Zennstrom & Anor v Fagot & Ors

Zennstrom & Anor v Fagot & Ors [2013] EWHC 288 (TCC)

It is easy to forget that other duties may govern the work of contractors and consultants apart from those set out in their written contracts. In addition to tortious and contractual duties, statutory duties, such as those under the Defective Premises Act 1972 (“DPA”) may result in liability.

The claimants in this case, Mr and Mrs Zennstrom, tried to use the DPA against the defendant vendors (“the defendants”) although the claim also involved other parties including the contractor and architect. The claimants claimed the house they purchased from the defendants was defective and required rebuilding. Unfortunately their claim was unsuccessful when it came before Mr Justice Edwards-Stuart in the TCC (Technology and Construction Court) earlier this year.

The claimants alleged that the defendants had a duty under the DPA as property developers as they had developed the property and this was not undertaken in a workmanlike or professional manner nor was it fit for habitation. In order for the defendants to come under a duty under the DPA the claimants had to prove that they developed the property ‘in the course of a business’.

In 2009 the claimants purchased a £1.1m house in Southampton from the defendants who had recently undertaken major construction work to it. The claimants alleged the property was defective and required demolition. The defects comprised mainly structural elements including an absence of piled foundations. In order for the claimants to succeed they had to prove that:

The defendants intended to sell the property from the start when they engaged the contractor; and
The defendants did not intend to occupy the property as their home.

The DPA provides that a person taking on work for or in connection with the provision of a dwelling owes a duty to the person acquiring the dwelling and subsequent purchasers to see that the work which he takes on is done in a workmanlike or professional manner, with proper materials and so that it will be fit for habitation when completed. For the defendants to be caught by the DPA they had to be proven to have developed the house in the course of a business.

Circumstances proved the defendants were not property developers; they were just building their dream home. Compelling evidence that supported this were the bespoke features installed, such as an entertainment system and art work, together with evidence from friends, neighbours and their architect that the house was to be their dream home. Also, significantly, the property did not benefit from an NHBC (National House-Building Council) certificate which it might have, had it been developed by a property developer.

The judge clarified that for the purpose of determining whether someone is acting in the course of a business: (1) It was unnecessary to demonstrate that other properties had been developed in the past; and (2) the business must exist at the time the work is arranged.

For the claimants to have succeeded it was key for them to prove that the defendants, as previous owners, intended to sell the property from the start of the building works and this was undertaken in the course of a business. Unfortunately the evidential burden on the claimant was not discharged as the weight of the evidence pointed to the dwelling being constructed as the defendants’ home. The DPA applies to the provision of new dwellings, extensions or conversions and the defects must be significant to render the dwelling unfit for habitation. This could clearly affect contractors and consultants when constructing/designing residential properties. Whilst contractors and consultants may in their written contracts seek to limit or exclude liability for losses they cannot exclude or limit liability under the DPA to the current or subsequent owners.