CAN YOU CLAIM FOR RE-BUILDING AN ENTIRE HOUSE IF THERE ARE SERIOUS DEFECTS IN THE FOUNDATION?
Is a claimant entitled to claim the costs of building a new house when the house suffers from serious defects that necessitated the building of a new loadbearing piled substructure? In this blog, we take a look at the recent case of Mallas v Persimmon Homes Ltd & Anor [2025] EWHC 2581 (TCC) (the “Judgment”) from the England and Wales Technology and Construction Court.
Background. The Claimant purchased a newly built four-bedroom detached house from the Defendant in 2015 (Judgment [3]). It was a “family home, a smart two-storey, double-fronted, four-bedroom detached house with a front porch, detached garage and various external features … [which] include a macadam path which is a right of way, and a dwarf retaining masonry wall at the end of the garden” (Judgment [1]).
Shortly after moving in, the Claimant noticed extensive cracking and gaps in the house (Judgment [7]), which were later attributed to differential movement caused by inappropriate trench strip foundations (Judgment [7] – [9]). The house was built on clay soil previously occupied by large trees, and the removal of these trees led to ground heave; the foundations therefore should have included piles extending down to below the level of the roots of the removed trees (Judgment [8] – [9]).
The Claimant commenced action against the Defendant based on breach of contract and under the Defective Premises Act 1977 (Judgment [10]). By the end of trial, the issues had narrowed because, as set out in Judgment [12]:
“… It was common ground between the parties that: (a) by reason of the Property lacking the appropriate foundations, the Defendant has breached clause 1 of its contract with the Claimant and is liable in damages; and (b) the appropriate measure of damages is ‘cost of cure’, plus an additional amount to compensate the Claimant for stress and inconvenience and for certain expenses (such as the cost of renting alternative accommodation whilst the remediation works are being carried out).”
The Dispute Over Remedial Works. With the above being common ground, a key issue then was whether the Claimant was entitled to recover the costs of demolishing the existing house and building a new one (Judgment [13]).
While there was broad agreement on the remediation scheme for the house in terms of the substructure (which involved the building of a new loadbearing piled substructure), the Parties differed as to whether the superstructure of the house should be preserved.
We set out a salient excerpt from Judgment [13] below which shows the difference in the Parties’ positions:
“i) The Claimant’s primary case is that the superstructure should be demolished and a new house built on new foundations. The Claimant also puts forward, as its alternative option, that the superstructure be demolished save for retaining and reusing the structural timber frame. Under that alternative option, the new superstructure would be constructed by positioning the retained timber frame over the new foundations and then building a new superstructure (including new masonry walls, floors, interior fittings, etc.) onto that frame using new materials.
ii) The Defendant, in contrast, argues that there is no need to demolish the existing superstructure, which can be left in place during and after completion of underpinning works consisting in the building of a piled raft. The carrying out of those works would require removal of the existing suspended ground level floor. After the underpinning works have been completed, the superstructure would then be made good and repaired by the installation of a new floor at ground level, filling in cracks and gaps throughout the house, and redecorating. As the Defendant observes, underpinning is the usual approach for remediating buildings that have been built on inadequate foundations and/or have been affected by ground heave.”
Why did the Claimant argue demolition was necessary? As set out in Judgment [14], there were three main reasons.
1. Given the degree of movement, the Claimant was concerned over potential damage to the timber frame or other structural elements of the superstructure. What is notable, however, is that as stated in Judgment [14], the Claimant:
“… relies on expert evidence from his structural engineering expert that such damage may have occurred; however, the Claimant has not provided any direct evidence that it has done. Such damage, if it occurred, could have been directly evidenced only by carrying out opening-up works, which would cause damage to the fabric of the house, as well as inconvenience to the Claimant and his family (they are living in the house). The Claimant contends that the risk that such damage has occurred is such that a demolition approach is necessary for ensuring that the Claimant receives, at the conclusion of the remedial works, that which he was contractually entitled to expect, namely a house unaffected by significant defects.” (emphasis in original)
2. Secondly, the Claimant argued that as the Defendant did not provide “as built” drawings and other detailed construction information which the Claimant’s structural engineering expert claimed ought to have been available, the Claimant could not have adequate confidence that what was built (in terms of the superstructure) was appropriate.
3. Thirdly, the Claimant argued that the construction of the house was of generally poor quality, and hence the house may therefore be subject to latent defects. To support this, the Claimant relied on “indicators that the house may lack certain fire safety features that should be present, such as cavity barriers in the roof.”
Court's Reasoning. The Court stated in its judgment that it had “considerable sympathy for the Claimant” (Judgment [15]).
However, the Court ultimately held that it “would be legally wrong” to award the Claimant damages based on “the cost of demolishing the superstructure and effectively building a new house” (Judgment [16]).
The main reason is because the Judge held that the Claimant failed to prove, on a balance of probabilities, that “demolition and rebuilding of the superstructure is required for remedying defects in, or other breaches of contract relating to, the existing superstructure” (Judgment [16]).
In particular, at Judgment [16], the Court noted that:
1. Insofar as there were gaps in the superstructure, they were likely to be attributable to the differential movement due to the substructure. As such, “[s]ubject to the differential movement ceasing, the existing cracks and gaps would be essentially cosmetic issues addressable by minor repairs, and could not reasonably justify demolition and replacement of the superstructure.”
2. Further, there was no evidence of damage to the timber frame or other structural elements. The Court held that the Claimant’s structural engineer could have established whether there was any such damage by carrying out opening-up works. However, these were not done. In this regard, the excerpt below is important.
“… The Claimant’s structural engineering expert could have established whether there was any such damage by carrying out opening-up works. But such works have not been carried out, even though there is no evidence that this was prevented by cost or to avoid serious disruption to the ability of the Claimant and his family to continue living in the house. In circumstances where a claimant controls access to a premises and has been practically able to carry out exploratory investigations for establishing whether a particular kind or extent of alleged damage has occurred, it will generally be reasonable to expect him to prove such damage. Where he has not done so, it is unlikely to be fair to assess the compensatory damages due to him on the basis that such damage might have occurred.” (emphasis in original).
3. The Court was also not convinced that the lack of “as builts” and other information constituted a breach of contract or any regulatory requirement. And further, there was “no evidence that, without being provided with drawings or information going beyond what is available for the Property, remediation contractors would be unable or unwilling to carry out a remediation scheme not involving demolition of the house.”
4. Lastly, the Court held there was “no basis” to allege that the construction of the superstructure was of generally poor quality or was likely to be subject of significant latent deficiencies. Further, “… insofar as any issues with the superstructure are identified whilst repairs are being made to it, such issues (such as an absence of required cavity barriers in the roof) are likely to be addressable by discrete repairs. Accordingly, the risk that the house is affected by such issues does not justify demolishing and replacing the superstructure: that would be an extreme and disproportionate approach for mitigating the perceived risk.”
Statement of principles. The Court also adopted the following statement of legal principles from the Defendant’s Skeleton Argument, which was not contested by the Claimant (see Judgment [29] – [30]).
“In respect of an award of damages for defective premises:
(1) In an action against a contractor for defective work, the appropriate measure of loss is generally taken to be the cost of reinstatement/repair, because that is the foreseeable consequence of the defective work.
(2) The cost of reinstatement/repair will not be used as the measure of loss if such cost is disproportionate to the end to be attained.
(3) A claimant who carries out either the repair or reinstatement of his property must act reasonably.
(4) The court is unlikely to adopt demolition and rebuilding as the correct measure unless two conditions are satisfied: first, the cost of demolition and rebuilding is less than the cost of remediation, and secondly, that remedying the defects represents a reasonable course of action, so that “the amount awarded is objectively fair as between the claimants and the defendants” [Hudson, [7-006]].
(5) If there are two equally efficacious alternative remedial schemes, and one is cheaper than the other, then prima facie the claimant is obliged to put in hand the cheaper of the two schemes.
(6) As regards betterment, if a claimant chooses to rebuild to a higher standard than is strictly necessary, it can recover the cost of the works less a credit for betterment.”
Conclusion. This case is a rather interesting one, as it is unusual to encounter a case where a party seeks to claim the costs of rebuilding an entire building.
We observe that the Court was sympathetic to the Claimant, though ultimately found against the Claimant on the basis that the Claimant had failed to prove that demolition and re-construction were necessary. What this suggests is that, in an appropriate case, a party can claim the costs of demolishing and re-constructing an entire building. But given the drastic nature of such a “remedy“, cogent evidence must be led to convince a Court or a Tribunal that such measures are appropriate.
We end off by highlighting that in the recent Court of Appeal decision of Pop Holdings Pte. Ltd. v Teo Ban Lim and others [2025] SGCA 51, the Court of Appeal drew attention to the need to properly plead and prove the fact and amount of damages and the consequences of what would occur if a court is unable to satisfy itself of the existence or quantum of damages:
“1 It is axiomatic that a claimant seeking damages for a civil wrong must prove its damage. What this means is that the claimant must plead and prove both the fact and amount of damage so as to establish its right to substantial damages (McGregor on Damages (James Edelman, Jason Varuhas & Andrew Higgins eds) (Sweet & Maxwell, 22nd Ed, 2024) (“McGregor”) at para 53-001). If the claimant’s case were to falter in the pleadings or on the evidence with the result that the court is unable to satisfy itself of the existence or the quantum of damage, an otherwise viable claim could either fail outright or, at best, sound in nominal damages (McGregor at para 11-001; Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd and another [2008] 2 SLR(R) 623 (“Robertson Quay”) at [27]; Biofuel Industries Pte Ltd v V8 Environmental Pte Ltd and another appeal [2018] 2 SLR 199 at [41]). A claimant unfortunate enough to find itself in such a situation would, having incurred the costs of litigation, inevitably find that the game has not been worth the candle.“
This publication is not intended to be, nor should it be taken as, legal advice; it is not a substitute for specific legal advice for specific circumstances. You should not take, nor refrain from taking, actions based on this publication. Chancery Law Corporation is not responsible for, and does not accept any responsibility for, any loss or damage that may arise from any reliance based on this publication.