Defective building damages: Wilson v HB (SWA) Limited clarifies recoverable heads of loss

The Court of Appeal has upheld the striking out of seven disputed heads of loss in a defective building claim, providing important guidance on the proper formulation of damages claims where remedial works are to be carried out by the original contractor.

In Wilson v HB (SWA) Limited [2025] EWCA Civ 1360, Gareth and Sheila Wilson appealed against His Honour Judge Keyser KC's decision to strike out their Schedule of Loss. The underlying dispute concerned fire safety and other defects at the Celestia Development in Cardiff, constructed between 2004 and 2007. The Wilsons, two of 41 leaseholder claimants, pursued claims for breach of contract and breach of duty under the Defective Premises Act 1972.

The pleading deficiencies

The Wilsons' Schedule of Loss, drafted personally rather than by counsel, contained nine heads of loss. Whilst service charge and interest losses were accepted, seven disputed heads totalling over £500,000 were struck out. Lord Justice Coulson, delivering the leading judgement, described the Schedule as "over-complicated, unclear, and lacking in even the basic information necessary to identify and support the disputed heads of loss".

The largest disputed claim—Total Capital Losses of approximately £317,000—purported to claim diminution in value at three historical dates when defects were discovered (2016, 2019, and 2024), despite the flats never being sold on those dates. At the appeal hearing, counsel attempted to reformulate this as a claim based on the November 2024 gifting of the flats to the Wilsons' daughters. The Court rejected this approach, noting that this entirely different case was neither pleaded in the Schedule nor the Re-Re-Re-Amended Particulars of Claim.

Principles on diminution in value

Whilst confirming that diminution in value claims generally accrue whether or not property is sold (following The London Corporation [1935] P 70), Lord Justice Coulson emphasised the Schedule's fundamental defects. The pleaded claim identified losses by reference to three dates when defects manifested, yet no loss crystallised on those dates. The defendant would carry out comprehensive remedial works at no cost to owners, meaning no claim for remedial costs could be advanced.

Critically, the Court noted the absence of authority where a contractor undertakes to perform remedial works free of charge but remains liable for conventional diminution in value calculated as if those works were never to be carried out. The complexity of formulating such a novel claim, combined with the imminent March trial date, meant there was no reason to believe the Wilsons could adequately plead the putative new case.

Other rejected heads

Investment Loss and Re-investment Loss were struck out as seeking damages based on returns from hypothetical alternative investments—the classic "road not taken" scenario rejected in principle. Rental Income Loss, whilst recoverable in principle under the parent pleading, lacked any proper particularisation of actual rent charged, rent that could have been obtained, or the difference between them.

Secured Borrowing Loss, Indemnity, and Taxation/IHT claims all failed for multiple reasons including lack of pleading, remoteness, and insufficient factual averments. The Taxation claim particularly troubled the Court, being described as making "no sense on its own terms" given the Wilsons could have transferred the flats earlier if inheritance tax planning was genuinely their concern.

The judgement reinforces that robust case management requires weeding out hopeless heads of loss before trial, rather than allowing speculative claims to proceed in hope that "something might turn up".