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	England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Zennstrom & Anor v Fagot & Ors [2013] EWHC 288 (TCC) (21 February 2013) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2013/288.html Cite as: [2013] EWHC 288 (TCC), 147 Con LR 162

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		21/02/2013

Mr Justice Edwards-Stuart :

Introduction

1. In November 2009 the Claimants, as purchasers, and the Second and Third Defendants, as vendors, exchanged contracts in respect of a property known as 22 Crowsport, Hamble, Southampton. The price was £1.1 million. The property was in a much coveted private road with a view over the marina. It had been completely rebuilt by the Second and Third Defendants, to whom I will refer hereafter as Ms Moseley and Ms Wilks, in a contemporary Bauhaus style. It had a striking exterior and a minimalist modern interior lit by extensive use of glazing.
2. However, according to the Claimants and their advisers, the building was structurally unsafe and has since been demolished. Ms Moseley and Ms Wilks, who had lived together as a couple for nearly 20 years, say that they built the property as their dream home in which they intended to live permanently. The Claimants, by contrast, allege that it was built purely for profit and that Ms Moseley and Ms Wilks are therefore liable under the Defective Premises Act 1972 because they developed 22 Crowsport in the course of a business of providing dwellings and the building was neither built in a workmanlike manner nor was it fit for habitation when completed.
3. This is a trial of a preliminary issue of whether or not Ms Moseley and Ms Wilks owed a duty to the Claimants under the Defective Premises Act 1972. The outcome turns on the facts and, essentially, whether or not I accept the evidence of Ms Moseley and Ms Wilks that they were not acting as property developers. This is not a case where there is a conflict of evidence between the claimant and the defendant: effectively, the Claimants in this case are not in a position to give any relevant evidence. Whilst the First Claimant, Mr Zennstrom, has made a long witness statement, it really amounts to nothing more than a forensic analysis of the documents produced on disclosure. As far as he is concerned, therefore, issues as to the credibility of his evidence do not really arise. So although the crucial evidence comes from the Defendants, the burden of proof rests on the Claimants.
4. The Claimants have also sued the builder, Kevin Fagot, the architect, Andrew Ramus, and a company called Fast-Calc Ltd, who carried out certain structural calculations in relation to the steelwork for the building. As part of the contract of sale, the Claimants took assignments of Ms Moseley's and Ms Wilks's causes of action against those parties. Judgment has been entered against the builder, who appears to have no assets, and the architect may have no insurance cover, which may go some way towards explaining why the Claimants have sued Ms Moseley and Ms Wilks under the 1972 Act.

The facts

5. Ms Moseley and Ms Wilks bought No 22 Crowsport in July 2004 for £360,000. It was clearly in need of refurbishment, but soon after they moved in they carried out limited works of improvement such as replacing some of the old metal windows, fitting some new floors and some redecorating and refurbishment. Ms Wilks said that they were particularly attracted to this property because they could keep their boat at the Hamble Marina, which was just a short walk away.
6. At that time Ms Moseley was a personal fitness trainer and Ms Wilks worked in the food sales industry. She spent a substantial amount of time travelling. They soon began to make friends and Ms Wilks says that they went on skiing holidays with some of their new neighbours.
7. In 2005 they met the architect Mr Ramus, the Fourth Defendant. In February 2006 they made their first application for planning permission. This involved a complete redesign of the whole house, involving the extension of both the ground and the upper floors of No 22. This was refused because the planners apparently did not like such a large extension to the upper storey. They made a second, fairly similar, application in the following month and that too was refused.
8. In October 2006 they made a further planning application for an extension: this time it was successful - the upper floor had been reduced in extent so as to produce an asymmetrical appearance, which was apparently in accordance with the wishes of the planning department. By this time they had been working with the architect Mr Ramus, the Fourth Defendant, for some 18 months or so and had become very enthusiastic about his ideas for the property. The work envisaged by this new application was very extensive and involved demolishing most of the existing building. Finally, on 3 October 2007, they made a further planning application which involved the demolition of the whole of the existing structure and the construction of a completely new building - albeit with a similar outcome to the proposal which had been the subject of the third application.
9. In September 2007 - before the new application for permission to demolish the whole building had been made - work started with the demolition of most of the existing structure, and this was not completed until about the end of November or early December 2007. The work of rebuilding the house took much longer than originally envisaged and was still not complete when Ms Moseley and Ms Wilks moved back into the property on about 5 September 2008, at which time work was still going on. They celebrated their civil partnership on 13 September 2008 with a large party (although, for the most part, not held in the house).
10. A certificate of Practical Completion was issued on 6 April 2009, with effect from 1 January 2009. On 21 April 2009 a Final Certificate was issued under the Building Regulations by JHA Innovation Ltd, the authorised building inspectors appointed by the local authority. Shortly after this Ms Wilks met someone who told her about hypnotherapy. She was very interested and decided to do a "taster" week-end at Brighton University. She had been neither happy nor satisfied in her present job in the food sales industry and after the week-end course she decided that she wanted to change career and to become a hypnotherapist. This would involve a training course lasting a year or more before she could set up her own practice. The consequence of this would be that for well over a year the couple would lose the benefit of her current salary and would have to make do on Ms Moseley's earnings, supported by any private income or the disposal of any capital assets (such as of the buy to let properties that they had bought a few years earlier).
11. The evidence of Ms Wilks was that, after much anxious consideration, she and Ms Moseley concluded that if Ms Wilks was going to give up her job they would have to sell No 22 Crowsport because without the second income they would no longer be able to service the mortgage. Ms Moseley agreed that they should do this. However, Ms Moseley told the court that there was a further reason for moving and that was the unpleasant behaviour of their next door neighbour at No 23, a Mr Jenkins. He was a man who, they said, disapproved of having a same sex couple as his next door neighbours and took no steps to conceal his animosity. Ms Moseley said, and I accept, that Ms Wilks had found this particularly upsetting.
12. However, the case for the Claimants was that Ms Wilks and Ms Moseley were already unable to finance the outgoings of No 22 on their present joint incomes and that they had always intended to sell it as soon as the work was complete. It was said that they deliberately kept the house sparsely furnished, more like a show house rather than a home, so that it would be attractive to potential purchasers. Indeed, the Claimants go further and say that this was their intention from the moment that they acquired No 22 in July 2004. Alternatively, if they did not have that intention when they acquired No 22, they had certainly formed it by the time they embarked on the building works in August/September 2007.
13. Whether or not the Claimants' case is made out is the question I have to decide on this preliminary issue.
14. It was submitted by Mr Richard Morgan QC, who appeared for the Claimants, that Ms Wilks and Ms Moseley were already well on the property ladder when they bought No 22 and that they were all too well aware of the profits to be made from the successful development of residential property. In the light of this submission it will be necessary later in this judgment to set out the previous property dealings of Ms Wilks and Ms Moseley in some detail.

The procedural history

15. A few weeks before the date set for the hearing of the preliminary issue the Claimants applied to amend the Particulars of Claim to make allegations of dishonesty against Ms Wilks and Ms Moseley, in that it was to be alleged that they were well aware that there were defects in the building during construction and that these were deliberately concealed from the Claimants.
16. It was accepted on behalf of the Claimants that if the application was to be allowed it would have the consequence that the hearing of the preliminary issue would have to be abandoned and that it would have to be determined at the trial of the remaining issues, which was then listed for 18 March 2013.
17. I refused the application on essentially two grounds. First, I did not regard the proposed amendments as giving sufficient details of the actual knowledge of the defects in the construction that was being alleged. Second, it represented a departure from the existing allegations that were made against Mr Ramus, the architect. The case against him was pleaded on the basis that if he had carried out his inspections of the work properly he would have noticed the defects and brought them to the attention of Ms Wilks and Ms Moseley. Had this happened, it was alleged that either Ms Wilks or Ms Moseley

"would have determined Mr Fagot's employment under the building contract and retained others to carry out and complete the works so that the property would have been reasonably fit for human habitation or they would have instructed Mr Ramus to ensure that Mr Fagot adhered to the building contract going forward and that he remedied the existing defects".

18. It is clear that the premise underlying this plea is that it was not being alleged Ms Wilks and Ms Moseley were aware of the existence of defects in the construction. If allegations were to be made that they did know of the defects, then this part of the case against Mr Ramus would clearly have to be reformulated.
19. However, Mr Morgan, who made the application on behalf of the Claimants, submitted that these allegations of knowledge of the existence of defects were also relevant to the preliminary issue and that it would be unfair to the Claimants if they were to be prevented from making those allegations at the hearing of the preliminary issue. In these circumstances I directed that, whilst not allowing the application to amend at that stage, the Claimants would be permitted to cross examine Ms Wilks and Ms Moseley at the hearing of the preliminary issue as to the extent to which they were aware of the defects that Mr Morgan submitted could be seen in the photographs that were taken during the construction period. Mr Daniel Crowley, who then, as now, appeared on behalf of Ms Wilks and Ms Moseley, did not object to this course.
20. As I will describe later in this judgment, Ms Wilks was cross examined extensively about the photographs that she had taken during construction and about defects or examples of poor building practice that they were said to show. However, it is relevant at this point to mention precisely what it is that the Claimants allege was wrong with the house and which, according to their advisers, required its demolition. I can do no better than to set out Mr Morgan's summary of the defects that he gave during his opening submissions. This was in the following terms:

". . . the inadequacy of the retaining wall, inappropriate bearing pressures, absence of piled foundations, absence of lintel designs, the fact that columns were not centred on two load-bearing padstones, poor installation of supporting beams, damage by cutting through of beams, existence of cold bridges, absence of roof ventilation, use of incorrectly sized beams, cracking blockwork and render and so on and so forth."

21. With the possible exceptions of the weakening of joists by excessive cutting and the cracking of blockwork and render, I would not have thought that any of these potential defects would be ones that a lay person, or perhaps even a passing builder, might be expected to notice: they are for the most part the province of engineers. So, with the exception of untidy or alleged poor construction of blockwork and the cutting of joists, Ms Wilks was, unsurprisingly, not cross-examined about the presence of the other defects of the types mentioned by Mr Morgan with the exception of one alleged defect in one section of the retaining wall.
22. It appears that the trigger for the making of the allegations of fraud was an e-mail sent by Mr Ramus to Ms Wilks and Ms Moseley shortly before the sale of No 22 to the Claimants, after various queries had been raised with him by those acting on behalf of the Claimants, the relevant part of which was in the following terms:

"Girls, can you tell me what answers you would like me to give for the following question?

Due to the shambolic nature of the build, items 5, 6 never happened as there was no builder around to issue these to."

Mr Ramus then replied to the enquiry saying that there were "No warranties as this was a self build to be lived in not sold on".

23. It was submitted on the half of the Claimants that the reference to the "shambolic nature of the build" reflected a shared understanding that existed between Mr Ramus and Ms Wilks and Ms Moseley, and that this demonstrated that they knew that the building had been defectively constructed. I have to say that my first impression was that this was not an obvious reading of the message. In my view, the adjective "shambolic" implies something that is disorganised, rather than being of poor quality. I will deal later in this judgment with what was or might have been seen on site during construction. However, before I do that I should say something briefly about the witnesses.

Mr Zennstrom

24. As I have already mentioned, Mr Zennstrom made a long witness statement which amounted to little more than a detailed analysis of the documents disclosed by Ms Wilks and Ms Moseley and an account of the discovery of the defects in the building after it had been purchased. It is quite clear that he had gone through all the documentation very carefully with a view to finding any evidence that might support the allegation that Ms Wilks and Ms Moseley had developed the property in the course of a business. It was sensibly agreed between the parties that Mr Zennstrom could refer to these documents although his opinions on their contents would not be admissible evidence (with the practical consequence that Mr Crowley would not have to cross-examine him about them).
25. So in terms of the real issue that I have to decide, the evidence of Mr Zennstrom is of limited relevance. This hearing was not concerned with the nature or extent of the defects that were subsequently said to have been found in the property. For the purposes of this issue I am prepared to assume that there were extensive defects. However, I did gain the distinct impression that the Claimants were determined that someone had to be made to pay for what they allege was a disastrous purchase.

Ms Wilks and Ms Moseley

26. They were, of course, the principal witnesses on whose evidence the outcome of the preliminary issue turns. In general, I thought that they were both honest witnesses although their recollection of the detail of some of the events which occurred over five years ago was, perhaps understandably, somewhat unreliable.
27. Ms Wilks is now a hypnotherapist and neuro-linguistic programmer. She used to work in the food sales industry until she switched career in 2009 and started her new training. She started in practice in January 2011. She was the principal witness and bore the brunt of Mr Morgan's very well constructed and skilful cross examination. She gave evidence for the best part of a day, and later was recalled for a further couple of hours of cross-examination. She was, I thought, a rather defensive witness, but in the circumstances this was perhaps unsurprising. I formed the conclusion that her stated ignorance of building work was genuine, and was not a forensic position designed to suit her case. There was no instance where her evidence was contradicted in any material respect by the contemporaneous documents, except for her evidence in relation to the timing of the decision to demolish the building - a point with which I will deal below, and on the whole she gave credible answers to the questions put to her. On the morning of the second day of the trial, a little way into her evidence, it emerged that she suffers from a form of dyslexia which makes it difficult for her to navigate her way around documents. This meant that she was sometimes a little slow to identify the passage in a particular document about which she was being asked, but overall I did not think that it made much difference to her evidence, either before or after that difficulty came to light. Mr Morgan treated her with courtesy and made sure that she understood what she was being asked.
28. Ms Moseley is a personal fitness trainer, and so she is not a person who works a lot with words or figures. She was a curious witness in that she had a rather oblique way of answering questions, and on occasions her answers seemed to come out back to front. However, I formed the view that she was an honest and forthright witness and for the reasons that I shall give later in this judgment I wholly reject the allegation that she made up a story about the use of the red spray paint.

The other witnesses

29. The Defence called three other witnesses. They were Ms Susan Meheux, Mrs Judith Lewis and Mr Brian Turner. It was accepted on all sides that they were transparently honest witnesses whose evidence should be accepted.
30. Ms Meheux, who described herself as a close friend of Ms Wilks and Ms Moseley, said in her witness statement that she understood Ms Wilks and Ms Moseley to regard No 22 as their "dream home", that she did not think that they were carrying on any form of property development business and that they sold the property because they would not be able to afford to service the mortgage once Ms Wilks stopped working. Of course, this evidence is largely based on what she was told by Ms Wilks and Ms Moseley, but nevertheless she struck me as a woman who was well able to form her own view as to the likely truth of what she was being told. However, Ms Meheux also confirmed that Ms Wilks and Ms Moseley had carried out work to No 22, such as replacing the windows and fitting new flooring, before they demolished it, thus rendering that work largely abortive.
31. Mrs Lewis was the person who recommended Mr Fagot to Ms Wilks and Ms Moseley. Her evidence entirely corroborates theirs in that she and her husband had been entirely satisfied with the work that Mr Fagot carried out for them and consequently she gave him a good reference. The work that Mr Fagot had done for them when they gave him a reference involved the construction of a very large dormer window which effectively formed a second storey extension to their substantial home and accommodated a new bedroom and a bathroom. Later, after the work had been done at No 22, he also carried out a ground floor extension to the kitchen. She said that she did not think that Mr Fagot provided the cheapest quotation for the work, but she said that he was recommended to them and was available when they needed him. She said that he finished the job satisfactorily. Whilst the construction of an extension comprising a dormer window, and bedroom and bathroom is nothing like as extensive as the building of a complete house, it was, I would have thought, quite enough for the Lewises to form a good view of Mr Fagot's qualities as a builder. Mrs Lewis said that she had visited Ms Wilks and Ms Moseley when they were living at No 22 following the rebuilding and she said that "it was their home and they were very, very excited about it". In her witness statement, at paragraph 13, she said this:

"I understand that there is an allegation that Ms Wilks and Ms Moseley are developers. I am totally aghast at this suggestion. I believe that, had they been developers intending to sell the property, something would have been mentioned in all the conversations we had about the property. Our conversations were quite to the contrary in that this was a house they were thrilled about and were building for themselves and themselves alone."

32. Mr Turner described himself as an ex sea-farer, and was a neighbour. He had lived in Hamble since 1937. He said that Mr Jenkins, who lived at No 23, put a huge bundle of bricks on the grass bank forming the boundary between No 22 and No 23 in order to make it collapse and that "he was as objectionable as he could make himself". He said that he had been great friends with Ms Wilks and Ms Moseley and he also gave the important evidence that it was only after Ms Wilks and Ms Moseley had sold No 22 to the Claimants that he told them that No 11 Crowsport might be for sale and put them in touch with the owners. He also formed the view, from the way that Ms Wilks and Ms Moseley talked about the house, that it was clear that they had no intention of building it in order to sell it on. In relation to No 11, he said that Ms Wilks and Ms Moseley had done a certain amount of work to it since they bought it, particularly to the garden which he said had been "a jungle". He said that they had carried out a small amount of demolition work, both inside and out, and had restored the original parapet walls to their original 1930s art deco state.

The Defective Premises Act 1972

33. Section 1(1) of the Act provides that:

"A person taking on work for or in connection with the provision of a dwelling (whether the dwelling is provided by the erection or by the conversion or enlargement of a building) owes a duty-

(a) if the dwelling is provided to the order of any person, to that person; and

(b) without prejudice to paragraph (a) above, to every person who acquires an interest (whether legal or equitable) in the dwelling;

to see that the work which he takes on is done in a workmanlike or, as the case may be, professional manner, with proper materials and so that as regards that work the dwelling will be fit for habitation when completed."

34. Section 1(4)(a) Act provides:

"A person who-

(a) in the course of a business which consists of or includes providing or arranging for the provision of dwellings or installations in dwellings; or

(b) …

arranges for another to take on work for or in connection with the provision of a dwelling shall be treated for the purposes of this section as included among the persons who have taken on the work."

35. Two points need to be made about these provisions. First, it is clear that the person who is under the duty must arrange for the taking on of the work for the provision of a dwelling "in the course of a business which consists of or includes providing or arranging for the provision of dwellings". However, it is not in my view necessary that the person in question must have already developed a dwelling in the course of that business before he or she can be under the statutory duty in respect of the dwelling in question. If it were otherwise, developers could circumvent the application of the Act by the expedient of setting up a separate company for each dwelling that was to be developed. This was the conclusion reached by Latham J in Mirza v Bhandal (unreported, 27 April 1999), and I agree with his reasons for reaching it.
36. Second, the expression "arranges for another to take on work" is in my view prospective in the sense that the work in question must be in the future, because taking on work includes the act of agreeing to do it as well as carrying it out. Thus the business of providing dwellings must be in existence when both those events occur. In the context of the present case, this can be no later than the date on which Mr Fagot agreed to undertake the work. This appears to have been at some time during August 2007.
37. Mr Morgan makes the point, which I accept, that the duty is owed in relation to the provision of a dwelling. Merely enlarging an existing dwelling by, for example, adding a back extension or an extra bedroom in the roof space does not involve the provision of a dwelling, because the dwelling already exists. By contrast, converting a house that was in single occupation into flats would, I would have thought, involve the provision of dwellings and thus fall within the scope of the Act. This to some extent answers the "floodgates" argument advanced by Mr Crowley to the effect that the Act cannot have been intended to extend to couples who in the ordinary course of events buy a property, improve it with a view to selling it and then move on and buy a larger property.
38. I also accept Mr Morgan's submission that if, at the time Ms Wilks and Ms Moseley contracted with Mr Fagot to build the new house, they had decided that they were not going to live in it as their home once the work was completed but instead had resolved that they would sell it on, it is reasonably arguable that they would have been carrying out the development as a business venture and not as the normal incident of ownership of a property. However, I am not persuaded that it can be said that a person who demolishes his home and then arranges for another house to be built on the same site with the intention of living in it for some time before selling it on can necessarily be said to be acting in the course of the business which includes arranging for the provision of dwellings. It seems to me that it is a matter of fact and degree.
39. I suggest this not just because the person lives in the house after it has been rebuilt, because a person could still owe a duty under section 1(1) of the Act even though he lived in the dwelling after he built it, but because it would be relevant to the question of whether or not he arranged the house to be built (by others) in the course of a business of providing dwellings. Thus if the person who is said to be under the duty imposed by the Act uses the dwelling as a home after it has been constructed (by others) and before selling it on, and always intended to do so, I consider that it would be much more difficult to say that he was acting in the course of a business of the type described in section 1(4) of the Act at the time when he arranged for the work to be taken on.
40. It is not in dispute in this case that Ms Wilks and Ms Moseley lived in No 22 for about 12 months, or possibly more, after the work could be said to have been substantially completed. If that is to be taken as having occurred on 1 January 2009, then Ms Wilks and Ms Moseley lived in the house for almost 12 months after it was completed. In fact, they lived in it for about 15 months in all, although whether it could be described as substantially complete when they moved in is rather doubtful. Mr Morgan submitted that the fact that Ms Wilks referred in her witness statement to moving back into the house in September 2008 carried with it the implied assertion that the work had been completed at that stage so that Ms Wilks was being somewhat economical with the truth. I do not consider that it is reasonable to read her witness statement in this way: the only implication from what she said was that the house was reasonably fit for occupation when they moved back in. There is no evidence that it was not.
41. In his closing oral submissions Mr Morgan submitted that if, come completion, the owner decided to sell the building having arranged for its development, that would be sufficient to impose on him the duty under the Act. He submitted further that if the owner had possible alternatives at the start of the work - whether to live in the house or to sell it - any subsequent decision at completion to sell it would not take the case outside the ambit of the Act. This was because, he submitted, the Act looked at what happened at the end and then looked back to see if it was done in the course of a business.
42. I am unable to accept these submissions. As I have already noted, the wording of section 1(4) is prospective, in the sense that the relevant business must be in existence at the time when the person arranges for another to take on the work. I cannot see how a decision taken subsequently can determine whether or not there was a business in existence at the start of the work. A practical objection is that in almost every case the owner will have the choice of whether to live in the property or sell it when the development is complete, so that - if Mr Morgan is right - the scope of the Act could be very wide.
43. In the circumstances, it seems to me that the Claimants must fail on the preliminary issue unless they can prove at least:

(1) that at or before the time when Ms Wilks and Ms Moseley entered into the contract with Mr Fagot for the demolition and rebuilding of the house they intended to sell it as soon as they reasonably could after it was completed; and

(2) that, at the same time, they did not intend to occupy it as their home after it had been rebuilt for a period that was more than minimal.

44. As I have said, the burden of proof is clearly on the Claimants. I shall therefore turn to consider the various aspects of the conduct of Ms Wilks and Ms Moseley that are relied on by the Claimants to show that at or before the time when they arranged for the property to be rebuilt they intended to sell it and not to occupy it as their home.

The conduct of Ms Wilks and Ms Moseley relied on by the Claimants

Previous property purchases

45. Ms Wilks and Ms Moseley have lived together since about 1995. They first lived in a house in George Street, Eastleigh, which belonged to Ms Moseley. Ms Wilks bought a share of the equity of the property in 1996.
46. The first house that they bought together was No 342 Brook Lane, Southampton. That property was bought in April 1999 for £136,500 with a mortgage of about £115,000. The house had already been refurbished by a developer, but nothing had been done to the garden. They built a lean to extension, which Ms Wilks thought cost about £15,000. In addition, they made various improvements to the garden, including the installation of a hot tub, some decking, a shed and so on, at a roughly similar cost. They sold the property in September 2002 for £275,000. So it appears that their net gain was of the order of £100,000 (before disposal costs). In her witness statement Ms Wilks said that they moved because there were plans to build a housing development nearby.
47. In December 2002 they bought a 2 year old Bovis town house at 28 Loveage Road, Whiteley. Ms Wilks described the house as being in immaculate condition and so they did nothing to it. The purchase price was £183,000. That house was sold about 18 months later for £220,000, producing a gain of about £37,000 (before disposal costs). Ms Wilks said that they sold that property when she inherited some money on her mother's death - about £250,000. She said that they had always wanted to live in Hamble and that this money gave them the opportunity to do so.
48. In 2003/04 they purchased two new houses built by Barratt in order to let them. They paid £175,000 each, of which £125,000 was financed by a mortgage. Ms Wilks said that they were able to pay for the deposits on these houses partly because she had just had a substantial increase in salary and partly out of the proceeds of the sale of a house that Ms Wilks had previously shared with her ex-boyfriend.
49. Finally, in July 2004, they bought 22 Crowsport for £360,000 in which they lived for about three years before the start of the rebuilding in September 2007.

The decision to demolish the building

50. An issue arose about when the decision was taken to demolish the building entirely, rather than to leave and reuse some of the existing walls. Ms Wilks was shown a letter dated 22 August 2007 enclosing a revised quotation for the proposed work, which referred to building a new house, demolishing the existing building and the disposal of waste. She was also shown a specification, that she accepted was probably the final specification, dated 30 August 2007. The notes to this specification said "Please note the existing house is now being demolished… Internal dimensions to remain the same". However, Ms Wilks said in evidence that she remembered a meeting on site in late October or early November 2007 by which time the house had been almost wholly demolished and only a few walls remained standing. At this meeting, she said, they discussed whether or not it would be better to demolish the remaining walls and build the whole house from scratch. One advantage of doing this was that the building work would not then attract VAT. Her recollection was that the decision to demolish those remaining walls was not taken until this meeting and she was adamant that until then it had always been their intention to leave a few of the original walls and to incorporate them into the new build.
51. However, the existing planning permission did not envisage or permit the demolition of the entire structure. A further planning application was submitted on 3 October 2007 which, for the first time, sought permission to demolish the whole of the existing structure. Permission was given on 26 November 2007. As far as one can tell from the contemporaneous photographs taken by Ms Wilks the last walls were demolished at some time between 18 November and 8 December 2007.
52. In fact, nothing turns on the outcome of this issue apart from, possibly, the reliability of the evidence of Ms Wilks and her credibility. As to the latter, I should say at once that Ms Wilks was giving evidence about matters which had occurred some five years earlier and which were probably not of any great significance either at the time or subsequently. In these circumstances, it would not be surprising if her memory was at fault. I can see no reason why she might have wanted to lie about it.
53. I find that what probably happened was that a decision was taken in principle, in about August 2007, to demolish the entire structure if planning permission could be obtained to allow that. The specification and the contract with Mr Fagot must have been based on the assumption that appropriate planning permission would be granted. I accept the evidence of Ms Wilks that there was a meeting on site in October or November 2007 when just a couple of the original walls remained and I find that there was a discussion at this meeting about the advantages of demolishing the remaining walls and the fact that if the existing house was entirely demolished there would be a significant saving of VAT. This, I suspect, was an opportunity taken by Mr Ramus to justify to Ms Wilks the decision to demolish the whole structure. It is reasonably clear that, subject to planning permission, the decision to demolish the whole structure had already been taken, at least in principle, at some time in August 2007. I consider that Ms Wilks has mistakenly conflated the timing of that decision with the meeting in October/November 2007.
54. It has not been suggested that, in terms of the outcome of this preliminary issue, anything significant turns on whether the decision to demolish the building in its entirety was taken in August 2007 or in October/November 2007. As I have already said, I can see no reason why Ms Wilks should have chosen to lie about the timing of the decision. I consider it far more likely that she was just mistaken in her recollection and that, because she has a fairly vivid recollection of the meeting in October/November 2007, she has attributed the decision to demolish the entire building to that meeting, rather than to some earlier point in time.

The choice of the builder

55. It was suggested to Ms Wilks that they chose Mr Fagot because he submitted the cheapest quotation. Mr Ramus had recommended a firm called MGS Builders, but Ms Wilks said that they rejected them for three reasons. First, they had apparently done a poor job on the decking for a terrace on a neighbouring property. Second, they did not like the attitude of the man who came to quote. Third, MGS never finalised their price, and the initial specification included a number of features that Ms Wilks and Ms Moseley did not want: apparently, MGS were not prepared to submit a firm price until they were assured that they would get the job. By contrast, they liked Mr Fagot and he had come well recommended. According to Ms Wilks, Mr Ramus eventually agreed that they should use Mr Fagot.
56. I accept Ms Wilks's evidence about this. It has been consistent and there has been no evidence to the contrary.

The course of the building work

57. The work started with the demolition of most of the structure in about September 2007. Ms Wilks took a very large number of photographs of the work throughout the construction period. Some of these photographs were disclosed during the original disclosure process, but it emerged during the cross-examination of Ms Wilks that there might still be further photographs on her computer that had not been disclosed. I therefore directed that there should be a further search for any other photographs of the construction in progress and that Ms Wilks and Ms Moseley could be recalled for further cross-examination if the further disclosure revealed a significant number of additional photographs. In fact, numerous further photographs were discovered and disclosed, and so the Claimants were permitted to recall Ms Wilks and Ms Moseley for further cross-examination. This took place on 6 December 2012.
58. Ms Wilks's evidence about her reason for taking so many photographs was not entirely consistent. Initially, she said that she was just interested in making a record of what happened because this was their first construction project. Later, she said that it had been suggested to her by Mr Ramus that people often liked to produce a photographic record of the construction which could then be compared with photographs of the completed building when all the work was finished. He had apparently told Ms Wilks that this was what people often did.
59. However, whichever explanation is correct - and it may have been a combination of both - it does not really explain why quite so many photographs were taken of similar features. For example, there was a series of about seven or eight photographs taken on one visit showing flooded foundation trenches. Ms Wilks said that she had a reputation for taking photographs of her feet, in other words by mistake, and that she may have taken some of these photographs inadvertently.
60. It was suggested by Mr Morgan that Ms Wilks took the number of photographs that she did because she was aware that the work was not been carried out properly and that she wanted a record of this should there be a subsequent dispute about the quality of the workmanship. I reject this suggestion emphatically: indeed, I regard it as quite unrealistic. There is no evidence that Ms Wilks showed any of these photographs to Mr Ramus, as one might have expected her to have done if she was concerned about the quality of the work that was being carried out. It was suggested that she did not care about the quality of the workmanship because she was not proposing to live in the house but to sell it. In my view, this does not make sense. Whether Ms Wilks and Ms Moseley were intending to live in the house or to sell it, they were paying to have the work properly done. There was nothing whatever to be gained by allowing shoddy workmanship when it was their contractual right to have good workmanship. In relation to the photographs about the excavations, which were taken on 7 November 2007, the building inspector in fact inspected the excavations the following day - there was no reference in his visit report about problems with flooded excavations.
61. I have come to the conclusion that Ms Wilks was simply a compulsive photographer who, for the most part, took the photographs because she wanted a record of something which for her was a new and different venture. However, I accept that at certain points she took photographs of aspects of the work that had the potential for being the subject of a subsequent dispute or needed to be the subject of a record, such as the propping to the bank between No 22 and No 23 or the precise line of the old fence at the boundary at the rear of the property.
62. It was insistently suggested to Ms Wilks in cross examination that these photographs contained numerous examples of poor workmanship during construction. Ms Wilks denied the suggestions. She said, and I accept, that she was not an expert in construction and that she saw nothing to give her cause for concern that the work was not being properly carried out. As she pointed out, not unreasonably in my view, the site was being regularly visited by Mr Ramus, and at fairly frequent intervals - on average about every three weeks or so, according to the documents - by the building inspector appointed on behalf of the local authority^[1]. Many of the features that were said to constitute defects in the workmanship must have been apparent to the building inspector during his visits. With one or two very minor exceptions, there is no report of defective work being recorded by the building inspector.
63. I have to say that I saw nothing in the photographs that I could categorise positively as examples of bad workmanship. It is quite true that Mr Fagot was not a tidy builder and that the site was generally a mess. In one or two places also the workmanship to the blockwork was somewhat sloppy, in the sense that the mortar was not neatly trimmed and the occasional block might have been slightly out of alignment. But whilst features such as these show a lack of perfection on the part of the bricklayer, they are subsequently covered up by other finishes and so generally do not matter because usually they will be of no structural significance. If, of course, blockwork is so poorly constructed as to be structurally unstable, that is another matter: but I saw nothing of that sort in the photographs.
64. One example of allegedly poor workmanship relied on by Mr Morgan was the fact that some of the joists were made of new timber and some of old timber. I can see absolutely nothing wrong in this: indeed, I would expect the builder to reuse existing joists wherever he could. To do so is not only economical, but well-seasoned timber is often better than new timber.
65. I would not go as far as to say that there were no patent defects of workmanship in the construction of the property, but I am not satisfied that any such defects as were said to be revealed by the photographs were evident to either Ms Wilks or Ms Moseley. Photographs are notoriously unreliable on matters such as this. For example, on more than one occasion Mr Morgan suggested that this or that wall was out of vertical or was not parallel with another wall: but experience shows that in the case of this sort of detail it is almost impossible to draw reliable conclusions from photographs. Again, I am not prepared to say that some of the examples given by Mr Morgan were not true examples: all I can say is that in my view this was not reliably demonstrated by the photographs.
66. One striking example relied on by Mr Morgan was the propping to the bank forming the boundary with the property owned by Mr Jenkins. This was indeed a fairly extraordinary structure that would not have been out of place in a drawing by W Heath Robinson, but so far as I can tell it appeared to support the bank. Mr Jenkins had a wooden shed on the edge of the boundary, which it was said had been filled with a heavily laden deep freeze in order to maximise the load on the bank, but I could see no sign of any subsidence of the bank immediately below the shed. It looked from the photographs as if there had been a minor slippage of soil, at a point fairly remote from the shed, before the propping was in place. However, in spite of encouragement by Mr Morgan, I could not see any clear evidence in the photographs of subsidence that had occurred once the propping was in place.
67. Ms Wilks was cross examined about the work on site by reference to some photographs that she had taken between 16 December 2007 and 23 January 2008. It was suggested that these showed that "there were some fairly unusual things going on". Ms Wilks said that it was ridiculous to suggest that she was aware that there was anything wrong and that, in any event, it was all there to be seen by the building inspector. I note that the building inspector visited the site on 18 and 20 December 2007, and again on 9 and 24 January 2008, and that the subject of his visit reports was either "Oversite" or "Excavation". The reports of these visits do not make any reference to problems with the quality of the work, apart from the existence of a design problem that resulted from the level of a new drain. When she was recalled for further cross examination (on 6 December 2012) Ms Wilks was asked about other, recently disclosed, photographs that had been taken during this period, which were said to show, amongst other things, a small collapse of the bank on the boundary. Ms Wilks disagreed. It seems to me that the building inspector must have seen most, if not all, of what was shown in these photographs and, if he had had any concerns about what he had seen, I am sure that they would have been recorded in one or more of his visit reports.
68. More generally, I do not accept the proposition that an untidy site means bad workmanship: sometimes it does and sometimes it does not. I had the clear impression that Mr Fagot was an idiosyncratic builder, and perhaps somewhat chaotic, but not obviously or necessarily a bad one. As I have said, he had come well recommended by Mrs Lewis, for whom he had carried out work at their house in Hampshire. According to Mrs Lewis, her husband was a former Managing Director of Pirelli Construction, and although he was an accountant by profession, rather than a builder, he was "extremely knowledgeable" in relation to construction and from this I infer that he was a person who could have been expected to know a good builder when he saw one. Mrs Lewis clearly had a high regard for Mr Fagot. She was a transparently honest witness and her evidence about this was not challenged.
69. It was suggested to Ms Wilks that she assisted with some of the carpentry on site, with the inference that she knew much more about building than she was prepared to admit. This was based on some photographs showing Ms Wilks nailing in place a timber spacer between the joists. When she was asked about this Ms Wilks explained that she had wanted to leave her mark on the construction and so had signed a few of these spacers which she then wanted to fix in position. She said that the builder allowed her to do this and showed her how to nail the spacer in place.^[2] I have no reason to doubt Ms Wilks's evidence about this.
70. The only defect of which Ms Wilks and Ms Moseley plainly had knowledge was that of a defect in the first floor balcony that resulted in damage to the plaster on the soffit outside the front door. Her evidence was that this was rectified and I find that it was of no significance in the context of the allegations being made by the Claimants.
71. On the fourth day of the trial, when Ms Wilks and Ms Moseley were recalled for cross examination on the recently disclosed photographs, they were questioned about various photographs of the interior of the house during construction that showed blockwork walls which had been marked with red paint from a spray can. The cross examination of Ms Wilks about this opened as follows:

MR MORGAN: When you saw the building inspector on site, did he ever have with him a can of red paint?

A. Not that I recall.

Q. Do you know what a building inspector spraying red paint on a wall might indicate?

A. No idea.

Q. Would it cause you any concern if you came into your dream house and saw that people had sprayed red paint over various walls?

A. I didn't know they had.

Q. You didn't know they had?

A. No.

72. After a few of these photographs had been shown to Ms Wilks, all of which appeared to be of walls in rooms where there was to be plumbing, I asked Mr Morgan whether there were any photographs showing red spray paint on blockwork walls in rooms that did not have any plumbing. He said that he was not aware of any. However, as the following passage of her cross examination shows, Ms Wilks was unable to offer any firm suggestion as to the origin of the markings:

MR JUSTICE EDWARDS-STUART: Do you know why there were red lines on it?

A. I think it's because where they put the pipes for the shower head to go up. Because that side is where the lever is for the water.

MR MORGAN: I'm going to put it to you, Ms Wilks, that is a sign that DS has come in, and is not satisfied with

the quality of the construction and has sprayed red paint on the wall to indicate it's condemned. Do you accept that?

A. What is the DS?

Q. The district surveyor, the person checking the quality of the build?

A. The building inspector -- I have never seen or heard from Andy [Mr Ramus] there was anything wrong with any of the walls.

MR JUSTICE EDWARDS-STUART: Have you any knowledge of the local district surveyor from the local authority coming

and condemning the walls or putting red spray paint over the place?

A. No.

MR JUSTICE EDWARDS-STUART: Do you know specifically why the red spray paint was there, or are you guessing when you --

A. That -- I'm guessing that's a stud wall, and that's where the pipes were for the shower.

73. When Ms Moseley was called, having been present during the cross-examination of Ms Wilks, she gave the following evidence in chief:

Q. Can I just ask one matter which has just come up. Could you please turn to bundle I1. You may have to turn around now. So I1, 1 of 1, the photographs bundle. And start at 373. I think you have been in court this morning, but it's not very clear. But if you look at the back wall there, there's red lines on that back wall. Do you see that?

A. Yes, I see the red marks.

Q. Do you recall why those red marks were placed on that wall?

A. My memory recognition, that would have been related to where we were going to place tiles.

The cross examination by Mr Morgan went as follows:

Q. Well, in relation to your evidence about the red paint,who sprayed it?

A. I -- I -- that's why I knew it's me.

Q. Who?

A. Me. I sprayed it. That's why I knew what it was.

Q. You sprayed it?

A. Yes.

Q. Did the left-hand wall have any tiling on it?

A. Yes, that would -- just this section as you were in the tile -- shower. Where the shower tray is, yes.

Q. Is that marked?

A. Doesn't show clearly, but there is something, yes, on the left-hand side, so I want to say I presume yes.

Q. If you look at I373, it seems that only the rear wall is marked with red paint there. Why is it that only the rear wall is marked?

A. Yes, it clearly shows the rear wall on that photograph. From that photograph I couldn't tell one way or the other because of the angle of the photograph. Anything on that left-hand side wall, as you look at it.

Q. So just the rear wall. It's fair to say that other walls were tiled, weren't they?

MR JUSTICE EDWARDS-STUART: I thought Ms Moseley said she can't tell whether there was red spray on the other walls because of the colour of the photograph. Have we got a better photograph of this?

MR MORGAN: My Lord, no, I'm afraid not. So did you go to a hardware store and buy a can of red paint, Ms Moseley?

A. I physically went and bought two colour paints. I remember buying two, a red and another colour. What I used the other colour for, I can't recall, and it would have been B&Q.

Q. Why did you think it necessary to spray the walls like this?

A. We found it easier from taking from the drawings from the architect, the very specific detailed of the -- our bathroom, particularly bathroom suites, because it required where the toilets were going to go positioned and what areas to be tiled, and we were choosing tiles. So it was a clear way of going round and then to mark off what area's tiled. So taking a vision from the drawings to the physical part of the -- each room, that is was our -- that was my process.

Q. So both of your process?

A. Mm-hm.

Q. So is there any reason why Ms Wilks couldn't remember that?

A. Firstly, it was me that did the action.

Q. In the picture of I971, why did you consider it necessary to spray the block work behind the battens, rather than waiting for the plies [sic] to be put up to show the wall?

A. From my memory, would be -- I would have gone in there and I would have just sprayed the area. Obviously a batten marks the area as well as the wall.

Q. Why not spray the word "tiles"?

A. Not the option I chose.

Q. Well, I'm going to suggest to you that this is a story that is not true.

A. Disagree.

MR JUSTICE EDWARDS-STUART: Have you just made that up, Ms Moseley?

A. No.

74. In his closing submissions, Mr Morgan repeated the allegation that Ms Moseley had been lying about the use of the spray paint. I reject this submission and I accept Ms Moseley's evidence as truthful. If she had wanted to make up a story to explain the presence of the red spray paint, it would have been far easier to say that she wasn't quite sure but thought that it was probably to mark the places where there was to be plumbing, which would have chimed with the possibility that was raised by the court and the tentative answers given by Ms Wilks. If her answer about marking the walls which were to be tiled was a lie, then it was a very clever one because it was not only plausible but was in fact the only explanation which appears to accord with the photographic evidence, such as it was. In fact, I thought that Ms Moseley's evidence had the ring of truth. It is in my judgment understandable that Ms Wilks did not remember this, some five years later, since it was not she but Ms Moseley who bought and used the spray paint.
75. There was not a shred of evidence before the court that building inspectors in general, or the local inspectors in Southampton in particular, have a practice of using red spray paint to mark work that is to be condemned. The way in which the questions were put to Ms Wilks did not raise this merely as a suggestion, but contained an implicit assertion that it was a general practice of which she might be expected to know ("Do you know what a building inspector spraying red paint on a wall might indicate?"). I have to say that I have never heard of such a practice by building inspectors. It is of course well known that spray paint is a convenient way of marking objects that are to be dealt with in some particular way, whether it is a tree to be felled or the location of a proposed excavation in pavement, but that is quite different from an assertion that building inspectors generally, or at least often, use red spray paint to mark work that is to be condemned to an extent that might be regarded as public knowledge. Further, I could see nothing whatever about the relevant walls that suggested that there was anything wrong with their construction and there is no documentary record of the building inspector ever having condemned any part of the blockwork on this project (there were, as I have already noted, one or two cases where the inspector condemned a small detail - such as a poor drainage junction - but these were immaterial in the context of the project as a whole, and were probably not even known by Ms Wilks and Ms Moseley).
76. I have to say that I deplore cross examination of this sort. In general, a witness should not be accused of lying without the reason for the accusation being clearly stated. If those advising the Claimants had some evidence that the local building inspectors were in the habit of using red spray paint to mark condemned work, that evidence should have been produced or at least put to the witness in clear terms so that she could have the opportunity to answer it and so that the court would be able to assess it. All I was told by Mr Morgan, when I asked about this during his closing submissions, was that he put the questions on instructions on the basis of information provided by one of the experts.
77. I was unimpressed with this explanation. It did not tell me whether this was merely a suggestion by an expert, or whether it was a practice that an expert had heard of, or whether it was said to be a practice that was actually adopted in Southampton. More fundamentally, this seems to me to be an example of an undercurrent that underlies much of the conduct of this claim by the Claimants. They have shown themselves determined to go to any lengths, and appear to have instructed their legal and professional team to do the same, to find any ground, however flimsy, that could be used to discredit the evidence of Ms Wilks and Ms Moseley.

The payment of bills

78. It was suggested to Ms Wilks that towards the end of the project she and Ms Moseley had a shortage of cash and were finding it difficult to pay their bills. Three particular examples were given. First, it was put to Ms Wilks that they were unable to pay Mr Ramus and had to negotiate terms of payment with him. Ms Wilks said that they did have the funds to pay for the project but that there was a time right towards the end when they had to ask Mr Ramus to wait a month or so because they had just paid a substantial bill for the wood for the decking and could not settle his invoice straight away. She said that apart from this incident there had been no problems with paying Mr Ramus and that, in fact, they ended up on very good terms with him. Ms Wilks fairly pointed out that they would hardly have been given "a lovely book" by Mr Ramus with a dedication saying how it had been great working with them^[3] if there had been a problem with the non-payment of his invoices (Day 2, p 47). I find that, apart from this one incident when they had to defer payment for a few weeks, there was no difficulty in payment of any of the invoices from Mr Ramus.
79. There was some discussion in the evidence about Mr Ramus's fees: it was put to Ms Wilks that Mr Ramus was no longer prepared to continue acting under the terms of the original engagement because the project had changed so much. That was not in fact the case, because the terms of Mr Ramus's engagement dated 9 January 2007 expressly provided that the fee for the work carried out under RIBA fee stages G-L was either 35% of the total fee or to be agreed on an hourly rate. The following table sets out the sums invoiced by and paid to Mr Ramus.

80. Invoices 7 and 8 totalled £7,111. 35% of the agreed fee of £17,920 (12.8% of £140,000) was £6,272, so Mr Ramus was paid a little more under the hourly basis that was agreed for RIBA stages G-L than he would have received if paid on the percentage basis. Accordingly Ms Wilks was quite correct when she said in evidence that Mr Ramus's fees on the hourly basis would be in addition to what he had already been paid under the original agreement (for work stages A-F). In fact, as the table shows Mr Ramus did not invoice for each individual work stage in accordance with the RIBA scale, but the overall percentage of 65% for work stages A-F was correct.
81. The second instance was in relation to Mr Fagot. It was suggested that by the end of the construction project Ms Wilks and Ms Moseley were no longer paying Mr Fagot. Ms Wilks said that they paid Mr Fagot the sums that they were advised to pay by Mr Ramus. She said that towards the end of the project Mr Fagot wanted "a big payment upfront" in order to pay his suppliers. There was some concern about Mr Fagot's financial position and so Mr Ramus advised Ms Wilks and Ms Moseley to pay the suppliers direct, rather than make the payments through Mr Fagot as the building contract required. Ms Wilks said that Mr Fagot remained on site until the end.
82. It was not established in evidence precisely how much was actually paid to Mr Fagot, but I am not persuaded that if there was any shortfall in the payments by Ms Wilks and Ms Moseley that it was caused by any financial stringency on their part. There is no evidence that they did anything other than follow the advice that they were given by Mr Ramus. I am less confident about Ms Wilks's evidence that Mr Fagot was there until the end - I suspect that he may have left site leaving various snagging items unrectified - but I have not been shown any correspondence from Mr Fagot complaining of non-payment.
83. Towards the end of the project there was a problem with a feature known as "shadow gaps". Instead of having a skirting at the junction between the wall and the floor, there was a reveal. This was formed, I think, by a steel bar in the form of a hollow E. The difficulty was that the plaster had to be taken up to it and a neat join made between the plaster and the edge of the reveal. It appeared that Mr Fagot had difficulty with this and so, as I understood the position, a specialist plasterer had to be found who could carry out the work. These shadow gaps were not confined to the bases of the walls but in some cases surrounded the architraves of the doors or the windows. Ms Wilks was asked about several photographs that showed a rather messy detail between the plasterwork and the architraves of the doors or the windows. These were taken before the shadow gaps had been formed and I am not satisfied that they showed anything more than an incomplete detail, albeit that in some cases it may have required some form of remedial work and not just finishing off. I suspect that the problem in relation to Mr Fagot's demand for payment was also connected to the problem of the need to engage a separate plasterer to complete the shadow gaps.
84. The third example was in relation to Fast-Calc. Ms Wilks was taken to a letter from Fast-Calc demanding payment of an invoice with the threat of legal action. It was suggested to Ms Wilks that they were having difficulties paying Fast-Calc as well. Ms Wilks explained that they had questioned a particular invoice from Fast-Calc which related to a site visit by Fast-Calc in response to a request from Mr Ramus. This arose because the builder had raised a query about the size of some steels, and possibly their positions also, and so Mr Ramus had invited Fast-Calc to site in order to confirm that what had been constructed was correct. Ms Wilks said that she was also asked to attend the meeting. However, Ms Wilks said that the representative from Fast-Calc had not brought any of his papers were with him and so was in no position to deal with the queries raised by the builder. He therefore had to come back on another occasion. Ms Wilks's position, which I have to say seems to me to be a reasonable one, was that she did not see why they should pay a professional man for attending the site when, once there, he was unable to do his job because he had not brought with him the relevant information.
85. It was suggested by Mr Morgan in his written closing submissions that Ms Wilks should have known from her attendance at this meeting that there was something seriously wrong with the design of the steelwork. I cannot see how this inference can be drawn. The evidence of Ms Wilks was perfectly clear and that was that the problem was not resolved at the meeting: there was no evidence that it was not resolved at all or, more relevantly, that either Ms Wilks or Ms Moseley was aware that it was not resolved (if that was the case).
86. In these circumstances, I conclude that none of the examples of a supposed inability to pay for the project has demonstrated that this was the case. Ms Wilks frankly accepted that there was a cash flow problem at one point and so they had to ask Mr Ramus to wait a few weeks for his money, and I am satisfied that it was no more than that. I will deal with the financial position generally in the next part of this judgment.

The financial position of Ms Wilks and Ms Moseley

87. Mr Crowley, as part of his final submissions, produced two helpful schedules showing the affordability of a £350,000 mortgage in June 2006 and the affordability of servicing the debts owed by Ms Wilks and Ms Moseley as at 31 August 2009.
88. In June 2006 the projected amount of the mortgage was £350,599. The rate of interest was 4.99%, and so the projected annual repayments on the loan amounted to £26,283. At that time Ms Wilks was earning about £24,000 net per annum and the receipts from Ms Moseley's business were about £26,000 per annum, giving them a combined annual income of about £50,000. Thus the mortgage repayments took just over 50% of their combined income, leaving them with a net disposable monthly income of about £2,000. At that time, Ms Wilks said that they anticipated the costs of the building work as being in the region of £300,000, and not the £400,000 odd that they actually spent.
89. Miss Wilks said in evidence, and I accept, that they were able to live on this amount and to enjoy a reasonably good social life at the same time.
90. By the time when they decided to sell No 22, in August 2009, the mortgage repayments were slightly lower, at a little under £24,000 per annum, but they had taken out a personal loan of which the annual repayments amounted to just under £5,000. Thus the annual cost of servicing the debt was a little under £29,000.
91. Ms Wilks's net income for the year ending 31 August 2009 was about £37,500 and Ms Moseley's net receipts from her business during the same period were about £40,000. Thus they had a joint net annual income of a little over £75,000. So in fact their position had improved because the cost of servicing the debt was about 40% of their combined income. This figure would probably have to be adjusted upwards very slightly, because Ms Wilks's income included reimbursement for motor mileage - a cost, which at least in part, was actually incurred.
92. These figures have not been challenged on the part of the Claimants, perhaps unsurprisingly because they have been drawn from the disclosed bank statements, and I accept them. In my judgment, it is not necessary to explore this issue any further because I am quite satisfied that the position of Ms Wilks and Ms Moseley in the autumn of 2009 was no worse than it had been in June 2006 when they took out the mortgage. Further, they still owned at least one of the Barrett buy to let properties, in which there was an equity of some £50,000, and the fact that they had not needed to sell it suggests very strongly that their financial position was satisfactory. For this purpose I am content to ignore the fact that in November 2009 Ms Moseley's mother died leaving her a fairly substantial amount of money - of the order of £250,000. However, this inheritance is relevant in relation to another aspect of the case which I will discuss in the next part of this judgment.
93. Accordingly, I reject the Claimants assertion that Ms Wilks and Ms Moseley would have been forced to sell No 22 in any event even if Ms Wilks had decided to remain in her former employment.

The inheritance from Ms Moseley's mother and the decision to buy No 11 Crowsport

94. Ms Moseley's mother died unexpectedly on 3 November 2009, some two weeks before contracts were exchanged for the sale of No 22, leaving her a substantial inheritance which turned out to be about £250,000.
95. In the circumstances Mr Morgan asked Ms Moseley why they did they not change their mind about selling to the Claimants because they could have afforded to pay off a substantial part of the mortgage leaving the repayments at a manageable level. Ms Moseley's evidence was this:

Q. You're going to receive a quarter of a million pounds from her. You have GBP 50,000 in your rental property. If you had applied both of those to your mortgage of 415,000, it would have gone down to 115,000, wouldn't it?

A. Yes.

Q. You could afford to live there?

A. Yes.

Q. Why did you move?

A. I think I was a bit exhausted with events going on because of mum's situation, and we just said, no, we'll follow what decisions we've made, you know, Debs needs the whole transition, she's got a lot of studying for her, it's a new environment for her. And you know, true to our word, we said that's -- you know, we were true to our word, we'd made the decision.

96. This seems to me to have been a perfectly understandable response. By this time Ms Wilks had already given up her job and started a new course, the Claimants had already had at least two surveys of the property carried out (one by a building surveyor and one by a plumbing expert) and Ms Wilks and Ms Moseley had psychologically prepared themselves for the sale. I do not consider that it can be inferred from this decision, which was made at a time when Ms Moseley had just lost her mother and things cannot have been easy, that Ms Wilks and Ms Moseley had always intended to sell the property.
97. Following the sale in January 2010 Ms Wilks and Ms Moseley bought a flat at No 1 Nightingale Walk, Netley, for £210,000, of which £27,000 was funded by a mortgage. Later they bought No 11 Crowsport for £425,000. This purchase appears to be financed partly out of the proceeds of sale of No 22 and partly from Ms Moseley's inheritance.
98. At the time of the hearing Ms Wilks and Ms Moseley were still living at No 1 Nightingale Walk, although the completion of the refurbishment of No 11 Crowsport was fairly imminent. Ms Moseley made the telling point in her witness statement that they would hardly have bought a house that was less than 100 yards away from No 22 if they knew that No 22 had been badly built.

The cutting of the joists

99. Ms Wilks and Ms Moseley had installed an entertainment system which included a large screen and a projector on the first floor. The screen was retractable so that it could be concealed in a recess above the ceiling when not in use. One of the allegations made by the Claimants is that notches were cut in the joists above the ceiling in order to accommodate the screen and that no measures were taken to strengthen them. It is said that the structure was unsafe as a result.
100. When Ms Wilks was questioned about this she explained that the suppliers of the system had undertaken to install it. She said that they carried out a survey of the house beforehand and that she remembered a conversation with them at the time of the survey. She recalls that they asked which way the joists ran. She said that they told her that if it was necessary to cut the joists, they would reinforce them. She did not see the work being carried out and said that she assumed that they would have done whatever was required to achieve a proper installation. She said that as far as she was concerned, they were specialist contractors and she assumed that they knew what they were doing. She did not take any steps to check or inquire as to what had been done.
101. It was suggested to her that if she had looked into the space above the screen she could have seen that the joists ran at right angles to the plane of the screen and that they had not been strengthened in the places where they had been cut. I am not sure that she was prepared accept this, but in any event her response was that she saw no need to check what had been done and did not do so. I am a little doubtful as to whether or not there was in fact any discussion at the time of the survey about strengthening the joists, but in my view it does not really affect the position. It seems to me that in her position she was entitled to take the attitude that she did: she and Ms Moseley had engaged specialists to supply and install the system and they were entitled to assume that they would do what was necessary.
102. In this context I consider that it is relevant that this problem was never raised or identified by the Claimants' building surveyor when he surveyed the property. It was a feature that might have been have expected to attract the attention of an experienced surveyor, and it is perhaps a little surprising that he (or she) did not look into the space in which the screen was housed in order to check what had been done. I am not suggesting that if this was not done, the surveyor would have been negligent: it just strikes me as a little unrealistic to criticise Ms Wilks and Ms Moseley for failing to carry out the very type of check that it seems did not occur to the Claimants' own surveyor.
103. I should add that it seems to me that this was a very expensive system - altogether it cost about £13,000 - to have installed in a house if one was planning to sell it within a few months.

The matters relied on by Ms Wilks and Ms Moseley

No evidence of carrying on business as property developers

104. The first and fundamental submission made on their behalf is that there is absolutely no evidence that they carried on business as property developers. The history of the property dealings up to the time when they bought No 22 was unexceptional and typical of many other professional couples. It is a matter of history that, until the market collapse in the autumn of 2008, buying a property, doing it up and moving on was a tax efficient method of building capital of which many hundreds of thousands of couples must have taken advantage. It is certainly true that Ms Wilks and Ms Moseley were on the property ladder, and indeed climbing it fairly successfully, but that does not make them property developers. The Barratt buy to let houses had nothing whatever to do with property development, they were simply a form of capital investment. Some people are content to buy pensions, others prefer the security of bricks and mortar.
105. If the Claimants' case is to succeed at all, I find that it must do so on the basis of events occurring from the time when Ms Wilks and Ms Moseley decided to buy No 22 to the time when they entered into the contract with Mr Fagot in August 2007.
106. The suggestion that they bought No 22 as a development project is, in my view, hopeless. If their intention at that time was to develop the house and then sell it on at a profit, they would have got on with it straight away. In fact, what they did was to carry out various works of improvement - the replacement of the windows and fitting new flooring - which would be very largely a waste of money if they were subsequently intent on carrying out major works of the type that eventually happened. In my view, this was simply not the conduct of people who intended to set themselves up in business as property developers.
107. In my judgment, the focus must be on the events of 2006/2007. When one does this, as Mr Crowley has pointed out, it is a remarkable feature of the case that the Claimants cannot point to a single piece of direct evidence that shows that either Ms Wilks or Ms Moseley had any intention other than that of turning No 22 into their dream home. That was the impression given to their friends and neighbours, as the evidence demonstrates. That is not simply the evidence of the three witnesses who gave evidence on their behalf, but also the evidence in the form of the inscription in the book that they were given by Mr Ramus and the earlier gift of a book by another neighbour^[4] which was intended to give them ideas for their new home.
108. At no stage during cross examination did either Ms Wilks or Ms Moseley concede that it had ever been their intention to resell No 22, nor did either of them make any concession about anything that would be consistent with such an intention. On this aspect their evidence remained unshaken.
109. The contemporaneous correspondence, which is often a reliable indicator of people's intentions at the time, does not contain a single document that supports the suggestion that Ms Wilks and Ms Moseley intended to develop the property for profit.

The unusual features that were installed by Ms Wilks and Ms Moseley

110. Ms Wilks and Ms Moseley have pointed to a large number of unusual features that were incorporated into the house, which were the result of their particular taste and were not necessarily likely to improve its resale prospects. They are listed at length in paragraph 50 of Ms Wilks's witness statement, and include the following:

(1) The installation of two kitchens, one upstairs and one downstairs. This was hardly a necessity in a house of this size and Ms Wilks said that this was because they liked to entertain a lot.

(2) The installation of a bespoke Paul Smith bathroom which Ms Wilks suggests would not have been to everyone's taste.

(3) A bespoke cantilever front door, which was hinged and attached from both the bottom and the top, so that it did not open like a conventional door.

(4) The drop-down projector screen which was concealed in the ceiling (and has given rise to an issue about the cutting of joists in order to accommodate it).

111. I consider that there is some force in this point, although I do not accept that by any means all of the items listed by Ms Wilks were ones that would not improve the value of the property. For example, the glass box arrangement that took the place of a normal ceiling on the first floor. I would have thought that that was just the sort of feature that would appeal to a potential purchaser.
112. In my view a more compelling point was the fact that prior to the civil ceremony, Ms Wilks and Ms Moseley asked their friends to contribute to an art fund, instead of giving the usual wedding presents, so that they could commission or buy a work of art for the house. With the money they commissioned a large picture that was specially designed to fit on a particular wall. It was not the sort of picture that could be easily moved and was not, I would have thought, one that would necessarily appeal to the typical purchaser. I consider that this was not something that a couple would do unless they intended to occupy the house for some time as their home.

The photographs of the construction and subsequent purchase of No 11 Crowsport

113. I have already discussed the interest that Ms Wilks took during the construction period and the very many photographs that were the product of it. Her obsession which resulted in the taking of so many photographs seems to me to be far more consistent with the act of a person who wanted to make a record of a special project, rather than a person taking routine photographs to record the progress of a business project.
114. I have already referred to the fact that Ms Moseley made the point that she and Ms Wilks would hardly have decided to buy another property that was within 100 yards of No 22 if they were aware of the fact that there were significant defects in the construction of No 22. This is a powerful point: it seems to me inconceivable that anyone would buy a house almost next door to one that they had just built and sold knowing that it was riddled with defects.

The absence of an NHBC or similar certificate

115. Ms Wilks and Ms Moseley never discussed with Mr Ramus the need for an NHBC certificate and so they did not register as builders or developers with the NHBC Buildmark Scheme or any similar scheme that would provide a warranty of the construction for the benefit of a subsequent purchaser. The evidence suggested that, in the absence of any such certificate, it would be difficult, if not impossible, for a future purchaser to obtain a mortgage. Accordingly, the point made on behalf of Ms Wilks and Ms Moseley is that it would be very strange to develop a property in order to sell it whilst at the same time limiting the potential purchasers to cash buyers. The evidence shows that Ms Wilks and Ms Moseley were aware of the existence of such schemes.
116. This seems to me to be another telling point. I find it unlikely that anyone developing a property as a dwelling for profit would not take steps to register under the NHBC (or similar) scheme.

The Grand Designs competition

117. Mr Ramus wanted to enter the house in the Grand Designs competition, which was restricted to self-build houses - in other words, those not built by property developers. To this end he arranged for a professional photographer to take photographs of the house and an entry was subsequently submitted for the competition.
118. The point made on behalf of Ms Wilks and Ms Moseley is that Mr Ramus would not have done this unless he was satisfied that they were developing the property as their own home and not as a business venture for resale. This is a fair point. That this was Mr Ramus's belief is supported by the inscription in the book that he gave to Ms Wilks and Ms Moseley on completion of the project.

Conclusions

119. From the outset the Claimants' case did not look promising. The evidence has not improved it. I am completely satisfied, taking the evidence as a whole, that when Ms Wilks and Ms Moseley embarked on the rebuilding of No 22 they did not have any intention of selling it. The evidence points overwhelmingly, in my view, to the conclusion that they built it as their dream home as they have always contended.
120. Ms Wilks was subjected to sustained and forceful cross examination but her evidence on the essential points did not shift. Similarly, Ms Moseley's position did not shift either - although, as I have noted, she gave as a further reason for selling No 22 the objectionable behaviour of their next door neighbour, Mr Jenkins. I find it understandable that Ms Wilks, who seemed to be on the receiving end of any abuse from Mr Jenkins, might have been reluctant to raise it herself. All in all, I consider that they were honest witnesses even if their recollections of particular events were not always reliable. But as I have already said, that is not really surprising when many of the events in question occurred over five years ago.
121. But even if I had felt uncertain about the reliability or honesty of Ms Wilks or Ms Moseley, the contemporaneous correspondence and the evidence of the other witnesses all pointed one way, and that was in favour of the case put forward by Ms Wilks and Ms Moseley.
122. This is not a case where the Claimants have simply failed to prove their case: I am quite satisfied that Ms Wilks and Ms Moseley have made good their defence.
123. I am also quite satisfied that neither of them was aware of any defects in the construction of No 22, or at least not of any defects that were of any significance. I accept that there were one or two matters that may have given them concern, such as providing proper support to the bank that divided the property from No 23 whilst the retaining wall was demolished and rebuilt, and Mr Fagot's ability to carry out the plastering for the "shadow gaps", but - so far as I am aware - these had nothing whatever to do with the matters now complained of by the Claimants.

Note 1    There were 15 inspections by the building inspector between 8 November 2007 and 18 November 2008. These contain the comments that one would expect for this type of inspection. There is no suggestion in the visit reports that the building inspector had any serious concerns about the general quality of the work (although on one occasion he did record that he wished to see certain calculations for beams and insulation).    [Back]

Note 2    The spacer is not a structural component in the sense that it carries a load: it is simply there to prevent the joists from twisting or moving laterally. Nailing one in place is not difficult and it probably does not matter very much if on occasion it is not done very well.    [Back]

Note 3    The inscription read: "Helen and Debs. Great working with you guys. Enjoy the home. Lots of love".    [Back]

Note 4    Mr Steve Hinton-Leaver, who was the owner of the neighbouring property at which MGS Builders had installed the defective decking to a roof terrace.     [Back]