Aerial top down shot of a house frame on a construction site surrounded by mud

Building defects can often be the source of a great deal of stress and inconvenience for homeowners. A question we are often asked by clients is whether a party can claim damages for the stress and inconvenience caused by defects, otherwise known as “Non-Pecuniary Loss”.

The answer depends on the circumstances of a case. However, the right to recover is also dependent on general legal principles, exceptions, and judicial precedent.

What is Non-Pecuniary loss?

Non-Pecuniary Loss is a type of loss which is typically difficult to quantify in monetary terms and includes pain and suffering; mental distress and inconvenience; and loss of amenities.

Can a party claim Non-Pecuniary Loss for breach of contract?

The general rule is that a contract-breaking party is not liable for moral or Non-Pecuniary Loss. There are exceptions to this rule, including where pain, suffering, distress and inconvenience, loss of amenities, or loss of expectation is caused to an individual by the breach. There is also an exception where the very object of a contract is to provide pleasure or peace of mind.

As mentioned, each matter must be judged on its unique circumstances. In commercial cases, a party is unlikely to be able to claim Non-Pecuniary Loss as, per the words of Lord Bingham, “contract-breaking is treated as an incident of commercial life which players in the game are expected to meet with mental fortitude” (Johnson v Gore Wood & Co (2000)).

However, recent court judgments involving residential owners show a trend in residential construction cases of awarding Non-Pecuniary Loss in particular circumstances:

  1. New builds – The purchasers of a newbuild home were awarded £2,250 per Claimant for disruption and inconvenience suffered, caused by defects and remedial work resulting in the loss of use of parts of the building for 3 years.
  2. Residential construction projects – The construction of a residential pool, which was shallower than the contracted depth (by 2 inches), and which had no impact on the pool’s value, resulted in the loss of expectation and amenity entitling the claimant to £2,500.
  3. Renovations – Remodelling of a London flat under a JCT Minor Works contract with significant defects and delays in construction caused distress and inconvenience to the flat owners for a year, entitling the claimants to £1,500 each.
  4. Architects – An architect producing a report for a prospective purchaser will not be liable for distress or inconvenience caused unless such distress and inconvenience go to the object of the contract. An example of this is where a surveyor is instructed for a specific purpose (e.g. where an Architect is instructed to investigate whether a property is affected by aircraft noise, if the Architect fails to report on such noise, and thereby distress or inconvenience is caused to the purchaser, this can give rise to liability – in that case £10,000).
  5. Encroachments – A homeowner received £2,250 for 5 years of inconvenience and discomfort resulting from cracking to their house caused by a nearby tree root.

What amount can be claimed?

The courts take the approach that general damages for Non-Pecuniary Loss may not be excessive and instead should be modest. This is a matter of policy in order to discourage “the creation of a society bent on litigation” (Farley v Skinner (2001)).

This policy is reflected in the levels of non-pecuniary damages in the cases above, with the £10,000 award against the architect being described as “the very top end of what could possibly be regarded as appropriate damages” (Farley).

For a claiming party, it is always important to bear in mind that there is likely to be a ceiling to the amount awarded for Non-Pecuniary Loss. This may be difficult to reconcile with a party’s own view of the value of the stress and inconvenience caused by a breach of contract.

The Construction Team at Stephens Scown can advise and assist in connection with making claims and defending actions that include claims for Non-Pecuniary Loss. To discuss any of the information raised in this article, please email or call 01392 210700.