The Defective Premises Act - who is a property developer?

An interesting court decision last month focussed on whether or not a defendant couple (who bought a house in Southampton, demolished it, rebuilt a new property on the site and then sold it) could be considered as being 'property developers' and therefore fall under the ambit of the Defective Premises Act 1972 ("the Act").  This Act confers liability on contractors,consultants and developers who have been involved in work providing dwellings that renders them unfit for habitation due to not being designed or built in a workmanlike manner. The contractor in the present case apparently had no assets and the architect was said to have no insurance cover, so the claimants looked a little further afield and tried to drag the previous owners into the frame. This kind of argument as to an owners' intentions is somewhat similar to the case of Martino Giaquinto's blog post of 25 March 2013 so it may be another sign of the times.

The claimants had bought the Bauhaus-style property in November 2009 for £1.1 million but it was alledgedly structurally unsafe and was demolished.

The defendants bought a house on the site in 2004 and carried out a few modifications before demolishing it in 2007 and building a new house which completed in 2009.  The defendants had lived together for nearly 20 years and claimed that they had built the property as their dream home in which they intended to live permanently.  The claimants alleged it was built purely for profit and so was developed in the course of a business.  To be caught by the Act the business must consist of or include providing or arranging for the provision of dwellings.

The court appears to have welcomed and placed reliance on a broad and colourful range of facts in arriving at a conclusion, including the fact that the defendants had made friends and gone on holiday with neighbours. The judge was far from convinced that the defendants should be classified as property developers who had undertaken the building works in the course of a business.

Each case will turn on its facts, but the lines as to who could be considered to be a property developer are perhaps becoming more blurred.  Living in a property for a while after completion should reduce the chances of the transaction being seen as a business and crucially to be caught "the relevant business must be in existence at the time when the person arranges for another to take on the work".

Zennstrom & Anor v Faggot & Ors [2013] EWHC 288 (TCC)

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