Hodgson v National House Building Council, Court of Appeal - Technology and Construction Court, August 29, 2018, [2018] EWHC 2226 (TCC)

Resolution Date:August 29, 2018
Issuing Organization:Technology and Construction Court
Actores:Hodgson v National House Building Council

Neutral Citation Number: [2018] EWHC 2226 (TCC)

Case No: HT-2017-000251




Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 29/08/2018

Before :


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Between :

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Daniel Goodkin (instructed by White & Black Limited) for the Claimant

Samuel Townend (instructed by Howes Percival LLP) for the Defendant

Hearing dates: 16th April and 29th August 2018

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Judgment Approved

Mrs Justice Jefford:


  1. The Claimant, Mr Hodgson, and his ex-wife were the owners of a bungalow, Lentune House, Church Brampton, Northamptonshire NN6 8AU. The bungalow was constructed in around 2002 by a builder, PA Groves Ltd. (``Groves''), and the property had the benefit of an NHBC Buildmark policy (``the Policy''). As more fully set out below, in September 2004 Mr Hodgson made a claim under the Policy against Groves in arbitration in respect of which there was a Partial Award. The award in Mr Hodgson's favour was largely not paid by Groves but met by the NHBC. Mr Hodgson then commenced a further arbitration under the JCT contract with Groves. By March 2010, Groves was heading for insolvency and in due course became insolvent. An agreement (``the Settlement Agreement'') was reached between Mr Hodgson and the NHBC under which Mr Hodgson discontinued the JCT arbitration and made a claim against the NHBC. The NHBC refused to make any further payments to Mr Hodgson largely on the basis that he was seeking to make claims already dealt with and determined in the arbitration. In February 2013, Mr Hodgson sold the property without having carried out any remedial works. These proceedings were commenced in September 2017. The NHBC now applies for summary judgment and/or to strike out the whole or part of the claim.

    The NHBC Buildmark Policy (``The Policy'')

  2. The terms of this Policy provide the background to what has happened in this long-running story and are also central to the issues that arise on these applications. The material provisions are as follows:

    (i) Definitions


    The cost we would have had to pay if we had arranged for the work to be done.


    Physical Damage to the Home caused by a Defect.


    A breach of any mandatory NHBC Requirement by the Builder or anyone employed by him or acting for him. .....''

    (ii) Section 2: The first 2 years after completion

    ``The Builder's obligations

    This part of the cover tells you what the Builder must do if you give him written notice of Defects or Damage in your Home. This notice must be given as soon as possible within the period of cover.

    The Builder must take the actions shown in the green panel below, but he does not have to take action to deal with any of the items in the blue panel.''

    (iii) The period of cover is defined as 2 years from the date of the Insurance Certificate.

    (iv) The green panel is headed ``What the Builder is liable for'' and contains the following:

    ``Within a reasonable time and at his own expense, to put right any Defect or Damage to your Home or its Common Parts which is notified to him in writing within the period of cover.


    If he is given written notice of Defects or Damage within this period of cover, the Builder remains liable as above, even after this period of cover ends.''

    (v) The blue panel is headed ``What the Builder is not liable for''. It lists various matters no relevant to this dispute and includes:

    ``Any cost or expense greater than that necessary to carry out a workmanlike repair of the Defect or Damage ...

    If you are not the First Owner, anything which you knew about when you acquired the Home and which resulted in a reduction in the purchase price you paid or which was taken into account in any other arrangements.''

    (vi) The NHBC Insurance

    ``This part of the cover only applies if the Builder does not meet his obligations under Section 2.

    We will either pay for the items in the green panel below or, at our option, arrange for the necessary work to be carried out at our expense. We will not pay for the items in the blue panel.''

    (vii) The period of cover is again 2 years.

    (viii) The green panel is headed ``What NHBC will pay'' and provides as follows:

    ``Any arbitration award or court judgment which you obtain against the Builder relating to obligations under Section 2 which he has failed to honour.


    If the Builder is insolvent, the Cost of any work which he would otherwise have been liable for under Section 2.''

    (ix) The blue panel is headed ``What the NHBC will not pay for'' and includes ``Anything listed in the General Exclusions''. The General Exclusions include:

    (a) At sub-paragraph (i):

    ``Loss of enjoyment, use, income or business opportunity, inconvenience, distress or any other consequential loss affecting you or any loss of value of your Home.''

    (b) At sub-paragraph (k):

    ``Costs or expenses greater than would have been paid or incurred by a reasonable person in the position of the Owner spending his or her own money.''

    The NHBC arbitration and the JCT arbitration

  3. In September 2004, Mr Hodgson commenced an arbitration against Groves under the terms of the Policy. The arbitrator (``the arbitrator'') appointed was Mr Roger Dyer. Mr Hodgson's claim was for £965,991. I shall refer to this arbitration simply as ``the arbitration''.

  4. What happened in the arbitration is of importance to this application:

    (i) Mr Hodgson's claims were set out in a Scott Schedule (``the NHBC Scott Schedule'') which ran to 152 items under 16 headings.

    (ii) The arbitration hearing lasted 5 days in September 2006 and, at that stage, the Claimant represented himself.

    (iii) The evidence adduced on behalf of the Claimant included a Report on Defects by Mr Ian Salisbury dated 6 June 2006; an Amended Quantity Surveying Report by Mr Peter Jaggard dated 15 September 2006; a number of reports from Mr Ian Fowler as to the alleged defects and repair works; and other expert evidence which I shall refer to as necessary.

    (iv) Following the hearing, the Claimant engaged counsel, Mr Peter Aeberli, to represent him and Mr Aeberli prepared the written closing submissions which were submitted on Mr Hodgson's behalf.

    (v) The arbitrator's First Partial Award (``the award'') was made on 19 January 2007.

    (vi) Mr Hodgson was awarded £153,598 and a subsequent award was made in respect of VAT. The arbitrator, however, also awarded sums by way of costs and his fees against Mr Hodgson, much reducing the net total due to him.

  5. Groves failed to pay the full amount and the NHBC paid Mr Hodgson £114,371 discharging its liability under Section 2 of the Buildmark Policy.

  6. Subsequently, Mr Hodgson commenced a further arbitration against Groves under the JCT contract between them (``the JCT arbitration''). The arbitrator was Mr Calcroft. This arbitration got no further than a preliminary award on jurisdiction and an award of costs to Mr Hodgson.

    The Settlement Agreement

  7. Groves became insolvent and was wound up on 27 April 2010. Under the Policy, in the event of Groves' insolvency, the NHBC agreed to pay any arbitration award which the Builder failed to honour. Before Groves was wound up, Mr Hodgson claimed from the NHBC the sum awarded in the JCT arbitration and intimated that he would claim against the NHBC any further sums awarded. This led to an agreement between the Claimant and the Defendant which has been referred to in these proceedings as the Settlement Agreement. There is no dispute about the formation and terms of the Settlement Agreement as such.

  8. By letter dated 10 March 2010, Mr Masson of Denton Wilde Sapte, then acting for the NHBC, made 3 proposals to Mr Hodgson. The letter made a number of ``introductory observations'' including the following:

    ``In summary with regard to Buildmark, in order for it to respond to your further claims, those claims will need to:

    (a) have been notified to the Builder as soon as you noticed them and in any event within the first two years of your Policy. You will need to prove this;

    (b) fall within Section 2's coverage;

    (c) have not already been disposed of by Mr Dyer, and;

    (d) fall outside of Buildmark's general exclusions.''

  9. The proposals then made were in summary as follows:

    (i) Under Proposal 1, the letter explained that by virtue of Section 2 of the Policy, if the Builder was insolvent, the NHBC would be liable for ``the Cost of any work which he would otherwise have been liable for.'' At the time, Groves was not insolvent, so Mr Hodgson could not claim on this basis and the arbitration would continue until Groves was wound up. The letter continued:

    ``For these reasons NHBC is prepared to treat the Builder as insolvent for the purposes of any claim that you may wish to bring under Buildmark. You will appreciate I hope that this is a relaxation of NHBC's strict legal rights. If you agree to adopt this course then NHBC would require you either to discontinue the arbitration or waive any claims against NHBC in relation to it, should you choose nonetheless to proceed with the reference. If you accept this proposal, and provided that the reference is then concluded, NHBC will pay the costs that you have demanded. You will then have three months in which to formulate and submit your claims under Section 2, which will then be determined by NHBC in the usual way in accordance with the terms of Buildmark.''

    (ii) Proposal 2 was that the NHBC should be joined as a party to the extant arbitration under the JCT contract.

    (iii) Proposal 3 was that the arbitrator adopted a full inquisitorial role.

  10. Following Groves' insolvency, a without prejudice meeting took place between Mr Masson and Mr Sliwinski, representing Mr Hodgson, on 18 June 2010. That was followed by a without prejudice letter dated 21 June 2010 from Denton Wilde...

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