeded on the basis that such work would be required and awarded damages accordingly, after expert agreement on costs. The court found no double recovery occurred because the diminution in value award excluded these future remedial costs.

Concerning the refusal to admit further expert evidence about a post-trial sale, the court concluded the judge’s decision was justified as the evidence added little new information, would have triggered further procedural burdens, and the judge had already taken the sale into account in his valuation considerations.

Holding and Implications

The court DISMISSED THE APPEAL, affirming the judgment below in all respects.

The decision confirms the appropriateness of a nuanced approach to valuation damages where mortgageability is uncertain and limited comparable sales exist. It also affirms that damages for future remedial works may be awarded separately to avoid double recovery. The ruling underscores judicial discretion in evidentiary case management and valuation methodology in construction defect claims. No new precedent was established beyond the application of established principles to the facts of this case.