If a home is built defectively, but the owners can still live in it, what compensation can they claim from the house builder for their loss of enjoyment? Such compensation is usually referred to as damages for "distress and inconvenience". Three cases have come before the Technology and Construction Court in the last year or so, that give some guidance both to owners and to those acting for developers and their insurers.

A key point is that the Courts do not over-exert themselves to compensate claimants for this type of suffering. Where there is a breach of contract, the law allows damages for distress and inconvenience only in two types of case. The first is where the provision of pleasure, or peace of mind, is an important part of the contract. In Farley v Skinner (2001) the law lords held that this could apply to a contract where a surveyor was engaged specifically to advise a prospective purchaser about the likelihood of aircraft noise near the property that he was intending to buy. It could also apply, they held, to a contract where an architect was engaged to design a bespoke staircase for a gallery and entrance hall. However, standard contracts for the construction of homes (or for the employment of surveyors to survey them) will not generally fall into this category.

The second type is where some physical inconvenience and discomfort, and possibly associated mental suffering, has been caused as a direct result of bad workmanship. Here, damages are recoverable. However, the courts have made clear that such damages will be modest and restrained. So what is the going rate? It all depends on the facts, as any cautious lawyer will say. Nevertheless, the three cases referred to do give some indication as to what one can expect.

In Eiles v Southwark Council (2006), the Council was held to be liable for tree root damage caused to a nearby house. The owner had to live for 5 years in a house with cracked walls and also had to vacate the property while underpinning works took place. The judge gave Mrs Eiles £2250, which equates to about £450 a year, and included something for the inconvenience of having to move out temporarily. The discomfort in this case appears not to have been too significant.

In the second case, Iggleden v Fairview New Homes Limited (2007), the houseowners had to endure a wide variety of problems, including floors that were out of level, together with ponding on their driveway and rainwater in their garage caused by poorly laid tarmac. The judge regarded the disruption to the couple who owned the home as being "in the middle" of the sort of disruption that homeowners might suffer in circumstances of this nature. He awarded each of them £750 for each of the three years disruption- £2,250 each.

The third case is AXA Insurance UK plc v Cunningham Lindsey UK (2007). This was rather different, in that it involved an insurer suing its loss adjuster for failing to deal properly with a subsidence claim by its insured homeowner. So concerned was AXA to avoid the bad publicity that the homeowners threatened to create that it entered into a settlement with the three occupiers that appeared to include a whopping £92,000 for distress and inconvenience. Needless to say, the judge held that this was far too much, and that AXA could not pass it on to its loss adjusters. Here, he said, in a case involving settlement with consequential replacement of lintels, replastering, repointing and damp repairs, a figure of £1,800 a annum for each occupier was the most that could be justified. A figure of £2,500 would usually be a maximum for this type of award, he added.

Lawyers and insurers in personal injury cases have access to tables (which are regularly updated) to assist them on the going rate for broken limbs and other injuries. There are no such tables for those dealing with defective works to dwellings. Of course, many cases depend on their facts. Nevertheless, these awards give some rough guidance. Based on an amount for each person per annum, £450 seems to be on the low side, £750 somewhere down the middle, and £1,800 or so (with a maximum of £2,500) up at the top end.

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For further information about this published aticle, contact Kathryn Hobbs on +44 (0)121 213 2397, Alexa Highfield on +44 (0)121 213 2396 or Matthew Purcell on +44 (0)121 213 2360

This published article may contain information of general interest about current legal issues, but does not give legal advice.