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Cite as: [2007] EWHC 1710 (TCC)

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Neutral Citation Number: [2007] EWHC 1710 (TCC)
Claim Number: 5T-00595

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

The Court House
1 Oxford Row
Leeds
LS1 3BG
11th July 2007

B e f o r e :

MR JUSTICE JACKSON
____________________

Between:
SHEPHERD HOMES LIMITED Claimant
v
ENCIA REMEDIATION LIMITED Defendant

____________________

Computerised Transcript of
WordWave International Limited
A Merrill Communications Company
190 Fleet Street London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
(Official Shorthand Writers to the Court)

____________________

David Cavender and Daniel Hubbard (Instructed by Nabarro) appeared on behalf of the Claimant.
Peter de Verneuil Smith (Instructed by Hill Dickinson) appeared on behalf of the Defendant

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    Wednesday, 11th July 2007

    (10.00 am)

  1. MR JUSTICE JACKSON: This judgment is in 18 parts, namely part 1, introduction, part 2, the facts, part 3, the present proceedings, part 4, the claimant's factual evidence, part 5, the defendant's factual evidence, part 6, the valuation evidence, part 7, the claimant's expert evidence, part 8, the defendant's expert evidence, part 9, the contractual issues, part 10, breach, part 11, factors of safety, part 12, how this court should assess individual properties, part 13, the 12 properties which have been remediated, part 14, the other 82 properties, part 15, future remedial works, part 16, other heads of damage, part 17, the claim for a contractual indemnity, part 18, conclusion.
  2. Part 1: Introduction
  3. This is a claim for damages and an indemnity in respect of breaches of contract by a piling contractor.
  4. The claimant in this action is Shepherd Homes Limited ("SHL"). The defendant is Encia Remediation Limited ("Encia"). Green Piling Limited ("Green Piling") was until recently third party in this action.
  5. The 94 houses which are the subject of this litigation are situated at Eden Park. Eden Park is in Cleveland and lies just to the west of Hartlepool.
  6. In the course of this judgment I shall use the following abbreviations:
  7. "AIG Consultants" means AIG Consultants Limited.

    "BSCP" means Birkett Stephens Coleman Partnership Limited.

    "Bullivant" means Roger Bullivant Limited.

    "FFL" means finished floor level.

    "Foundation Engineering" means Foundation Engineering Limited.

    "JPA" means Joynes Pike & Associates Limited.

    "Knowles" means Knowles Construction Technology Limited.

    "NHBC" means the National House-Building Council.

    "Ove Arup" means Ove Arup & Partners Limited.

    "PMC" means Precision Monitoring & Control Limited.

    "PPL" means piling platform level.

    "Redrow Homes" means Redrow Homes (Yorkshire) Limited.

    "Tay Homes" means Tay Homes (Northern) Limited.

    "Tony Gee" means Tony Gee & Partners Limited.

    "Yuill" means Cecil M Yuill Limited.

  8. The 94 houses with which this court is concerned stand on piled foundations in an area of difficult ground conditions. The expert witnesses have devised a colour code for the houses which has been of immense value throughout the trial and which I shall explain at the outset. Each expert has produced a plan upon which every house is coloured red, orange, blue, purple or yellow. The agreed meaning of those five colours is set out as follows in the experts' second joint statement: Yellow means no settlement related damage. Purple means minor damage; evidence that damage is not progressing. Blue means minor damage; no evidence damage is progressing but it may be. Orange means damage caused by settlement; evidence that damage is progressing. Red means significant progressive damage -- foundations need to be replaced by underpinning (subject to reasonableness of cost, appropriateness of option and extent).
  9. Whenever I refer to the colour or the appropriate colour for a house, this is by reference to that colour code.
  10. Finally, I should refer to negative skin friction. This phenomenon occurs when ground around a pile settles. As the ground settles it imposes downward pressure on the pile which is additional to the structural load that the pile is carrying.
  11. These remarks are, I hope, sufficient by way of introduction. It is now time to turn to the facts of the present case.
  12. Part 2: The facts
  13. Around 20,000 years ago, the last ice age was drawing to a close. The ground which was exposed as the ice melted is referred to as "glacial till".
  14. In the area of what is now Eden Park the glacial till comprised boulder clay with sands and gravels beneath. As the ice sheet retreated northwards beneath the warmth of the sun, the melting water flowed over the boulder clay forming ponds and channels in the surface. These irregularities in the surface of the glacial till have caused many of the problems in the present case.
  15. In post-glacial times rivers and lakes existed in the area. These deposited soft clays and peats on top of the glacial till. In time these rivers and lakes receded.
  16. By the 18th century the land to the west of Hartlepool comprised farmland and marshes. The alluvial deposits near the surface were the soft clays and peats. The boulder clay at depth was the glacial till.
  17. In the centre of what is now Eden Park there was a depression in the glacial till. The greatest depth of alluvial deposits lay in the area of that depression.
  18. A map dated 1770 (prepared for the purpose of sale particulars) shows the site with which this court is concerned marked "Low Town Carr". The word "Carr" meant a collection of trees or shrubs at the edge of fens or swamp. In the ordinance survey map of 1859 that same area is marked "Throston Carr". Symbols on the map show the area to be lightly wooded and marshy.
  19. On the 1897 map the area remains undeveloped but a tank is marked on the south-western boundary of the site. The 1919 ordinance survey map shows two oblong buildings on the eastern boundary of the site. It can also be seen that by 1919 Cameron Hospital has been built just to the east of the site.
  20. Subsequent plans show that the site remained the same until after the Second World War. More outbuildings had been added by 1954. It appears that between the 1940s and the 1960s the land was used for agricultural purposes. There appears to have been a natural depression around the centre of the site.
  21. By 1970 Yuill was the owner of the site. During the 1970s Yuill deposited landfill on the site and the central depression was filled. The material deposited included construction and demolition waste. In the early 1980s Yuill surrendered its licence for landfilling.
  22. During the 1980s Yuill sold the northern part of the site to Tay Homes and the southern part to Redrow Homes. Tay Homes built a number of houses to the south of Hart Lane and to the east of the specific area with which I am concerned.
  23. In June 2001 SHL purchased from Tay Homes that part of the site which is now referred to as phase 1. In June 2002 SHL purchased from Redrow Homes that part of the site which is now referred to as phase 2.
  24. In order to achieve a level site, SHL carried out a "cut and fill" operation. The details of this operation have been analysed by the experts. In essence, however, the ground level on the north-west part of the site was lowered by cutting. The ground level at the central and south-east areas of the site was raised by filling.
  25. SHL built a total of 94 houses on the phase 1 land and the phase 2 land. References in this judgment to "Eden Park Estate" are references to those 94 houses, and not to the other houses nearby which may have an Eden Park address.
  26. SHL created two roads on the phase 1 land, namely Barley Close and Clover Drive. SHL constructed 15 houses on Barley Close. These houses are sometimes referred to as plots 1 to 15, and sometimes referred to as 1 to 15 Barley Close.
  27. SHL constructed 31 houses along Clover Drive. These houses are sometimes referred to as plots 16 to 46. They are sometimes referred to by their postal addresses which range from 1 Clover Drive in the north to 34 Clover Drive in the south-west.
  28. SHL created two roads on the phase 2 land, namely Hayfield Close and Meadowgate Drive. SHL constructed 18 houses on Hayfield Close. These houses are sometimes referred to as plots 56 to 73, and sometimes referred to as 1 to 18 Hayfield Close.
  29. SHL constructed 30 houses along Meadowgate Drive. These houses are sometimes referred to as plots 47 to 55, and plots 74 to 94. They are sometimes referred to by their postal addresses, which range from 20 Meadowgate Drive at the east to 77 Meadowgate Drive at the west.
  30. Any follower of this litigation needs to be familiar with both the plot numbers and the postal addresses of individual properties. Both methods of identifying properties have been used throughout this trial.
  31. Let me now turn specifically to the design and construction of the foundations for the 94 houses. SHL had the benefit of a report prepared by JPA in November 1999 setting out the results of JPA's ground investigation across the phase 1 and phase 2 land. The JPA report summarised previous investigations. It also set out the results obtained by JPA from bore holes, trial pits and a variety of laboratory tests.
  32. The JPA report noted that in general the site comprised made ground overlying peat and soft clay deposits, which in turn overlay soft boulder clay. The JPA report recommended that piled foundations should be constructed, that piles should be driven to a set, and that these should include allowance for negative skin friction.
  33. SHL decided to obtain its own report on the ground conditions. Accordingly, SHL commissioned AIG Consultants to investigate and report upon the ground conditions of the site. AIG Consultants drilled nine bore holes and excavated 16 trial pits. They provided two reports to SHL dated, respectively, June and July 2001. AIG Consultants recommended the use of piled foundations and further recommended that piles should penetrate the stiff boulder clay by about 3 metres.
  34. SHL sought a quotation from Encia for the construction of the site infrastructure, foundation and floor slabs in relation to phase 1. By letter, dated 3rd May 2001, Encia offered to carry out those works in relation to phase 1 on the terms there set out.
  35. On 15th June 2001 SHL wrote to Encia as follows:
  36. "With regards to your quotation dated 3rd May 2001, I am pleased to confirm that you have been allocated the above development for the site infrastructure and foundation/floor construction works.
    "The works are to include full road and sewer construction including wearing course together with completion of 46 plot foundations/floors. The official order will follow shortly subject to our final agreement of prices and fixed price periods.
    "Other works including drives and plot drainage may also be incorporated in the works but will again be subject to satisfactory negotiation over price."
  37. On the 6th September 2001 Encia sent a revised quotation to SHL. SHL enclosed a revised schedule relating to all 46 plots on phase 1.
  38. On 12th October 2001 SHL sent a five-page letter to Encia, which included the following passages:
  39. "We are pleased to confirm our instruction to carry out civil engineering works and external works at the above site in accordance with your quotation dated 3rd May 2001 and 6th September 2001 ...
    "Our order is placed on the basis of an all risk lump sum price ...
  40. "The following points should be noted:
  41. "1. All works to be carried out in accordance with the Joynes Pike Report and AIG Consultants Report in relation to details, recommendations and requirements with regards to gas and any other abnormal bodies which require precautions.
    "2. The responsibility for setting out lies with yourselves ...
    "16. Our "General requirements" as enclosed will apply. Any terms and conditions included in, or appended to your quotation shall be of no effect, unless agreed in writing.
    "A copy of our "Contractors Safety Guide" is also enclosed. Would you please ensure that your employees are conversant with the contents and are in possession of a copy."
  42. There is no dispute that SHL enclosed with this letter a copy of its "General requirements" and a copy of its "Contractors' Safety Guide", both these documents are referred to in the covering letter. SHL contends, but Encia denies, that SHL also enclosed with the letter a document headed "Conditions of contract for subcontractors". I shall address this issue between the parties in part 9 below.
  43. Encia duly proceeded with the foundation and infrastructure works for phase 1. Encia engaged Green Piling to carry out the foundation works. The form of piles which Green Piling adopted for phase 1 were tubular steel piles driven to a set.
  44. After Encia had carried out the foundation works, SHL proceeded to construct the 46 houses which comprise phase 1 of the Eden Park project. SHL constructed six different types of house, each to a standard design. The six house types are known as Carrington, Langdale, Newbury, Doulton, Ashbrook and Aylesford.
  45. The largest house type, namely Aylesford, stood on 22 piles. The smallest house type, namely Doulton, rested on ten piles. The other house types had between 12 and 15 piles each.
  46. The phase 1 houses started to go on the market in the autumn of 2001. Completion of the first sale was achieved in December 2001. In due course, all 46 houses in Barley Close and Clover Drive were duly sold to owner occupiers.
  47. It should be noted that 8 Barley Close was sold to Mr and Mrs Bell who completed their purchase in September 2002. Mr and Mrs Bell are the only purchasers from whom I have received evidence at the present trial.
  48. Let me now turn to phase 2. By letter dated 2nd July 2002 Encia offered to carry out foundation and infrastructure works for phase 2 for the various sums set out in the schedule to that letter. These works included piling to all properties for the sum of 146,087. SHL accepted that quotation by a letter dated 15th July 2002.
  49. Paragraph 9 of that letter stated that Encia would be required to comply with the conditions of contract for subcontractors dated April 2002.
  50. Clause 4 of those conditions provides:
  51. "All workmanship and all materials where such are supplied by the subcontractor as part of its works shall comply with the requirements of any relevant local authority, the NHBC or any associated or successor body, all statutory and other obligations, current building regulations and further with the requirements of the company, including any specification which the company has supplied for that purpose, and in any event and without operating to reduce the effect of any and all implied conditions or terms to qualify and without prejudice to the generality of the foregoing all workmanship and materials shall be of a high standard, free from defects and fit for their purpose.
    "Any design work carried outlet by the subcontractor shall be carried out in such away as to ensure the accurate and reliable performance of that design. The subcontractor shall indemnify and hold the company safe against any and all consequences, claims, losses, expenses or damages resulting from, relating to, or arising out of any breach of the provisions of this condition."
  52. Clause 13 of these conditions provision:
  53. "(a) The subcontractor shall be liable for and shall indemnify the company against any expense, liability, claim, loss or proceedings in respect of any injury or damage whatsoever, to any property including the subcontract works, any temporary subcontract works, any materials or any other things delivered to site for incorporation therein, and construction plant, tools, equipment, temporary buildings and contents owned or hired by the subcontractor or for which he is responsible, insofar as such injury or damage arises out of or in the course of the subcontract works unless due to any negligence of the company or any person for whom the company is responsible.
    "(b) The subcontractor shall be liable for and shall indemnify the company against any liability, loss, claim or proceedings whatsoever arising under any statute or common law in respect of personal injury or death of any person whomsoever arising out of or in the course of or caused by the carrying out of the subcontract works, unless due to any act or negligence of the company or any person for whom the company is responsible."
  54. Encia duly proceeded with the foundation and infrastructure works for phase 2. Encia engaged Green Piling to carry out the foundation works. Green Piling installed tubular steel piles for a small number of houses and concrete piles for the majority of houses on phase 2.
  55. The concrete piles for phase 2 were driven to specified depths rather than to a set. The steel reinforcement of the concrete ground beams was tied into the steel reinforcement of the concrete piles in order to effect a secure joint between piles and ground beams.
  56. After Encia had carried out the foundation works, SHL proceeded to construct the 48 houses which comprise phase 2 of the Eden Park project. SHL constructed the six different house types, which I have previously mentioned. In due course all 48 houses in Hayfield Close and Meadowgate Drive were duly sold to owner occupiers.
  57. In March 2003 cracking started to appear in the houses at Eden Park. SHL engaged BSCP to investigate the problem and advise on remedial works. SHL notified Encia of a potential claim. Encia engaged Knowles to investigate the matter and generally to act on behalf of Encia.
  58. The house owners had the benefit of the NHBC's insurance scheme. Many house owners contacted the NHBC. The NHBC carried out its own investigations and was closely involved in discussions concerning remedial works.
  59. SHL decided to buy back five of the most seriously damaged properties in order to investigate the causes of damage and then carry out remedial works. The five properties which SHL bought back are 5, 6, 9 and 10 Barley Close and 18 Hayfield Close.
  60. Having carried out investigations and taken expert advice, SHL embarked upon remedial works to those five properties, together with seven other properties. These seven additional properties which have been remediated are 4, 7 and 11 Barley Close, 32 and 40 Meadowgate Drive, 2 and 3 Hayfield Close. Thus remedial works have so far been carried out at 12 properties situated in Barley Close, Hayfield Close and Meadowgate Drive.
  61. The method of remediation adopted comprises installing new piles from inside each house. The piles are sleeved to protect them against negative skin friction. The houses are jacked up to level, a new reinforced ground floor is installed, supported by the replacement piles. This method of remediation is sometimes referred to as "the Bullivant scheme" because Bullivant were the piling subcontractors employed for remediation. It is sometimes referred to as "internal repiling".
  62. After the basic work had been done to the 12 houses, the superstructures were repaired as necessary. The repairs to superstructures have been euphemistically referred to as "cosmetic" works, and I will adopt the same term. It should be noted, however, that in certain instances the cosmetic works have involved rebuilding sections of brickwork.
  63. In respect of 4, 7 and 11 Barley Close, 32 and 40 Meadowgate Drive, 2 and 3 Hayfield Close, SHL have not only borne the cost of remedial works but have also met the cost of providing alternative accommodation for the owners.
  64. In parallel with the investigations into the causes of damage, there were negotiations between SHL and Encia as to who was responsible for the foundation problems and who should pay for the remedial works. Those negotiations did not lead to any agreement between the parties. Accordingly, SHL commenced the present proceedings.
  65. Part 3: The present proceedings
  66. By a claim form issued in the Leeds Technology and Construction Court on 18th October 2005, SHL claimed against Encia damages for breach of contract in relation to piling works carried out at Eden Park Estate. SHL's pleaded case, as set out in the re-amended particulars of claim, may be summarised as follows.
  67. SHL engaged Encia to carry out piling works on phase 1 and phase 2. SHL's standard conditions of contract for subcontractors were incorporated into both the phase 1 and the phase 2 contracts. Furthermore, whether or not those conditions were incorporated, it was an implied term that Encia would exercise reasonable skill and care in installing the piles.
  68. Encia was in breach of the express and implied terms in the following respects:
  69. "19. Prior to disclosure and/or prior to further expert inspection of the piling works,the best particulars the claimant can give of the defendant's breaches are as follows.
    A. The defendant failed to give any or any proper consideration to the appropriate diameter/cross sectional area and length of the piles used at the phase I land and the phase II land, having regard to the soil conditions at the site.
    B. In particular, the defendant failed to give any or any adequate consideration to:
    (a) the possible negative skin friction effects caused by the soft soil settling around the piles and reducing the capacity of the pile to carry loads imposed by the structure;
    "(b) the performance of steel and concrete piles in the ground conditions encountered on the site (the natural topography of the site consisting of a depression of between 3m and 4m in-filled with inert waste comprising rubble and waste soils, underlain by soft alluvium);
    "(c) the fact that when a pile is driven through soft ground and into harder grown it is common for some of the soft material to be dragged into the interface between the harder ground and the pile, reducing the pile capacity;
    "(d) the driving conditions above the bearing strata, in particular, in the made ground which potentially contained object constructions such as kerbstones;
    "C. Further, in selecting long length driven steel piles with a very small diameter for the phase 1 land, the defendant failed to give any or any adequate consideration to:
    "(a) the driveability of the slender piles in the made ground;
    "(b) uncertainty as to where the piles were driven to laterally;
    "(c) flexion occurring during the driving process, caused by the length of the piles;
    "(d) the need for special consideration to be given to the capacity of the piles and the stratum to which they were driven because the base area of the piles was so small that they would rely almost completely on friction on the shaft to hold the load.
    "d. Further, the defendant failed to give any or any proper consideration to the appropriate design of the piles.
    "e. The basis of the design of any bearing pile is its ultimate axial capacity in the particular soil conditions at the site where the structure is to be built. The ultimate capacity can be determined either by load tests on piles constructed at the site or by the use of an empirical formula to predict capacity from soil properties.
    "f. In designing the piles, the defendant failed to make any or any adequate calculation of their ultimate capacity and to adequately characterise the ground conditions of the site to allow such a calculation.
    "g. The defendant is understood to have calculated the driving resistance of the piles using a formula known as the Hiley Formula. The defendant is understood to have proceeded on the assumption that the ultimate capacity of the piles was the same as their driving resistance, calculated in accordance with the Hiley formula. This assumption was false. Although the ultimate capacity of piles may occasionally be the same as their driving resistance, there is not necessarily any equivalence between the two. Ultimate capacity is particularly unlikely to be the same as driving resistance in cohesive (clayey) soil conditions, such as though those on the phase 1 land and the phase 2 land.
    "h. Taking the piles at plot 10 by way of example from the phase 1 land, three of the piles were too short to carry the anticipated loads (ignoring the effects of negative skin friction which would have reduced the piles capacity still further). The ultimate capacity of several other piles was only just higher than the applied load whereas the usual safety factor would be at least 1.5 to allow for variations in ground strength and uncertainty in the design process.
    "i. Taking the piles at plot 56 by way of example from the phase 2 land (and again ignoring the possible effects of negative skin friction), the working load of the piles significantly exceeded their capacity on the assumption that the glacial till occurred at 12m below ground level which it does at BH4, which is close to plot 56).
    "j. In addition, taking into account the likely effects of negative skin friction (as they ought to have been, but were not, taken into account by the defendant), the ultimate capacity of the piles would be substantially exceeded by the working load.
    "k. Further, the defendant failed to ensure that the workmanship and/or materials used in the piling work were of a high standard and/or free from defects and/or fit for their purposes.
    "l. The defendant's engineering experts have carried out pile testing on the houses at plots 9, 10 and 56, each of which contains unacceptable cracks. According to their reports dated 25th June 2003 and 30th November 2004, the piles which they inspected contained the following defects of workmanship and/or materials:
    "(a) The original design of the houses envisaged a connection between the hollow steel pile and the ground beam being supported by carrying reinforcement, from the top of the pile, a minimum of 40 bar diameters in to the ground beams, ie a plug of reinforced concrete cast in to the top of the driven pile. The depth of the concrete plug should have been about 700mm.
    "(b) Instead of being filled with reinforced concrete to this depth as it was designed to be, pile B1 on plot 9 was found to be hollow at depths of 150mm and 600mm below the foundation beam.
    "(c) Pile A4 on plot 10 was similarly found to be hollow and without the designed concrete plug.
    "(d) Pile A1 on plot 10 was discontinuous at about 150mm below the base of the ground beam. The top of the pile had been flame cut. The discontinuity was apparently caused by the trimming of the pile at too low a level. A satisfactory solution to this problem would have been to extend the ground beam to form a reinforced enclosure around the pile. The solution adopted by the defendant, of balancing an offcut on the top of the pile, shows a severe lack of understanding and quality control on the site.
    "(e) Pile A1 was similarly found to be hollow and without the designed concrete plug. In addition, the concrete piles under plot 56 appear to have had a structural discontinuity.
    "(f) In summary, there were significant workmanship defects in each of the houses supported by steel piles, including in particular the lack of a rigid connection between the ground beam and the pile head which would have altered the load spreading pattern between the elements of the ground beam grid as one or more piles settled under the load. Each house inspected contained at least one defective pile."
  70. SHL claims as damages the costs of investigation, the costs of remedial works carried out, the costs of future remedial works and the amount of its liability to house owners at Eden Park. There is also a claim for diminution in value. Alternatively, SHL claims an indemnity in respect of the future liabilities which it will incur in respect of houses at Eden Park with defective piles.
  71. Encia by its amended defence, denied that it was liable for breach of contract, denied the claim for an indemnity and challenged the amount of damages claimed. In relation to quantum, Encia denied that SHL acted reasonably to mitigate its loss. That plea has recently matured into the contention that the 12 remediated properties ought to have been demolished and rebuilt. Such a course, says Encia, would have been cheaper than underpinning by internal repiling.
  72. In addition to defending SHL's claim, Encia also brought third party proceedings against Green Piling, claiming an indemnity or contribution in respect of SHL's claim. Green Piling in its defence to that claim contended that its liability to Encia was restricted by a contractual limitation clause. This contractual issue between Encia and Green Piling was obviously appropriate for determination as a preliminary issue.
  73. Because of the scale and complexity of this litigation, the trial date originally fixed had to be put back. At a case management conference on 20th October 2006 HHJ Behrens directed that the preliminary issue between Encia and Green Piling be tried on 20th and 21st December 2006. In relation to the remainder of the action, Judge Behreans directed as follows at paragraph 13 of his order:
  74. "Trial to take place on 4th June 2007 in relation to all issues in the claim ... as to liability, causation of damage (including competing remedial schemes) save in respect of quantification of loss."
  75. Following that directions hearing, this action was referred to myself, pursuant to paragraph 3.7.5 of the TCC Guide for a decision as to whether the action should be managed and tried by a High Court judge. I directed that the action should be so managed and tried.
  76. At a case management conference on 24th November 2006 I gave further directions for the management of this action, including the preparation of a Scott Schedule. Paragraph 14 of those directions requested the experts to prepare an agreed plan showing the soil layers across the site and the depth of all piles sunk.
  77. On 20th November 2006 Christopher Clarke J, who is one of the TCC High Court judges, sat at Leeds in order to try the preliminary issue between Encia and Green Piling. Christopher Clarke J upheld Green Piling's defence based upon the contractual limitations clause. Following that decision on the preliminary issue, the third party proceedings between Encia and Green Piling were resolved by means of a Tomlin order.
  78. At a case management conference in Leeds on 8th March 2007 I gave SHL permission to amend the particulars of claim in order to include SHL's claim for an indemnity (the gist of which has already been summarised). As a result of that amendment, it became necessary to expand somewhat the scope of the trial as defined in Judge Behrens's order of 20th October 2006.
  79. Accordingly, I gave the following direction in respect of the scope of the present trial:
  80. "Paragraph 13 of the Order dated 20th October 2006 to be amended as so to read 'The Trial to take place on 4th June 2007 in relation to all issues as to (i) liability, (ii) causation of damage including competing remedial schemes (save in respect of quantity of loss) and (iii) the Claimant's claim in the alternative for an indemnity'."
  81. On 19th March 2007 I attended at Eden Park for a view of the properties, the subject of this litigation. I was accompanied at that view by the two experts instructed for the purpose of this litigation. The claimant's expert is Mr Jim Johnson of Ove Arup. The defendant's expert is Mr Richard Newman of Tony Gee.
  82. The two experts gave me an extremely helpful tour of the site. We went inside a number of houses where remedial works were in progress. We viewed the remainder of the 94 houses from the outside. The experts pointed out features which I should note, but they carefully avoided entering into any matters of controversy between them.
  83. At this point, may I pay tribute to both experts for the progress which they made in agreeing technical issues before trial. Indeed, that process continued during the course of the trial with the production of three further expert joint statements. These agreements between experts have swept away many side issues and have enabled both counsel and the court to concentrate on the real issues between the parties.
  84. In response to paragraph 14 of the court's order dated 24th November 2006, the experts have produced schedules showing the agreed length of every pile. The two experts have also produced plans showing the ground conditions on site, about which there is a reasonable measure of agreement but not total agreement.
  85. The trial of this action duly commenced on Monday, 4th June 2007, as directed by Judge Behrens. Mr David Cavender and Mr Daniel Hubbard represent the claimant. Mr Peter de Verneuil Smith represents the defendant. The trial has lasted for some five weeks with closing speeches last week.
  86. At the outset of the trial Mr de Verneuil Smith accepted that Encia owed to SHL "... duties ordinarily implied into a construction contract (reasonable skill and care et cetera)" (see paragraph 12 of his opening note). Mr de Verneuil Smith accepted that in relation to phase 2, but not phase 1, SHL's conditions of contract for subcontractors were incorporated into the contract.
  87. In relation to liability, Mr de Verneuil Smith made the following admission on behalf of Encia in paragraph 23 of his opening note:
  88. "D accepts that for both the phase 1 contract and the phase 2 contract (ie all the properties) D breached the implied term as to reasonable skill and care in the design of the piling. This is clear from the joint statements of the experts."
  89. That admission was extremely sensible and has obviated the need for extensive debate about liability at trial.
  90. Whilst admitting that Encia was in breach of its duty of skill and care in respect of all 94 properties, Mr de Verneuil Smith nevertheless contends that in most locations the piled foundations have in fact turned out to be satisfactory. In other words, although Encia was negligent in its design, in most instances by good fortune no damage has been caused.
  91. Mr de Verneuil Smith summarises Encia's case pithily in his opening note as follows:
  92. "26. As is apparent from the respective expert reports the main areas of dispute are (i) causation of loss and (ii) damage (existing and the possibility of future damage).
    "27. It is D's case that (i) C has in respect of many properties not proven its case on causation, and (ii) the vast majority of properties have satisfactory foundations, notwithstanding design defects and have and will only suffer minor damage ...
    "32. D's expert has addressed causation by creating 4 categories (A to D) which can be summarised as follows...
    "Category A. Damage is not related to settlement (positive case that there is no causative link to damage).
    "Category B. It cannot be shown on the evidence available that all damage is caused by settlement and further evidence is required (there is a causative link to some damage).
    "Category C. Causation is made out and there is a high risk of further movement. Monitoring is required to determine remediation.
    "Category D. Causation is made out and it is agreed that remediation should go ahead.
    "33. D accepts that C has in principle satisfied a cause of action for breach of contract in respect of the properties in category B, C and D (subject to extent of damage, heads of loss and quantum)."
  93. It is helpful to consider the Eden Park properties in two groups, namely the 12 houses which have been remediated and the other 82 houses which are in their original condition.
  94. In relation to the first group of properties, I must consider whether SHL has carried out unduly extravagant remedial works and has thereby failed to mitigate its loss. In relation to the other 82 properties, the mitigation issue does not arise as such. Instead I must consider which houses are defective and require remedial works, what form those remedial works should take and/or whether SHL is entitled to an indemnity.
  95. I must address the multifarious issues between the parties in an orderly manner. Accordingly, I shall first summarise the evidence which has been adduced at trial before tackling the issues between the parties.
  96. Part 4: The claimant's factual evidence
  97. In this part of the judgment I shall summarise the evidence given by the claimant's factual witnesses, in so far as that evidence bears on issues which arise for decision. In doing so, I shall weave together the gist of each witness' written statement and oral evidence.
  98. DAVID SAUNDERS

  99. Mr Saunders was employed by SHL as an estimator in the commercial department until April 2003.
  100. Mr Saunders sent out the letter to Encia dated 12th October 2001, placing an order for the phase 1 foundation works. That letter makes no reference to Encia's conditions of contract for sub-contractors, but this was likely to have been an oversight. It appears that the template for the standard order letter to sub-contractors had not been updated.
  101. There were several standard documents which it was SHL's practice to include with order letters to subcontractors. Copies of these standard documents were kept in trays. Mr Saunders used to take one standard document from each tray, so as to form a pack of documents which he enclosed with each order letter to subcontractors. The conditions of contract for subcontractors comprised one of these standard documents.
  102. It would have been normal practice for Mr Saunders to have included the conditions of contract for subcontractors with the letter to Encia dated 12th October 2001. Mr Saunders cannot say whether he did so on that occasion, but there was no reason not to.
  103. There is no reference to those conditions in the letter dated 12th October 2001. It was normal practice to refer in a letter to any documents being enclosed.
  104. Exhibit 1 comprises the top copy of the letter dated 12th October 2001, which Mr Saunders sent. His signature appears at the end. The documents which are now attached to that letter by a clip (and which form part of exhibit 1) do not include SHL's standard conditions for subcontractors.
  105. STEPHEN MURRAY

  106. Mr Murray is managing director of Shepherd Homes, having joined the company in August 2004. By this time problems at Eden Park had been manifest for over a year. There was a crescendo of complaints from owners and Encia had failed to take any remedial action.
  107. Knowles were producing reports for Encia and BSCP were producing reports for SHL.
  108. Mr Murray has considerable experience of the construction industry, as set out in his CV, but he is not an engineer or an expert in piling.
  109. SHL had bought back three houses at Eden Park before Mr Murray joined the company. Mr Murray decided to buy back two further houses. The total cost of buying back those five houses was some 1.3 million. SHL's objective was to investigate the cause of failure at those five houses.
  110. SHL also wanted to carry out remedial works to those five houses. Knowles suggested in correspondence that it may be appropriate to demolish and rebuild. Mr Murray favoured remedial works by underpinning.
  111. In an email of 11th May Mr Jones of BSCP said that foundation works under a new build would be about 33% cheaper than the remedial option, if a 40 tonne piling rig were used; more realistically the saving would be about 10% if a smaller piling rig were used. Given the proximity of other houses Mr Murray did not think that a 40 tonne piling rig could be used. Furthermore, when one added the cost of building new houses, Mr Murray considered that demolishing and rebuilding would be significantly more expensive than underpinning.
  112. On 21st June 2005 there was an important meeting about Eden Park Estate. The chairman of SHL and many others attended. Mr Murray prepared a briefing note before the meeting. This note did not suggest demolition plus rebuilding, and that option was not discussed at the meeting. They were concerned about the reputation of SHL and the reputation of the estate. They did not want the estate blighted.
  113. There were further meetings in July. On 19th July it was decided to send out tenders for underpinning. On 22nd July Mr Murray gave a power point presentation. Demolition and rebuilding were not discussed at these meetings. By the summer of 2005 Mr Murray was keen to get on with remediation. It was over two years since the cracking had come to light.
  114. Mr Murray liaised with the NHBC. On 20th September 2005 Mr Barrett of NHBC commented in a letter that the cause of the cracking still had not been established with certainty. He added that after foundations had been stabilised, the superstructure may remain out of tolerance. This may affect value and influence the NHBC in deciding whether to give a warranty in respect of the repaired properties.
  115. The remedial scheme was revised to take account of the NHBC's concerns. The scheme as subsequently carried out was approved by the NHBC.
  116. At a meeting on 7th October Bullivant was selected as remedial contractor. The figures discussed at that meeting did not cause SHL to consider demolition and rebuilding. By then the decision to have internal piled underpinning had been made, even though the scheme had not been finalised.
  117. There was a meeting on 9th November. The minutes of that meeting list the work which would have to be done. Because of the effect on other house owners and blight, SHL would prefer remediation to demolition and rebuilding even if remediation were somewhat more expensive. However, it would have become reasonable to demolish and rebuild, if that would achieve a saving of 15% to 20% or more.
  118. At a meeting on 23rd November 2005 Terry Smith, the group finance director, advocated demolition and rebuilding. He felt this would show that SHL were serious about putting things right. Mr Murray argued against this on the grounds that such a course would damage SHL's reputation and cause a lot of disruption to residents. Also Mr Murray was concerned about the likely long delay in getting planning permission for demolition and rebuilding.
  119. It was decided that this issue would be considered further. Mr Murray was asked to get the comparative costs for (a) remediation and (b) demolition and rebuilding.
  120. Following that meeting Mr Murray spoke by telephone to John Patch of Bullivant. Mr Patch said that if they demolished and rebuilt the cost of piling would be about 35,000 per property. This was about half the cost of remediation piling if the houses were not demolished. Shortly afterwards Mr Murray received Bullivant's quotation for remediation piling to 5, 6, 9 and 10 Barley Close. These figures were 73,002; 76,967; 73,253; 82,770.
  121. Mr Murray produced a spreadsheet, which he finalised on 2nd December, showing that the total cost of demolishing and rebuilding those four properties would be 433,531 and the total cost of remediation piling would be 385,992. The latter figure included 15,000 per property for "cosmetic adjustments". This term included all work to be done by SHL, such as stripping out, superstructure repairs etc. It can be seen that that figure of 15,000 was too low. At the time Mr Murray thought that the figure of 15,000 was reasonable but, with hindsight, it probably was not reasonable.
  122. Mr Jones' fax of 6th December 2005 showed that Mr Murray's figure for piling under new build was slightly too high. The figure quoted by Bullivant to Mr Jones was 31,680 per property. Mr Murray did not see Bullivant's letter to Mr Jones dated 5th December explaining how the figure of 31,680 was arrived at.
  123. A further concern which Mr Murray had about rebuilding was that it would take longer to get the necessary party wall awards. These were required because of the close proximity of the houses to one another. Mr Bell, who lived in Barley Close, was particularly difficult in this regard. He said that SHL would never be allowed to come onto his land in order to work on some other property.
  124. The decision to go ahead with remediation piling was taken by Mr Murray in discussion with his colleagues shortly after the preparation of the spreadsheet. Mr Smith said that on the basis of that information he was happy to go ahead with remediation works.
  125. Subsequently the remediation works were extended to twelve properties. These were the five houses which SHL had bought back and seven other properties. On 7th April Bullivant quoted 1,064,520 for remediation piling to those twelve properties. Also SHL had to meet the costs of relocation for the occupants of the seven houses which SHL had not bought back. Mr Murray did not do an estimate of these costs. By April 2006 the matter was being dealt with by Mr Hare.
  126. Mr Murray attended a meeting of SHL and its advisers on 3rd May to discuss the remedial works. By now the number of properties to be remediated had increased from four to twelve. At this stage SHL believed (wrongly as it later turned out) that planning permission was needed for the remedial works. A number of residents were objecting. Mr Murray thought that if they applied for planning permission to demolish and rebuild, they would have similar difficulties.
  127. In hindsight Mr Murray agrees that by May 2006 his December 2005 costs comparison may have been out of date. Quite possibly it would have been reasonable to recalculate the costs comparison. Mr Murray's allowance of 15,000 per property for "cosmetic" works was probably not accurate by then. However, SHL had other concerns beyond the financial. They felt that doing works from inside the properties would probably be less disruptive for the other occupants.
  128. As mentioned above, by May 2006 Mr Murray was less involved in Eden Park than Mr Hare. Mr Murray had other responsibilities to attend to. It was for Mr Hare to say if he thought that the previous cost comparison was no longer valid.
  129. Some owners objected to the remediation works being done. Others did not.
  130. Recently Bullivant has supplied an alternative quotation for piling 10 Barley Close, but that quotation contains certain anomalies which Mr Murray could not explain. MGL has recently provided a quotation for demolition and clearance of that property in the sum of 6,300.
  131. Mr Murray does not accept that demolition and rebuilding would be an appropriate way of dealing with red properties which have not yet been remediated.
  132. ALISTAIR HARE

  133. Mr Hare is development director of SHL, having joined the company on 1st February 2006. A large number of complaints were made by owners about the defects at Eden Park. Mr Hare has prepared a helpful schedule of all those complaints, which is annexed to his witness statement.
  134. On 9th February 2006 Mr Hare sent a letter to all Eden Park residents, stating that he had taken over responsibility for day-to-day co-ordination of the remedial works from Mr Murray. The letter also explained that Bullivant had been employed to carry out underpinning works.
  135. Mr Hare did not have any discussions with his colleagues about the option of demolishing and rebuilding. He understood that this had previously been considered and a decision made to undertake remediation piling.
  136. The number of properties to be remediated increased from 4 to 8 in February, from 8 to 11 in March and subsequently to 12. This did not lead to discussion about demolition and rebuilding. Mr Jones told Mr Hare that that question had been considered before Mr Hare joined the company.
  137. In an email dated 25th April 2006 Mr Johnson posed 35 questions about the proposed remediation by underpinning and jacking. At the end of the email Mr Johnson stated that after the repairs there were likely to be defects in the superstructure, which would have a significant effect on future value. Mr Johnson's email was forwarded to a number of people and each of his points was addressed. Mr Hare and his colleagues did not, however, reconsider the question of demolition and rebuilding.
  138. Mr Johnson's points were discussed with Bullivant. On 8th May Bullivant sent a three page letter responding to each of Mr Johnson's questions.
  139. SHL had it in mind that they would need to do superstructure repairs to some of the properties, but not others. It was unclear in advance what the superstructure repairs would be. In the event some houses required sections of brickwork to be replaced, while others did not require any structural repairs.
  140. The remediated properties have all proved satisfactory. The signs of repair work are not particularly evident. One owner on receiving his property back after remediation said that it was the quality of a show home.
  141. Mr Hare considers that the method adopted for dealing with those twelve properties was the most appropriate one, both from a practical point of view and from the point of view of SHL's customers. From the customers' point of view it was necessary to keep down the amount of noise, dust and disruption generated during the works.
  142. MARK CONNORS

  143. Mr Connors is the production director of SHL, having joined the company in 2001.
  144. SHL entered into plot sale contracts with the purchasers of houses at Eden Park. These contracts required SHL to complete the works "in a good and workmanlike manner". The contracts also required SHL to provide buyers with the NHBC's ten-year insurance cover known as "Buildmark".
  145. In respect of phase 2, each of the plot sale contracts contained the following clause:
  146. "7.5. In the event that there are any works required to remedy defects in the property following completion the Buyer will co-operate with the seller to allow access to the property. The seller will carry out the works within a reasonable period of time and the buyer shall not be entitled to any claim for compensation including (but not limited to) inconvenience, loss of use, loss of earnings or loss of profits resulting from the carrying out of such works. This clause will not merge on completion."
  147. Mr Connors was involved in dealing with the problems at Eden Park in 2003. He was anxious to effect remedial work swiftly, but he accepted that the cause of the damage needed to be established first. Between 2004 and 2006 Mr Connors had no substantive role in relation to Eden Park. He has now become involved again, because he has a site manager dealing with the cosmetic works to the twelve remediated properties.
  148. Mr Connors has experience of demolishing buildings such as schools, factories and a housing estate. Normally demolition is done by machine.
  149. If SHL were to demolish and rebuild individual houses at Eden Park, this would be difficult and time-consuming. In order to protect properties on each side, demolition would have to be done by hand. This would take an extra 8 weeks or so. There would be problems moving plant around. Bricks and other materials could not be stored on site, so it would be necessary to "drip feed" them in. This would substantially increase the costs of the exercise.
  150. Hoardings would have to be placed around properties to be demolished and rebuilt. There would be many people on site, and they would need parking spaces, welfare facilities, et cetera.
  151. In Barley Close, where the red properties are next to each other it would be possible to demolish four or five properties in one operation. Possibly a machine could be used to demolish 4, 5, 6 and 7 Barley Close, but there is a Tay Homes house right behind 6 Barley Close and materials from demolition must not be knocked into the garden of that property. Also care would need to be taken about 3 and 8 Barley Close, which are adjacent properties. Mr Connors would not want to use a demolition machine on a plot next to an occupied property.
  152. Mr Connors agrees that rebuilding achieves a better finish than remediation, but the owners of remediated properties have been happy with the outcome so far. In the case of a rebuilt property the NHBC's ten-year insurance period starts afresh upon completion of the rebuilding.
  153. GLYN JONES

  154. Mr Jones is a civil and structural engineer. He is joint managing director of BSCP.
  155. BSCP were first instructed on behalf of SHL in early 2004. After inspecting plots 9, 10 and 56, Mr Jones formed the view that the cause of damage was differential settlement of the piled foundations due to negative skin friction. He so advised SHL in April 2004.
  156. Having received BSCP's initial report, SHL instructed BSCP to carry out visual inspections on all properties at Eden Park. Mr Jones and his colleagues, Mike Nettleton and Peyman Ghasemi, duly carried out those inspections. A schedule to Mr Jones' witness statement sets out in convenient format a summary of BSCP's findings and observations in respect of each of the individual houses.
  157. In October 2004 SHL instructed BSCP to consider and advise on remedial options. BSCP liaised with Knowles, who had been instructed on behalf of Encia to consider the same matter.
  158. Knowles proposed attaching a corset around the affected houses, but in Mr Jones' view that would not address the problem. Alternatively, Knowles suggested installing piles and new beams around the outside of houses.
  159. BSCP, on the other hand, proposed installing new internal piles. Knowles argued that this would drive up the costs so that demolition and rebuilding would be preferable (see Knowles' letter dated 21st/22nd February 2005).
  160. On the 9th May 2005 there was a meeting between BSCP, Knowles and Mr Barrett of NHBC. Much of the meeting was spent discussing the cause of the damage. In relation to remedy, Mr Barrett stated that NHBC preferred BSCP's proposals for internal re-piling to Knowles' proposals.
  161. Following the meeting Mr Jones contacted Foundation Engineering for information. He then sent an email to SHL, which included the following:
  162. "If a 40T piling rig could be used, the cost of new foundations would be about 33% cheaper than the remedial option above. More realistically, using a small pile rig would only be about 10% cheaper than the remedial option."
  163. In Mr Jones' view a 40 tonne piling rig would be far too large for that site.
  164. Mr Jones attended the meeting of 21st June. BSCP's solution (internal re-piling) was on the table. There had been no discussion about demolition and re-building. Mr Jones had been asked to look for an internal solution. It was felt that this would be better for the residents.
  165. BSCP obtained quotations for internal re-piling from Foundation Engineering and Bullivant. Foundation Engineering proposed sleeves for the top of the piles, whereas Bullivant proposed waxing the tops of piles to prevent negative skin friction. BSCP preferred Foundation Engineering's proposal. BSCP asked Bullivant to tender on that basis. In the end Bullivant's quotation for sleeved piles was cheaper than that of Foundation Engineering and BSCP proposed employing Bullivant.
  166. By September BSCP were keen to start. The damaged properties were deteriorating - especially 5 Barley Close, where Mr Jones had to introduce tie bars. In a letter dated 20th September the NHBC expressed doubt as to whether the cause of damage had been established with certainty, but generally the NHBC accepted Mr Jones' analysis of negative skin friction.
  167. Mr Jones attended the meeting on 23rd November 2005. At that meeting Mr Jones raised the issue of demolition and re-building. He wanted to give SHL the opportunity to revisit that option. It was discussed at length. Differing views were expressed. Mr Jones was not against demolition and re-building. Indeed at one stage he was in favour of that course. It would be more acceptable to new owners. In the case of 5 and 6 Barley Close, there would need to be re-building of some walls. Other properties would require jacking to close up cracks. Both demolition plus rebuilding and underpinning with internal piles were viable options. Mr Jones did not consider the issue of planning permission.
  168. In Mr Jones' view, the Barley Close properties would have been more appropriate for demolition and rebuilding, because there was a group of houses close together. But that would not have been appropriate for the other properties away from Barley Close. It may be, of course, that if some properties but not others had been demolished and rebuilt, then all residents would have wanted that. On the other hand it may have been that residents would not consent to demolition.
  169. Following the meeting on 23rd November, at SHL's request Mr Jones obtained costings for the alternative schemes. SHL wanted ballpark figures quickly, in order to compare the costs of (a) underpinning existing houses and (b) building new houses with piled foundations. BSCP approached Bullivant because they were familiar with the site and could produce the figures quickly. Mr Jones did not consider that Bullivant had a conflict of interest.
  170. BSCP's email to Mr Murray dated 1st December sets out six items not included in the costs quoted by Bullivant. Mr Jones does not know what those items would cost. Nor can Mr Jones comment on the likely cost of the cosmetic works. BSCP are engineers, not quantity surveyors.
  171. On the 6th December Mr Jones telephoned SHL. He was told that a decision had been made to proceed with remediation by underpinning. That was a final decision.
  172. Mr Jones was involved in the correspondence and meetings during early 2006. He was aware of the concerns which Mr Johnson expressed about plots 9 and 56 in his letter of 28th April. However, these matters did not cause Mr Jones to reconsider the demolition plus rebuilding option.
  173. With hindsight Mr Jones accepts that the Barley Close probably should have been demolished and rebuilt. But Mr Jones does not accept that the other properties, which either have been remediated or are due to be remediated, require demolition and rebuilding. He cannot comment on the planning implications of the two approaches.
  174. JOHN AND ELIZABETH BELL

  175. Mr and Mrs Bell (whose joint written statement was put in evidence without cross-examination) purchased 8 Barley Close in September 2002. They have three children, aged between 2 and 8.
  176. In the early period Mr and Mrs Bell made improvements to their house, but then defects began to appear. They have tried without success to sell the house. Indeed the local estate agents refuse even to market the property.
  177. The properties on either side of 8 Barley Close have been the subject of remediation. Those remedial works have caused enormous disturbance, disruption and distress to the Bell family over many months. These events have taken their toll on the family's health. Both Mr and Mrs Bell and possibly also their children require medical treatment in consequence.
  178. Mr and Mrs Bell deplore the fact that SHL have refused to buy back the property.
  179. Part 5: The defendant's factual evidence

  180. In this part of the judgment I shall summarise the evidence given by the defendant's factual witnesses, in so far as that evidence bears on issues which arise for decision. In doing so, I shall weave together the gist of each witness' written statement and oral evidence.
  181. MALCOLM SAUL

  182. Mr Saul is managing director of Encia, having joined the company in 2004.
  183. Mr Saul was not, therefore, involved in negotiating Encia's contracts with SHL in 2001/2002 for the phase 1 and phase 2 contracts. However, Mr Saul has been through Encia's archive to extract the relevant documents. In his witness statement he sets out the history of events, as it emerges from those documents.
  184. Mr Saul's witness statement has the relevant documents exhibited. In the exhibit a number of documents follow SHL's letter dated 12th October 2001(placing SHL's order for the phase 1 foundation works). These documents include SHL's "Conditions of contract for sub-contractors". However, he does not remember seeing this document before. So its inclusion in the exhibit must have been an error by Mr Saul or by the person who compiled the exhibit.
  185. Mr Saul produced (as exhibit 1) the original letter from SHL dated 12th October 2001 together with its attachments, as they were in Encia's archive. These attachments do not include the conditions of contract for sub-contractors. Nevertheless Mr Saul cannot say for certain whether or not SHL sent those conditions to Encia in October 2001. After this passage of time, that must be a matter of conjecture.
  186. After joining Encia in 2004, Mr Saul became involved in the dispute with SHL. He tried to re-build relations with SHL and achieve some co-operation. However, his correspondence did not amount to an admission of liability.
  187. MARK BRAY

  188. Mr Bray's evidence was given in writing since he was not required for cross-examination.
  189. Mr Bray was an employee of Encia. He obtained tenders from piling companies for the phase 2 piling works. Because the price of steel had increased significantly, he discussed with Green Piling the use of concrete piles for phase 2.
  190. Green piling tendered for the work on 1st July 2002. This tender provided for 60 tubular piles on four or five plots and concrete piles on the other plots. This was the lowest tender and Encia duly accepted it.
  191. Green Piling required probe piles to be installed, in order to ascertain the required depth for the concrete piles.
  192. Green Piling started work on 5th August 2002. Mr Bray instructed Green Piling to carry out dynamic testing for three piles. On 8th August Green Piling advised that the pile driven length would be in the region of 17.5 metres. On 13th August Green Piling submitted their final quotation.
  193. Mr Bray visited site about once per month and saw Green Piling installing their piles. He also saw them recording sets.
  194. Green Piling may have regraded certain plots by adding 300-400 mm prior to piling works. Such regrading prior to piling was regular practice within the industry. The PPL for phase 2 was approximately 800 below FFL. After piling was complete, fill would have been placed from PPL up to the underside of the ring beam.
  195. The piles were installed leaving a section of pile above ground level for interface with the ground beam. The top section of pile was then broken away, leaving the steel bars to interface with the ground beam.
  196. NICHOLAS BONE

  197. Mr Bone has been a director and chairman of Encia since 2002. Before that he was operations manager. Mr Bone is also a qualified geologist.
  198. Mr Bone first became aware of the remedial costs incurred by SHL at the mediation a couple of weeks before trial. He considers those costs to be excessive. In the light of those costs, he has come to the conclusion that SHL ought to have demolished and rebuilt the twelve remediated properties, rather than underpinned them as per the Bullivant scheme. Mr Bone did not make that suggestion at the time (although he was aware of the proposed remedial scheme). He has first put this argument forward in May 2007.
  199. Turning to the documents, Mr Bone has examined the cost analysis prepared by Mr Murray dated December 2005. In relation to the first section ("demolish and rebuild") Mr Bone regards as reasonable Mr Murray's figures for demolition and site clearance (20,000), rebuilding (55,207 to 67,259 - depending on house type) and supervision (30,000).
  200. Mr Bone considers Mr Murray's figure for piling (35,000 per property) to be unreasonably high and artificially inflated. Mr Bone would expect the costs of piling new properties after demolition to be about 6,000 per property. This assumes about twelve piles, each driven about 15 metres. He supports this by reference to a budget estimate which Encia created in May 2005. Mr Bone is not a quantity surveyor or an expert in piling. His figure is right plus or minus 20 per cent. He believes that his figure would be backed up by others who are expert in piling. Mr Bone has not produced a costed scheme for piling new houses at Eden Park.
  201. The figure of 35,000 per property quoted by Bullivant to SHL was so high that Mr Murray must have known that it was excessive. The allowance by Bullivant for sleeves was far too high. Indeed, sleeves would not have been necessary at all if properly designed piles were used on this site. Sleeves are not the only way of counteracting negative skin friction. For example, the piles can be painted with bitumen. The fact that this is a brown field site does not make piling more expensive. The borehole logs and other data show that there are not a lot of obstructions in the ground at Eden Park.
  202. Bullivant are respectable piling contractors, but he believes that it suited their interests to quote an excessively high figure as the cost piling in the event of demolition and rebuilding.
  203. Turning to the costs of the underpinning which was actually carried out, Mr Bone notes that Foundation Piling and Abbey Pynford quoted comparable figures to those quoted by Bullivant. Mr Bone's concern here is that the final costs of the underpinning carried out were very much higher than any of the figures quoted.
  204. From a public relations point of view, Mr Bone thinks that demolition and rebuilding would have been better than underpinning, but Mr Bone accepts that he is not an expert in public relations.
  205. Mr Bone does not accept that there would have been practical problems in demolition and rebuilding.
  206. The adjacent properties in Barley Close could have readily been fenced off and demolished by machine (save for walls abutting neighbouring properties). The garden behind 6 Barley Close could have been protected by netting.
  207. In the case of 32 Barley Close (which had houses on both sides) a detailed methodology would have had to be prepared. Scaffolding would have been needed on each side of the gable. This house would have had to be demolished by hand to first floor level. The lower part could still be demolished by machine. When breaking out the ring beam floor structure, it would be necessary to protect the next door properties from vibration. This would be achieved by digging a 30 mm wide trench around the structure. The spoil from this trench could be put in the garden. The trench could if necessary be shored up locally with timber.
  208. The normal demolition costs of one house are about 5,000. Where special precautions are taken, these go up to about 6,500.
  209. Mr Bone does not accept that demolition and rebuilding would have generated unacceptable additional traffic on site. Six or seven vehicle movements would remove all the demolition material from one house. The construction materials for the new house to be built on the same site could all have been stacked in the garden of that property. The bricks and timber for one house could have been delivered in one day. Alternatively, there could have been piecemeal delivery. A pallet can hold 500 bricks. Mr Bone does not dispute that a new house at Eden park would need about 10,000 bricks.
  210. All in all, Mr Bone considers that SHL adopted the wrong remedial strategy. SHL started too soon and before they had carried out a full investigation. SHL's decision to buy back five properties set a most unfortunate precedent.
  211. Part 6: The valuation evidence

    CLAIMANT'S VALUATION EVIDENCE

  212. The claimant called an expert valuer, Mr Woodruff of Knight Frank LLP. I shall now summarise Mr Woodruff's evidence, weaving together the main points in his report and the gist of his oral evidence (which was given on two occasions, namely day 3 and day 14).
  213. Mortgageability and saleability

  214. Properties on an estate like Eden Park are only saleable if they are mortgageable. Mortagees will lend on the security of (a) structurally sound houses or (b) houses that have been remediated. Thus lending institutions would be willing to provide mortgages on the yellow and purple properties and on those red and orange properties which have been remediated. They would not be willing to provide mortgages for unremediated red or orange properties.
  215. So far as the blue properties are concerned, these are subject to uncertainty. These properties will be unmortgageable (and therefore unsaleable) until such time as (a) they are remediated or (b) they are certified to be stable so that the uncertainty is removed (i.e. they become yellow or purple). If the court grants Shepherd Homes an order for indemnity in respect of the blue properties, this could provide a degree of comfort to the owners, but it would not alter Mr Woodruff's view about the blue properties.
  216. Despite the foregoing, in the case of a property which is settling, if the cause of the problem is identified and the cost of repair is established, then a mortgage could be obtained. The lender would retain the cost of the repairs. But one cannot get a mortgage if the risk of future damage is unknown or uncertain. The lender would require such a property to be monitored, particularly if the house is at Eden Park. Many lenders would accept the risk if the cost of remedial works is less than say 10% of the capital value of the property. However, Mr Woodruff does not think that valuers would accept the risk of future movement. Progressive movement must be arrested.
  217. Mr Woodruff has never known a property where a mortgage has been granted despite ongoing movement and the absence of any solution. However, he has come across a property where the remedial cost has been quantified and a mortgage has been obtained.
  218. Mr Woodruff would refuse to grant a mortgage on plot 30. It is known that there are problems on Eden Park. One tends to look at the worst case scenario in respect of any house at Eden Park. Likewise on the current evidence Mr Woodruff thinks that plot 2 is unmortgageable.
  219. Mr Woodruff agrees with Mr Byrom that there is a market for defective properties at suitably discounted prices. Specialist lenders might provide loans for such purchases, but mainstream lenders would not.
  220. In the case of a new house during its first ten years of life, approval by the NHBC is required before a house is regarded as stable. If the NHBC approve remedial works (so that the NHBC insurance remains in force until the expiry of the initial ten-year period) then that is sufficient. Underpinning, whether total or partial, would be regarded as satisfactory, if approved by the NHBC.
  221. After the expiry of ten years, certification by an engineer is the critical factor. If an engineer certifies that a particular house either is stable or has been rendered stable by remedial works, than that will be accepted by purchasers and mortgagees.
  222. If a defective property is demolished and rebuilt, then the ten-year NHBC insurance period begins all over again. Accordingly, approval by the NHBC of the rebuilt property is crucial.
  223. The houses built by SHL at Eden Park are all in their first ten years of life. Thus it is essential that any remedial scheme for a house at Eden Park be approved by the NHBC.
  224. If some houses at Eden Park are demolished and rebuilt, whereas others are remediated by underpinning, Mr Woodruff does not believe that there would be any difficulty in selling the underpinned properties.
  225. Diminution in value

  226. The problems at Eden Park Estate are notorious. All houses on the estate are blighted. Even those houses which are stable suffer in consequence. This is evidenced by the very low number of sales of Eden Park houses in recent years.
  227. In Mr Woodruff's view, the yellow and purple properties are diminished in value by 10-15 per cent. Likewise those red properties which have been remedied by underpinning suffer a 10-15% diminution in value. In other words, there is no difference in value between houses which have been underpinned and houses which did not need to be underpinned. This is because similar houses on an estate all tend to sell at the same level. However, if a defective property is demolished and rebuilt (rather than underpinned), then the diminution in value is 5% less: i.e. the diminution in value of those newer houses is only 5-10 per cent.
  228. In the case of unremediated blue or orange properties, these are subject to uncertainty. The diminution in value is the full cost of remediation plus an additional 10-15% to reflect blight.
  229. Once all properties at Eden Park have been rendered stable or certified to be stable, then the blight will slowly come to an end. Mr Woodruff estimates that it will take three to five years for the blight to work its way out.
  230. Sales of houses at Eden Park

  231. Mr Woodruff annexes to his report an extremely helpful schedule showing all known property sales at Eden Park over the last five years. This table sets out in each case the date of sale, the address of the property and the price paid.
  232. Mr Woodruff also sets out separately the details of repurchases by SHL. These are as follows:
  233. 5 Barley Close (plot 5) 215,000

    6 Barley Close (plot 6) 230,000

    9 Barley Close (plot 9) 192,000

    10 Barley Close (plot 10) 265,000

    18 Hayfield Close (plot 56) 265,000

    Utilities

  234. Mr Woodruff also draws attention to the likelihood that utilities, in particular foul and surface drainage systems, will be damaged by ground movement. However, he has not taken this factor into account in his assessments of diminution in value.
  235. DEFENDANT'S VALUATION EVIDENCE

  236. The defendant called an expert valuer, Mr Byrom of Byrom Thomas. I shall now summarise Mr Byrom's evidence, weaving together the main points in his report and the gist of his oral evidence (which was given on day 14).
  237. On the question whether it is possible to obtain a mortgage for the purchase of a property at risk of requiring cosmetic repairs to brickwork, it is a matter of degree. Many banks and building societies are prepared to lend where there is an apparent risk so long as (a) the borrower can service the debt and (b) there is sufficient equity in the property despite the defects.
  238. If a property shows signs of progressive movement, a lender would require a structural engineer's report on the cause of the movement and recommended remedy. If the cost of repairs is up to 10% of the value of the property, many lenders would be prepared to go ahead. For example, the Woolwich Building Society has instructed its valuers that major repairs of less than 10% of capital value can be disregarded.
  239. If an engineer determines that there is a remote risk of damage to the structure, but no need for underpinning, and suggests cosmetic repairs (costing less than 10% of the value of the property), then in Mr Byrom's opinion such a property would be mortgageable.
  240. There is a second situation in which a purchaser may be able to obtain a mortgage from a mainstream lender. That is when substantial remedial works are known to be required and the purchase price has been reduced accordingly. For example, a 200,000 house may be sold, despite the fact that it requires 50,000 or 100,000 worth of repairs. The purchaser would require an allowance for the cost of repairs and also a double discount to reflect (a) the hassle factor and (b) the stigma of Eden Park. A mainstream lender may provide a mortgage for such a purchase, if there is clarity about what remedial works are required.
  241. If there is no such clarity, then it might be possible to obtain a mortgage from an "exotic" lender. Such lenders charge higher rates of interest and make smaller loans. House purchasers at Eden Park are not likely to benefit from exotic lenders.
  242. If a 200,000 house requires 150,000 worth of repairs, that would be uneconomic. Such a house would be unmortgageable.
  243. Turning to the blue properties at Eden Park, it is a question of degree whether it would be possible to obtain a mortgage for such a property. The property may be mortgageable, if the engineers say that the chance of further repair work is remote.
  244. Some purchasers are prepared to take a risk on a property, as long as the structural engineer's report has not condemned it.
  245. An orange property would be mortgageable, if there is a structural engineer's report setting out the cost of making the house stable.
  246. Mr Byrom has had experience of housing estates where there were foundation problems. After the defects had been put right, the houses sold satisfactorily.
  247. Part 7: The claimant's expert evidence

  248. SHL's expert witness on liability and causation issues is Mr Jim Johnson, a director of Ove Arup. Mr Johnson is a chartered civil engineer, specialising in geotechnical engineering.
  249. In this part of the judgment, I shall summarise Mr Johnson's evidence, weaving together the main points of his report and the gist of his oral evidence.
  250. The site

  251. The ground conditions at this site are variable. Basically, however, at the top there is a layer of made ground varying between 1.6 and 10 metres thick. Then there is a layer of lacustrine alluvium, comprising soft clays and peats and varying between 0 and 9 metres thick. Beneath that is a discontinuous gravel and sand layer, which is 0 to 2.6 metres thick. Beneath that is glacial till (boulder clay), which is 1.1 to 9 metres thick. Beneath that are glacial sands and gravels.
  252. The alluvium is soft and compressible. The glacial till has high strength, ranging between 50 and 125 kiloNewtons per square metre.
  253. In those parts of the site where alluvium is present, negative skin friction operates on the piles. In other words, as the weight of made ground compresses the alluvium beneath it, the made ground and the alluvium move downwards. These layers tend to pull the piles down with them. This process (discussed more fully below) continues over many years.
  254. Design and performance of the piled foundations

  255. Encia (including for this purpose its subcontractor, Green Piling) used tubular steel piles for phase 1. These were nominally 140 mm diameter, but sometimes 170 mm diameter. Encia used similar piles on the first few plots of phase 2, namely plots 50-55 and 91-94. On the remainder of phase 2 Encia used precast concrete piles, 250 mm square.
  256. The phase 1 piles and some of the phase 2 piles were driven to a set, using a modified version of the Hiley formula. Most of the phase 2 piles were driven to a pre-determined lengths, based upon the performance of probe piles.
  257. Both methods used by Encia to determine pile length were unsuitable, given the variable ground conditions on this site. The Hiley formula should not be used when piles are driven into cohesive soils. The result is that on both phases some piles fail altogether to penetrate the glacial till; some piles have very short penetration into the glacial till; some piles have much greater penetration into the glacial till or pass through it into the glacial sands and gravels. Furthermore, Encia made no allowance for negative skin friction, despite the presence of soft alluvial deposits which were apparent from the borehole logs provided to Encia.'
  258. CAPWAP tests were carried out on the driven piles. This method was inappropriate. CAPWAP is a dynamic load test and thus difficult to interpret in cohesive soils (as here). Two of the directors of PMC (the company which carried out the load tests for Green Piling) were also directors of Green Piling.
  259. The results of the CAPWAP tests contain many anomalies. There is not the expected correlation (a) between set and measured capacity or (b) between depth of penetration into till and end capacity. There is not the expected difference between end capacity in boulder clay and end capacity in sands and gravels.
  260. The results of the CAPWAP tests indicated higher resistance than was realistic and should not have been accepted by the contractor. The CAPWAP tests on phase 1 piles gave end bearing values in the sand and gravel between 13 MPa and 50 MPa. When compared with the values quoted by Tomlinson, these are incredible. (Two of the values quoted in Tomlinson's figure 4.21 are anomalous and not regarded by Tomlinson as typical.) The other references put to Mr Johnson in cross-examination suggest a similar conclusion.
  261. There are a number of possible explanations for the anomalous CAPWAP results. The contractor should have rejected those results at the time as unreliable.
  262. There were construction defects in certain individual piles at plots 9, 10 and 56.
  263. The loads (ignoring negative skin friction) imposed upon each of the piles in each of the house types have been agreed between the experts. Those agreed loads are set out in Mr Johnson's report.
  264. Load tests recently carried out

  265. Bullivant has carried out load tests on three recently installed piles. These are 178 mm diameter steel tube piles.
  266. Mr Johnson has plotted load v settlement curves for each of the three test piles. He draws upon these data in assessing the performance of the original piles.
  267. Mr Johnson accepts that the Bullivant piles, being jacked, are less likely to cause densification than the driven piles used on site. Driven open ended piles may become plugged. In this respect the Bullivant test piles may perform less well than the actual driven piles. The Bullivant test piles would not have positive skin friction. The driven piles had positive skin friction as well as end bearing. The graph showing load v settlement for the Bullivant test piles is more like a straight line and less like the conventional curve. This may be partly explained by the shortening of those piles (without which the first part of the line would be steeper).
  268. It might have been possible to clear space and do load tests on an existing pile (as Mr Martin of Byland Engineering Ltd suggested). However, these piles had already settled in an uncontrolled fashion and so it may have been difficult to interpret the results of tests on such piles.
  269. Mr Johnson used the Imperial College methodology ("ICP") to derive the toe capacity of the two test piles founded in sand and gravels. This suggests that a typical toe capacity for a 140 mm steel tube pile founded in sands and gravels would be about 100kN.
  270. Plot data sheets

  271. Mr Johnson has prepared plot data sheets for each of the 94 houses. In respect of each house the data sheet records the details of each pile, the ground through which and into which each pile passes and the dimensional survey results for that house. The plot data sheets also record the maximum factor of safety in respect of each pile.
  272. The definition and significance of a pile's factor of safety are dealt with later in this summary of Mr Johnson's evidence.
  273. It can be seen that there is much common ground between the experts in relation to details of piles and the factors of safety achieved. One recurrent disagreement, however, concerned the depth to which piles penetrated on phase 1. On phase 1 Mr Johnson took a PPL .24 metres below FFL. On phase 2 Mr Johnson took a PPL .8 metres below FFL. On the other hand Mr Newman took a difference of .8 metres for both.
  274. During the course of the trial the experts re-examined photographs taken during the construction phase, re-examined the contemporaneous data and conferred further about this issue. The result is set out in a schedule lodged on the third day of Mr Johnson's cross-examination, setting out agreed depths for all piles on phase 1. Broadly speaking these agreed depths lie somewhere between the original positions of Mr Johnson and Mr Newman.
  275. Recorded movement of individual properties

  276. A variety of surveys and inspections of individual houses have been carried out. Mr Johnson sets out the results in part 4 of his report (entitled "Observations of Damage").
  277. BSCP surveyed all 94 properties over a period of time, both externally and internally, and recorded their observations.
  278. The NHBC carried out level and verticality surveys on 12 properties during November and December 2005. In carrying out these surveys the inspectors interpreted the NHBC document "A consistent approach to finishes" as permitting a deviation from level of up to 30 mm in a wall 5 to 10 metres long. Mr Johnson regards that as a misinterpretation. In his view the permitted deviation is up to 15mm (or perhaps 20mm).
  279. SCS carried out surveys of plots 14 and 52 between February 2005 and February 2006 on the instructions of BSCP. The levelling sockets were referenced to a manhole cover (at plot 14) and a garden wall (at plot 52), but the datum was itself shown to be moving. SCS monitored crack widths at ten properties using DEMEC studs between August 2006 and April 2007, on the instructions of BSCP.
  280. SCS undertook surveys of 74 properties in January, March and May 2007 on the instructions of Ove Arup, measuring both level and verticality. Chris Mills of SCS told Mr Johnson that the level surveys were accurate to within plus or minus 1 mm (although the target of accuracy stated in BRE Digest 344 is plus or minus 2 mm). The most up to date data from SCS were added to the supplementary documents bundle during the trial.
  281. Where the recorded observations of BSCP and SCS differ, there are all sorts of possible explanations. For example, in one instance a crack was missed by one inspector because the crack was behind a bush, but picked up by another inspector.
  282. Mr Johnson accepts that best practice is to take intermediate levels (i.e. at points in the middle of walls, as well as at corners). This has been done in certain instances. But generally levels have been only taken at corners. This was because of the scale of the operation and the limited time available.
  283. Six to twelve months is the normal period for monitoring. A twelve month period covers all seasons and makes it possible to eliminate thermal movement. Nevertheless, a six month period may be sufficient.
  284. Cracks may or may not be indicative of settlement. A stepped crack usually indicates settlement. The frequency of cracks is also relevant. Cracks of 1 or 2 mm could be caused by settlement, or alternatively by thermal movement or shrinkage. The conclusion would depend upon where the crack is and the circumstances. BRE Digest 361 states that cracks from foundation movements are often large, e.g. 5 to 25 mm; and that cracks from thermal and moisture movements are generally between .5 and 5 mm wide. Mr Johnson does not disagree with those comments.
  285. When a building tilts, it may or may not behave as a rigid cube. Modern properties are brittle and tend to crack more readily in the event of settlement. It is uncertain how much a property can tilt before cracking occurs.
  286. "Hogging" is when the corner of a wall sinks. "Sagging" is where the middle of a wall sinks.
  287. Authors of textbooks and papers have adopted different standards for assessing deformation or tilt. Mr Johnson sets out the standards which have been proposed in tables 7, 8 and 9 of his report. According to table 9, a slope of 1/500 to 1/200 is liable to cause superficial damage but not of structural significance. This would accord with BRE scales 0 to 2. A slope of 1/50 to 1/200 is expected to cause superficial damage and possible structural damage. A tilt of 40 mm would become noticeable and would require monitoring. At 75-100 mm the property may require jacking.
  288. Mr Newman (using similar references to Mr Johnson) concludes that 3.7 mm of sagging or 2.3 mm of hogging will produce cracks. Both Mr Newman and Mr Johnson have calculated that angular distortion in the range of 2 to 4 mm is sufficient to generate cracking (see Day 8/25). In order to illustrate this, Mr Johnson plotted the settlement of plot 14 on two sheets of graph paper lodged on day 9. This shows that despite the substantial variations in levels, angular distortion is limited to the sort of magnitude where cracking may start to occur.
  289. It is possible to distinguish between angular distortion and tilt by looking at all the recorded levels, in order to see whether there is a uniform pattern of one half of a house going downwards.
  290. Buildings may be constructed out of tolerance. In other words, a deviation from level may be attributable to the original construction rather than settlement. In Mr Johnson's view the typical tolerance for these houses is 15 to 20 mm along a wall.
  291. Mr Johnson accepts that the photographs show some instances of bad workmanship, for example putlog damage. But there is no evidence of generic bad workmanship.
  292. The BRE classifies visible damage into categories 0 to 5 according to ease of repair. In classifying damage on that scale Mr Johnson looks at a range of factors, not just crack width. At paragraph 7.6.3.1 of his report Mr Johnson sets out in relation to each of the 94 properties the results of the various surveys and inspections, what visible damage has been recorded and how that damage should be categorised on the BRE scale.
  293. The damage recorded at plot 88 (55 Meadowgate) is anomalous. The rear right hand appears to have dropped 33 mm, but one would expect the property to tilt down at the front right hand corner, where the pile is most overstressed. In view of the absence of cracking around the rear right hand corner, Mr Johnson has never said that that is an instance of hogging. The house could have been built 33 mm out of tolerance, but Mr Johnson would expect that to have been picked up at the time.
  294. Plot 30 (33 Clover Drive) was originally classified yellow, despite the presence of certain cracks. Mr Johnson now classifies that property blue. There are a number of hairline cracks in that house. There is rucking of tape, which indicates movement between wall and ceiling. Doors are sticking.
  295. In plot 31 (31 Meadowgate) there are a number of cracks both externally and internally. These are 0-1 on the BRE categorisation. Mr Johnson classifies this house as blue.
  296. Category 2 on the BRE scale refers to cracks up to 5 mm wide and some impairment of serviceability, such as windows or doors sticking. The houses which Mr Johnson classifies purple, blue or orange generally have damage up to category 2 on the BRE scale, but not higher. The BRE categories do not take account of progression. The orange properties are ones where damage is progressing.
  297. Settlement of piles

  298. There are 1194 piles on this site. Mr Johnson has not analysed how far each one has settled. He has, however, looked at the range. Ignoring negative skin friction: (a) The minimum amount which any pile is likely to have settled is 5 mm; that is because each of the piles shortens under load by 5 or 6 mm. (b) The maximum amount any pile is likely to have settled is about 30 mm; that is where the pile is carrying a significant load and there is a low factor of safety. Indeed some piles will have settled more than 30 mm.
  299. Where a pile has a factor of safety of 2.5, typically it settles about 5 to 7 mm under a normal working load (about 135 kiloNewtons). This is demonstrated by results from the three Bullivant test piles. The test piles had a diameter of about 170 mm, so were slightly larger than the steel piles used on phase 1 (diameter 140 mm), but otherwise were similar to those piles. The test piles went through the boulder clay and were embedded into the underlying sands and gravels by about 1 metre.
  300. The heaviest loads imposed on piles at Eden Park are in the region 250-300 kiloNewtons. The results from the three test piles suggest that at this level the settlement is in the range 10-27 mm.
  301. On the basis of the Bullivant test piles data, Mr Johnson concludes that a "good" pile settles by 7-10 mm. That is acceptable. Settlement of 15 to 20 mm is probably not acceptable, unless it is uniform.
  302. A pile is generally taken to have failed when settlement equals 10% of the pile diameter. In order to be generous, Mr Johnson took failure of the test piles to be settlement of 30 mm. When a pile reaches failure point or "ultimate capacity", it plunges into the ground.
  303. It is possible for all piles to fail, but for the house not to suffer structural damage. For example, at plot 76 (42 Meadowgate) all piles are plunging, but there is no structural damage. That property is settling by about 1-2 mm per month, but the settlement is uniform. So there is very little cracking or tilt. Nevertheless, it is unacceptable for all the piles of a property to fail so that the house is simply sitting on the ground.
  304. Appendix E6 to Mr Johnson's report is an analysis of overall settlement. This concludes that on average the phase 1 houses are 28 mm lower than when constructed; on phase 2 many properties have settled over 100 mm. However, the calculations in appendix E6 may be wrong. They contain many assumptions and potential inaccuracies. However, enormous settlements, if they occur and if they are uniform, do not cause damage. Nevertheless, Mr Johnson accepts that the physical state of the 94 houses at Eden Park is not consistent with all the piles having failed across the whole estate.
  305. Both Mr Johnson and Mr Newman have examined the likely settlement of piles using a software system. Mr Newman used "Repute", whereas Mr Johnson used "Pilset". Their respective conclusions (as set out in Mr Newman's report and Mr Johnson's supplemental document) are affected by the assumptions fed in. The conclusions of the two experts are similar, but Mr Johnson's predicted settlement is somewhat higher than Mr Newman's predicted settlement for any given load and factor of safety.
  306. Whichever approach is adopted, there is no dispute that the performance of a pile can be plotted as a curve, with the x axis as settlement and the y axis as load. Initially the line climbs steadily, then it curves and flattens out horizontally: once the factor of safety of 1 is passed, settlement increases with no or little change in load. Hence the line is flat. (In practice the factor of safety is not passed, because when the factor of safety is less than 1 the pile sinks until equilibrium is restored.) The curve predicted by Mr Newman's calculations is somewhat sharper than the curve predicted by Johnson's calculations.
  307. On the basis of the test piles and the calculations, Mr Johnson makes two observations. First, the test piles show different settlement rates under the same loads. This is indicative of the variable ground conditions on site. Secondly, the test piles settle appreciably more than is predicted by either Mr Newman's or Mr Johnson's calculations.
  308. It is probable that the best guide to performance of the piles at Eden Park is a curve which is somewhere between that indicated by the Repute/Pilset calculations and that derived from the Bullivant test piles. (Nevertheless Mr Johnson was forced in cross-examination to concede important respects in which the performance of the test piles differed from the performance of the actual piles.)
  309. Mr Newman has done calculations using the "Lusas" programme to determine the distortion of the ground beam where the pile in the middle of a wall fails. Those calculations produce less distortion than Mr Johnson would expect. The reason for this is that Mr Newman's calculations assume that the central pile still provides a measure of support for the ground beam.
  310. Factors of safety

  311. The factor safety of a pile is defined as the capacity of the pile divided by the load which the pile has to carry.
  312. When designing foundations, it is normal to use a factor of safety between 2 and 3 - say 2.5. However, at the present time more is known about ground conditions at Eden Park than is normally known when one is designing foundations (although the variable ground conditions mean that there is still some uncertainty on this site). Therefore it is appropriate to take a lower factor of safety. Mr Johnson regards a factor of safety of 1.5 as reasonable and that is what he used in preparing the claimant's entries on the Scott Schedule.
  313. Mr Johnson accepts that some piles could have a factor of safety of less than 1 without the house suffering significant damage. The reason is that when a pile tries to settle, the load imposed upon it is redistributed by the ground beam both to other piles and to the earth beneath the ground beam (unless that has settled). This explains why a number of houses at Eden Park, some of whose piles have a low factor of safety, have nevertheless escaped significant damage.
  314. It may be sufficient if the property has an overall factor of safety of 1.5. However, the distribution of piles is relevant. If the piles on one side of the house have a factor of safety of 2, the piles in the middle have a factor of safety of 1 and the piles on the other side have a factor of safety of .5, then the house will tilt.
  315. If you plot the performance of a pile on a graph (x axis settlement, y axis load) the line will be a curve, not a step.
  316. There are three different factors of safety to consider (which it was agreed with counsel would be referred to as FOS 0, FOS 1 and FOS 2). FOS 0 is the factor of safety, where there is no negative skin friction, but instead the soil surrounding the pile is providing positive skin friction. FOS 1 is the factor of safety where there is neither positive nor negative skin friction. FOS 2 is the factor of safety where there is negative skin friction exerted on the pile by the made ground and the alluvial deposits.
  317. In the plot data sheets at appendix F to his report Mr Johnson has calculated FOS 0 for each of the 1194 piles. This is shown under the heading "maximum factor of safety". In a supplementary document lodged during the trial Mr Johnson has calculated FOS 1 and FOS 2 for each of the piles. It is necessary to examine the ground conditions at each location, in order to determine which factor safety it is appropriate to take in any given instance. At plot 40 (13 Clover Drive) it is appropriate to take a factor of safety between FOS 0 and FOS 1. The ground under the ground beams at this location is strong, because at the north west part of the site the ground was "cut" not "filled". The ground there is old and it formerly had greater loads upon it. Hence, when one looks at all the relevant circumstances, it can be seen that that property is stable. Accordingly, Mr Johnson has classified that property as yellow. Both Mr Johnson and Mr Newman take similar factors of safety for plot 40.
  318. In many instances Mr Johnson and Mr Newman broadly agree about the factors of safety for piles. Where the experts disagree about applicable factors of safety, Mr Johnson explains the reasons for disagreement as follows. One reason is that they take different resistance figures where piles are embedded in sands and gravels. This is because Mr Newman attaches credence to Green Piling's CAPWAP results, whereas Mr Johnson does not. Mr Johnson has derived end bearing values for piles embedded in sands and gravels from the results of cone penetrometer tests. This difference of opinion only has a significant effect in relation to seven houses, namely plots 18, 20, 21, 30, 31 50 and 51.
  319. Another reason for disagreement about factors of safety had been the experts' difference of opinion about PPL, but that difference was resolved during the trial. A further reason for disagreement about factors of safety is the fact that they used different computer models for ground conditions. There is not a borehole by every pile. Therefore it is necessary to extrapolate from existing boreholes what the ground conditions are likely to be at the location of each pile. Furthermore the experts do not always agree about the interpretation of borehole logs. Take borehole 103 as an example. The log for this borehole is annexed to the JPA report. Mr Newman believes that the till begins at a depth of 4.8 metres, whereas Mr Johnson believes that the till begins at a depth of 8 metres. The layer between those two points is described as "stiff brown sandy clay with some gravel and rare wood fragments". The reference to wood fragments causes Mr Johnson to think that this is made ground rather than glacial till. However, it appears that the person doing the borehole took a different view because he did not use the term "made ground" in the borehole log. Mr Johnson accepts that this layer of ground is strong, because it has a recorded SPT of 29. The experts agree that this layer of material (whether classified as till or made ground) would provide positive support/positive skin friction for the pile (see paragraph 2.2 of the experts' fourth joint statement).
  320. Negative skin friction

  321. Negative skin friction occurs when the ground around a pile settles and drags the pile downwards.
  322. In Part 3 of his report Mr Johnson analyses the ground settlement at Eden Park. Two separate loads placed upon the ground cause it to settle: the fill material deposited in the 1970's ("load 1") and the fill material placed in the cut and fill operation of 2000-2001 ("load 2"). The alluvial deposits (peat and soft clay) are compressed by the weight of the made ground on top and so both of those layers move downwards. The amount of any settlement at any location is determined by the thickness of the alluvial deposits (greatest at the centre of the site) and the amount of made ground above. Mr Johnson's figure 16 shows settlement of the ground across the site between 2000 and 2007; figure 17 shows likely ground settlement between 2000 and 2010; figure 18 shows likely ground settlement between 2007 and 2017; figure 19 shows likely ground settlement between 2007 and 2032. It can be seen that there is a correlation between the areas of greatest ground settlement and the areas where houses have suffered most damage.
  323. The figures for ground settlement shown in figures 16 to 19 are very approximate. Mr Johnson accepts a margin of error of plus/minus 50 per cent. Soil settlement generates negative skin friction when the amount of settlement reaches .5% or 1% of the diameter of the pile.
  324. Negative skin friction causes progressive movement. If one disregards piles which are plunging, it is only negative skin friction which drives progressive movement on this site. We have now, in 2007, reached a situation in which negative skin friction has made itself manifest in every part of the site where negative skin friction is occurring or will occur. The negative skin friction load has reached its maximum value. Future settlement of the soil will not change the load.
  325. Mr Johnson has identified in the Scott Schedule those properties which are not subject to negative skin friction. Looking at the "clusters" plan (figure 25 in Mr Johnson's report) the following properties are not subject to negative skin friction: area C3; area C2, except around plots 30-34; area C1, except at the boundaries with areas A1 and A2; the bottom left hand corner of area D2; area B1.
  326. Areas D1 and D2 probably have negative skin friction, except at the bottom left hand corner. Area B2 possibly has negative skin friction. Areas A1 and A2 probably have negative skin friction.
  327. This evidence of Mr Johnson was subsequently refined by the experts' fifth joint statement, lodged on day 8 of the trial. Attached to this joint statement is an agreed plan, on which properties affected by negative skin friction are coloured white and properties not affected by negative skin friction are coloured blue. A question mark denotes some uncertainty about the experts' conclusion in respect of four properties. The letter "P" indicates that there is probably no negative skin friction due to the area of cut.
  328. If you draw a diagram of a pile, you can mark the parts on which negative skin friction are exerting a downward pressure and the parts on which glacial till at the toe and around the lower parts are exerting an upward pressure. There is a "neutral point" on every pile where the force pushing downwards equals the force pushing upwards. This is illustrated on Mr Johnson's figure 10. In calculating these forces Mr Johnson and Mr Newman have agreed to take a figure of .3 for soil resistance (beta). This is an assumption, it is not an absolute value. As demonstrated by Mr Johnson on his sheet 8, drawn during cross-examination (and subsequently agreed by Mr Newman) the amount by which a pile settles through negative skin friction is always less than the amount by which the ground surface settles.
  329. There are two main layers of soil above the glacial till, namely the soft or alluvial deposits and the made ground. As the alluvial deposits compress, both those deposits and the made ground above exert downward pressure on the pile. Where there are no alluvial deposits, over time the made ground compresses slightly. So there is the potential for some negative skin friction to develop in the made ground, even where there are no alluvial deposits beneath.
  330. If the soil around the neutral point of the pile is settling, then the pile moves down. If the soil around the neutral point of the pile is not settling, then the pile does not move down. Thus if the pile has a factor of safety greater than 1, after taking into account negative skin friction, then the neutral point of the pile must be in the till. Accordingly there should be no progressive movement of that pile.
  331. Analysis of individual properties

  332. We now have the results of six months level monitoring of most properties and nine months of DEMEC monitoring. A picture has emerged. Nevertheless in respect of some blue and orange properties the picture is likely to be clearer at the end of the year.
  333. For the purpose of analysing all 94 properties, Mr Johnson has divided the properties into nine "clusters" of properties which have broadly similar features in common. Those nine clusters are:
  334. A1: plots 3-12 and 52-55

    A2: plot 56 and plots 67-76

    B1: plots 50-51 and 90-94

    B2: plots 47-49

    C1: plots 1-2, 13-26 and 57-61

    C2: plots 30-38

    C3: plots 39-46

    D1: plots 27-29 and 62-66

    D2: plots 77-89

  335. The position in respect of orange blue and purple properties will become much clearer in one and a half to two years.
  336. Both in his report and in cross-examination Mr Johnson has gone through each of the 94 properties individually, following the sequence of the clusters. It would unduly prolong this judgment if I recite the evidence which Mr Johnson gave about each property in the course of that Odyssey. I bear all of that evidence in mind and will draw upon it in setting out my conclusions in respect of individual properties.
  337. Remedial works

  338. The most severely affected properties will require repiling together with replacement or modification of the ground beams. Where movement has occurred but has now ceased, superstructure repairs ("cosmetic repairs") will suffice. Properties where ongoing movement is sufficiently slow and decreasing with time, may be dealt with by repeated cosmetic repairs.
  339. Purple properties can generally be dealt with by cosmetic repairs and redecoration.
  340. Blue properties require monitoring. In due course they may require cosmetic repairs, alternatively replacement foundations.
  341. Orange properties also require monitoring. They are more likely to require new foundations, but cosmetic repairs may prove to be sufficient.
  342. The red properties require substantial remediation. There are two options (i) demolition and rebuilding; (ii) underpinning the existing structure together with cosmetic works. Both options are technically valid solutions, each with different advantages and disadvantages.
  343. The option which has already been adopted for twelve of the red properties is underpinning, using a hybrid of the cantilever pile technique and the beam and pile technique. This is followed by cosmetic repairs, as necessary. The procedure adopted is a technically acceptable solution for the twelve properties where remediation has been undertaken.
  344. Mr Johnson was not asked to design the remedial scheme for the first twelve properties. He was handed the Bullivant scheme and asked to do an independent check on it. He was not asked to consider the reasonableness of the costs of that scheme, or to advise whether it was reasonable in comparison with other schemes.
  345. In the event of demolition and rebuilding it would be possible to design piles without sleeves. But there would be constraints because of the size of such piles and the size of the rig that could be accommodated. Steel sleeves are expensive. Plastic sleeves would be cheaper, but Mr Johnson has only ever used steel sleeves.
  346. Part 8: The defendant's expert evidence
  347. The defendant's expert witness is Mr Richard Newman, a director of Tony Gee. Mr Newman is a chartered civil engineer, specialising in geotechnical engineering.
  348. In this part of the judgment I shall summarise Mr Newman's evidence, weaving together the main points of his report and the gist of his oral evidence.
  349. History of Mr Newman's involvement

  350. Mr Newman was instructed on behalf of Encia in December 2005. Mr Newman visited site on 20th December 2005 and 24th March 2006, in order to inspect 5, 6, 9 and 10 Barley Close and 18 Hayfield Close, the five houses which SHL had bought back. On the second occasion he inspected jointly with Mr Johnson, SHL's expert. Those five houses had all suffered extensive damage, as set out in paragraphs 5.2 to 5.6 of Mr Newman's report. This damage was obviously attributable to failure of the piled foundations. There was no need to institute level surveys of those five houses in order to confirm that conclusion.
  351. Mr Newman was first given an outline of the proposed remedial scheme at a meeting with Mr Johnson, Mr Jones and Mr Hare on 16th March 2006. Paragraph 10 of the minutes of that meeting records the remedial scheme as follows:
  352. "Houses to be supported on new piled raft foundations constructed from inside the property.
    Foundations to be constructed through holes in the raft and taken into the gravel layer:

    Piles to be jacked into position

    Piles to be sleeved against negative skin friction.

    Subsequent fabric repairs to each property."

  353. According to the minutes, the only question raised by Mr Newman was whether costs could be saved by allowing the contractor to work outside the properties, to which Mr Jones responded referring to the sensitivities of residents. Mr Newman also requested full details of the remedial scheme, and this is confirmed in the minutes of the meeting.
  354. In May 2006 Mr Newman and Mr Johnson carried out joint inspections of 2 and 3 Hayfield Close, 32 and 40 Meadowgate Drive.
  355. During the first half of 2006 Mr Johnson and Mr Newman (who were former colleagues at Ove Arup) worked well together and adopted a collegiate approach. On the 28th July 2006 they produced their first joint statement, relating to nine houses at Eden Park. They agreed that the design and installation of phase 1 and phase 2 piles were defective. They agreed that Encia's CAPWAP tests had produced higher values for end resistance than were credible, and these should not have been accepted by Encia. The experts agreed that the houses were settling because the piled foundations were inadequate (a) to carry the structural loads and (b) to cope with negative skin friction. The experts agreed that remediation of the five worst affected properties "will necessitate the complete replacement of the piles and structural modifications or replacement of the ground beams". They also agreed that there were likely to be other houses where the factor of safety of some of the piles was likely to be unacceptably low, and that the most appropriate way forwards would be to zone the site for risk.
  356. In September and November 2006 Mr Newman inspected the properties being remediated as well as trial pits which had been dug.
  357. In response to an order of the court, the experts produced a protocol in November 2006, setting out the nature of the further investigations which should be carried out. These included the carrying out of level surveys for up to six months. Paragraph 7 (iv) of the protocol stated:
  358. "In conjunction with the level survey, verticality measurements of the external walls and crack width monitoring may be required for some properties."

  359. Although not apparent from that protocol, it is Mr Newman's opinion that BSCP ought to have undertaken level surveys and monitoring of all houses from an early stage. They lost a golden opportunity by failing to institute this two years ago. As a result, both experts at trial are struggling with only six months data.
  360. In January 2007 Mr Newman, together with Warren Teasdale of Ove Arup carried out inspections of 1, 2 and 15 Barley Close, 17 Hayfield Close, and 22, 34 and 42 Meadowgate Drive. The damage to these properties was slight. The main damage which Mr Newman noted was very fine stepped cracking at the front of the right hand gable of 2 Barley Close.
  361. Mr Newman took photographs during his various inspections. These photographs together with location plans and various contemporaneous notes of Mr Newman are helpfully exhibited at appendix 7 to his report. These photographs show not only settlement damage but also certain instances of bad workmanship.
  362. The carrying out of further tests and surveys began in January 2007. Mr Newman expected to receive the results straight away and was dismayed not to do so. Mr Newman contacted Mr Johnson about this many times. He pursued the matter more formally through solicitors in March.
  363. Tony Gee did not stop work or slow down because Encia was in dispute with its insurers. However, they did feel exposed at times. Mr Newman was careful to ensure that Tony Gee were paid up front.
  364. Mr Newman received a large mass of information in April and had difficulty in coping with it all. That is why he did not deal with the Bullivant test pile results in his report. It was not the case that those results did not fit with his conclusions. Mr Newman was always concerned that the conditions of the test piles did not represent the conditions of the actual piles on site.
  365. In the Scott Schedule Mr Newman did not criticise the Bullivant remedial scheme. At that stage he understood that he was meant to be concentrating on causation. The alternative approach of demolition and rebuilding only became obvious to Mr Newman when he saw Mr Bone's statement. Mr Newman started to develop the alternative piling methods set out in section 11 of his report during April or May 2007.
  366. Mr Newman's first criticisms of SHL's remedial scheme were those appearing in section 11 of his report, served shortly before trial. Mr Newman did not bow to pressure from solicitors or insurers when including that section in his report. Mr Newman did not get the details of the Bullivant scheme until a late stage.
  367. The design of the piles

  368. Mr Newman agrees that there were failures of design. There was incompetent pile design both on phase 1 and phase 2. In particular, Encia failed to take into account negative skin friction. Also it was inappropriate to drive the steel piles to a set in cohesive soils. This is because the sets achieved would be affected by water pressures, which can subsequently change. It was inappropriate to drive the precast concrete piles to predetermined lengths, because ground conditions and the contours of the boulder clay varied so much across the site. This meant that piles would not always achieve sufficient penetration of the glacial till.
  369. On the other hand Mr Newman rejects many of the specific breaches alleged in paragraph 19 of the re-amended particulars of claim. He is also critical of the manner in which the various alleged breaches are formulated. Mr Newman also rejects the criticism that piles with a factor of safety less than 1.5 are inadequate. However, as the factor of safety approaches 1, the settlement increases markedly.
  370. The Capwap tests

  371. Green Piling procured dynamic loading tests (CAPWAP tests) on certain of the installed piles. PMC carried out such tests on ten phase 1 piles and eight phase 2 piles. The results are summarised in table 6.2 of Mr Newman's report. The test results indicated an overall average base resistance of 350 kiloNewtons. Many of the piles so tested were founded in the sands and gravels below the boulder clay. CAPWAP test results showed that piles founded in those sands and gravels had high base resistance.
  372. Mr Newman changed his view about the reliability of the CAPWAP test results (from that expressed in the first experts' joint statement) in January 2007. He now considers that the CAPWAP test results give a reliable indication of the end resistance of steel piles founded in sand and gravels. On the basis of these results Mr Newman has taken an end resistance for the steel piles of 300kN or 19.4 MPa.
  373. The high base capacity of open-ended piles founded in sands and gravels is supported by a number of papers cited in Mr Newman's report, in particular Tomlinson. (The correct interpretation of Tomlinson on this point was the subject of lengthy cross-examination, to which I shall return later.)
  374. Mr Johnson has used the results of cone penetration tests, processed by the Schmertmann method, in order to assess the end resistance of steel piles founded in sands and gravels. The Schmertmann method is part of the Imperial College methodology and is a reputable procedure. Nevertheless, Mr Newman prefers the higher end resistance figures derived from the CAPWAP tests. Steel piles driven to a set in sands and gravels will necessarily seek out the denser sands and gravels in which to found. Furthermore the ends of such piles become plugged, so they are in effect closed end piles.
  375. Mr Newman accepts that CAPWAP is a dynamic, not static, load test. Nevertheless, there is a good correlation between static and dynamic load tests upon piles founded in sands and gravels.
  376. Mr Newman accepts that there are some oddities in green PMC's CAPWAP results. In particular, the results for pile 21-E3 are higher than credible. Also the steel piles are generally scoring higher on shaft resistance and base resistance than the concrete piles when (other things being equal) one would expect the reverse. When the CAPWAP results are plotted on a graph (as Mr Johnson has done at figure 26 of his report), the results are largely in a vertical line; one would expect to see the set diminishing as the load increases. However, none of these matters cause Mr Newman to doubt the reliability of the CAPWAP results.
  377. Factor of safety

  378. Encia attempted to adopt a factor of safety of 2.5, which would have been unexceptionable. Indeed, if negative skin friction is properly allowed for, one can take a factor of safety less than 2. In Mr Newman's view a reasonable factor of safety is 1.5, after allowing for negative skin friction.
  379. The factor of safety is intended to protect against uncertainties, such as the load on a pile being larger than intended.
  380. For the assistance of the court, Mr Newman has calculated the factors of safety of each of the 1194 piles. In doing so, he has adopted a degree of conservatism.
  381. Geology of the Hartlepool area

  382. The glacial till is the material which existed at the time of the last ice age. It comprises boulder clay with sand and gravels beneath. Above the boulder clay there are silt and soft clay, which were probably laid down as lake and alluvial deposits in post-glacial times. These alluvial deposits are accompanied by the formation of peat. The silts, soft clays and peats are collectively referred to as alluvial deposits. They are liable to be compressed by any fill placed above them.
  383. A number of triaxial compression tests on the alluvial deposits indicate a strength in the range 8 - 27 kiloNewtons per square metre. The strength of the boulder clay is in the range 100 - 125 kiloNewtons per square metre at the surface, increasing to about 160 kiloNewtons per square metre at depth.
  384. Our knowledge of the site now

  385. There have now been many surveys and ground investigations. Our knowledge of the site is improving all the time. The alluvial deposits (beneath the made ground) run across the site in a reasonably well defined channel.
  386. Nevertheless there are uncertainties, because ground conditions are variable. Total knowledge about the site is, of course, impractical. Also one does not know how loads are redistributed after a house starts to move.
  387. For the most part there is good consistency between Mr Johnson's and Mr Newman's models of ground conditions. These models interrogate all nearby boreholes and CPT results.
  388. For present purposes, it is particularly important to identify the top of the boulder clay. Mr Newman has undertaken this exercise, using the "Surfer" programme. The result is set out in figure 4.3 of his report.
  389. The accuracy of figure 4.3 depends upon the quality of the data fed in. Two areas of this figure were scrutinised during cross-examination: namely the ground in front of plot 75 (location of dynamic probe 06) and the ground behind plot 60 (location of dynamic probe 24). In each instance Mr Newman has interpreted the probe results so that the boulder clay is at a much higher level than indicated by nearby borehole and CPT data. This is not surprising in view of the variability of the ground. Looking at the dynamic probe results, Mr Newman can see why Mr Johnson has interpreted the boulder clay as starting at a much lower level. However, even if Mr Johnson is right in those two instances, the material above the boulder clay has high shear strength and is unlikely to generate negative skin friction. If Mr Johnson's interpretation of the dynamic probe results are correct, then the contours of the boulder clay as shown on those two areas of figure 4.3 will change substantially.
  390. The irregular surface of the boulder clay was formed at the end of the last ice age. As the ice sheets retreated, a series of channels and ponds formed in the boulder clay in which water flowed or collected.
  391. It is important to identify the depth of fill. Mr Newman's figure 3.2 sets out the depths of fill deposited across the site during the cut and fill operation of 2000 to 2001. The weight of fill at any location, when multiplied by a factor (which is approximately .3), indicates the amount of downdrag exerted on piles by negative skin friction in those locations where fill overlies compressible material.
  392. It is also important to note the location of stockpiles during the cut and fill operation. These stockpiles had the effect of surcharging the ground and reducing future settlement. Mr Newman accepts, however, that these stockpiles were moved around.
  393. Settlement of the ground at Eden Park

  394. The ground at Eden Park is settling as the weight of fill material presses down on the alluvial deposits. The fill placed by SHL in 2000-1 has the dominant effect, but the fill placed by Yuill in or around the 1970's still has some effect.
  395. The elements of this settlement are: consolidation of the soft clay; long term settlement (creep) of the soft clay, the peat and indeed the fill. At 40 Meadowgate Drive, for example, Mr Newman calculates that approximately 100 mm of ground settlement has occurred over the last five years.
  396. The ground will continue to settle for many years, albeit at a decreasing rate. The magnitude of settlement at each location will depend upon the thickness and nature of (a) the fill and (b) the alluvial deposits. Mr Johnson's figure 19 is not an unreasonable portrayal of the sort of settlement which is likely to occur over the next 25 years (2007-2032).
  397. Where a pile has an insufficient factor of safety, then the settlement of the ground causes the pile to settle, albeit by a lesser amount, until the pile reaches equilibrium.
  398. Mr Newman's Repute calculations

  399. Mr Newman has modelled the performance of an individual pile, using the "Repute" programme. Mr Newman has taken a number of different lengths for the pile, in order to examine the different behaviour.
  400. Figure 10.6 of Mr Newman's report shows the settlement of a typical pile (in this case pile A4 of the Langdale house) under load. The line follows a hyperbolic curve. The reason for the hyperbolic curve is this. Once the pile has settled by .5 to 1% of its diameter, it picks up positive skin friction from the soil around its shaft. The pile does not generate base resistance until it has gone down about 10-20% of its diameter. The lower the factor of safety, the sooner the line flattens out.
  401. Mr Newman regards his graph as more helpful than the purely theoretical graph in Mr Johnson's report. However, as part of the supplementary documents Mr Johnson has modelled the behaviour of pile A4 on plot 10.
  402. Mr Johnson has modelled the behaviour of an individual pile using "Pilset". Like Repute, Pilset is a reputable and reliable programme. The two sets of calculations are quite similar, but settlement is slightly greater on Mr Johnson's analysis than on Mr Newman's analysis. When the load settlement analyses are plotted, the first part of the curve is more vertical on Mr Newman's graphs than on Mr Johnson's graphs.
  403. It may seem as if Mr Newman's figures for settlement on some occasions are so low that they do not even allow for shortening of piles. The explanation is that during the phase in which a pile is supported by positive skin friction, it is only the upper part of the pile which is subject to elastic shortening. Both Mr Johnson and Mr Newman have calculated the amounts by which a pile shortens under load. Their figures are in the same range. It is fair to say, however, that if one adopts Mr Johnson's shortening calculations, the curve on Mr Newman's graph shifts a bit to the right.
  404. All these curves demonstrate that the rate of settlement decreases over time. Thus houses at Eden Park which have not so far suffered significant settlement damage are unlikely to do so in the future. Those houses were all built four or five years ago.
  405. The Bullivant test piles

  406. The results of the test piles are of no value. This is apparent from the fact that when those results are plotted they form a straight line, rather than a hyperbolic curve. Those piles appear not to have developed positive skin friction. Instead the load goes straight down the pile to the base. Accordingly the test piles do not replicate the actual piles installed by Green Piling.
  407. Mr Newman does not accept that data from the test piles cast doubt on the reliability of CAPWAP tests in relation to base capacity of piles.
  408. Mr Newman's Lusas calculations

  409. Mr Newman has modelled the behaviour of an individual ground beam using the Lusas programme. This is a form of finite element analysis. The results of this exercise are at appendix 19 to Mr Newman's report. It can be seen that the ground beam is strong and well able to redistribute load.
  410. Mr Newman has assumed piles with factor of safety of 2 at each end of a wall and a pile in the middle with a low factor of safety (ranging from FOS 1.5 down to FOS 1).
  411. Mr Newman has also modelled the behaviour of the rectangle comprising all four ground beams. Although it was not designed to do this, the ground beams effectively redistribute load between piles. The Lusas calculations show that when you have a pile with low factor of safety (e.g. 1) surrounded by "good" piles, the load is redistributed satisfactorily. Mr Newman has focused on the central pile of a wall and what happens when it is "squashy".
  412. Mr Newman accepts that where the load on a pile (after redistribution) is less than 1, then the pile will settle about 30 mm. It was not the purpose of the Lusas calculations to demonstrate that factors of safety less than 1 are acceptable. However, those calculations do demonstrate that a factor of safety of about 1.5 does not lead to unacceptable settlement.
  413. Where individual piles are overstressed, but the house is undamaged, it is possible that the ground beams are shedding some of the load into the ground.
  414. The significance of a house being out of level

  415. The NHBC tolerance of plus or minus 15 mm is a construction tolerance. It does not mean that that amount of settlement after construction is acceptable.
  416. In a number of instances in the Scott Schedule, Mr Newman has stated that the tilt of a house is 30 mm less than recorded. This is because he is giving Encia the full "benefit" of the construction tolerance. He does not accept that this was misleading. Mr Newman accepts that the yellow houses along the top of Clover Drive were well built with nothing like a 30 mm deviation from level. However, a number of different gangs were likely to have been employed on this site and not all gangs would have achieved that high standard. For example, at plot 37 one corner is down 67 mm, but there is no damage to the house. That suggests something peculiar about the workmanship, rather than pile settlement.
  417. Charles & Skinner's paper, "Settlement and tilt of low-rise buildings" (April 2004) states that the design limit for tilt is 1/400; tilt becomes noticeable and requires monitoring at 1/250; remedial action is required when the tilt is 1/100. On an 8-10 metre wall a tilt of 40-50 mm is 1/250. Mr Newman thinks that Charles and Skinner's classification is reasonable. Also he generally agrees with the comments on tolerability of foundation tilt in BRE Digest 475. Mr Newman cannot comment on the effects of tilt upon valuation, as this is outside his expertise.
  418. Angular distortion of a house (sagging or hogging) is more likely to cause cracks and damage than tilt. Mr Newman calculates that about 3.7 mm of sagging or 2.23 mm of hogging will cause cracking. These calculations can usefully be looked at alongside Mr Johnson's calculations of angular distortion at 14 Barley Close. It can be seen that the hogging and sagging at that property (as calculated by Mr Johnson) is about at the levels where (on Mr Newman's calculations) cracking begins.
  419. Mr Newman's approach to individual houses

  420. Virtually all new buildings crack. This is for a variety of reasons, as explained in BRE Digest 361: temperature changes, drying out, poor workmanship or materials, etc. This needs to be borne in mind when considering the cracks in Eden Park houses.
  421. Mr Newman looks at the circumstances of each individual house. He also looks at the local setting, but he does not allow his analysis to be driven by the local setting, because there are great variations on this site.
  422. There is much bad workmanship at Eden Park, such as putlog damage and mortar coming away from lead flashings.
  423. Many cracks are present in houses, which are unrelated to settlement. In the case of cracks less than 3 mm wide, it is very difficult to decide the cause. Interpretation would be much easier if level surveys had been carried out over the last two years. Mr Newman is not attempting to pin all cracks on other causes. He does not require all other causes to be eliminated before accepting that a crack is settlement related. He looks at all the evidence objectively and fairly. His judgments about individual houses are reasonably robust.
  424. If the piles of a house are ineffective, so that the ground beams are acting like a strip foundation, that is not acceptable. Indeed some houses relying heavily upon the ground beneath the ground beams have already been remediated.
  425. If all the factors of safety of piles are very low but the house is not suffering damage, then Mr Newman would question the "paper" factors of safety. This is because we cannot be certain about ground conditions. Engineering has developed from experience of how buildings actually perform.
  426. If the factors of safety as calculated by Mr Johnson or Mr Newman indicate that the piles of a house are just adequate, there may be uncertainty as to whether those factors have been correctly calculated. However, that uncertainty may be removed if the house shows no sign of distress. Plot 19, for example, is an agreed yellow because it has suffered no damage. This is despite the fact that the calculated factors of safety for plot 19's piles are almost all below 1.
  427. The greatest rate of settlement occurs in the early years. If a house has stood for five years and suffered very little damage, then it is unlikely to need substantial remediation.
  428. For the reasons explained by Mr Johnson on day 9, you cannot in reality have a building in which all the piles have a factor of safety of less than 1. The piles must move downwards until there is equilibrium. Such foundations are unacceptable. As also explained by Mr Johnson, when negative skin friction drags down piles, the piles do not move down as far as the ground surface.
  429. When examining an individual house, it is very helpful to look at the average factor of safety of all the piles.
  430. The categorisation of houses

  431. In classifying houses Mr Newman relies heavily on the BSCP reports. Although they do not include level surveys, these reports do describe the damage observed at different dates, and indicate whether or not it appears to be settlement related.
  432. Mr Newman has had some difficulty in understanding orange. If a house suffers progressive movement, generally you have to eradicate the problem altogether. But he has agreed Mr Johnson's proposed definition of orange. Mr Newman originally put two houses in this category, plots 67 and 70. These houses have very minor progressive damage and may warrant cosmetic repair. More properties moved into this category during the course of Mr Newman's cross-examination.
  433. The purple houses have slight damage, which is not progressive. It is difficult to be certain that that damage is settlement related. In the purple houses you see a lot of putlog damage and cracks that do not go anywhere.
  434. In the case of blue properties, there is more evidence that movement may be progressive and should be monitored. Mr Newman does not expect the blues to move up to the category of requiring full remediation, although one blue house (plot 77) may require partial remediation.
  435. In the last few weeks Mr Newman has changed his categorisation of a number of houses. This is because of the receipt of new information. It is possible that as further information comes in, yet more houses will - on Mr Newman's assessment - change categories.
  436. Plot 76 is anomalous. The four corners appear to be sinking at the rate of 1 mm per month over five months, but there is very little damage. If a house continues to settle at such a rate, that is unacceptable. Plot 76 requires long term monitoring before any decision is taken about it.
  437. The critical information required in respect of each house is whether movement is continuing.
  438. In the case of houses where ongoing movement is very slow, minor repointing and cosmetic repairs (possibly repeated) may suffice. It would be extraordinary to underpin a house, where there is very little damage either inside or outside.
  439. Remedial works

  440. Part 7 of Mr Newman's report sets out a useful summary of the investigations and discussions which led up to the adoption of the Bullivant scheme for the twelve houses which have been remediated. Mr Newman criticises SHL for embarking on remediation without fully establishing the cause of damage and linkages with pile design. He also points out that SHL's actions were not unanimous. It can be seen from internal documents that different views were expressed about the respective merits of (a) underpinning plus consequential works and (b) demolition plus rebuilding.
  441. Part 11 of Mr Newman's report sets out a variety of possible piling schemes. These include mass concrete; beam and pier; beam and piles; raked piles; piled raft; corset. Mr Newman (like Mr Jones of BSCP) rejects the corset option as being unsuitable.
  442. Mr Newman does not put forward any particular scheme for any particular property. Furthermore the various schemes set out in Part 11 of Mr Newman's report have not been approved by the NHBC for the houses at Eden Park.
  443. Mr Newman does not criticise the Bullivant scheme as adopted. This was an adaptation of the piled raft option. Mr Newman believes, however, that time and costs would have been saved if as much as possible of the repiling had been external (as opposed to internal - as was actually done). Also, he believes that driven piles rather than jacked piles should have been used. SHL's fears about the effects of vibrations were unfounded. Some of the existing piles could have been re-used.
  444. Mr Newman hopes that the Bullivant scheme is going to work, although there will be some cracking in the restored houses.
  445. The twelve houses remediated were jacked up. SHL appear not to have given any reasoned consideration to the NHBC's request for jacking of those houses. Nevertheless, it was reasonable for SHL to jack up 6, 7, 8, 10 Barley Close, 34 Meadowgate Drive and 1 Hayfield Close.
  446. Partial underpinning is an acceptable solution for properties where only one part of the piled foundations has failed.
  447. Demolition and rebuilding would produce a more satisfactory end result than the underpinning scheme which has been adopted to date. Also it would have been a cheaper option for the first twelve remediated properties.
  448. The Odyssey

  449. Like Mr Johnson, Mr Newman went through the individual houses in detail during the course of his cross-examination. I will not summarise that part of his evidence. I will, however, draw upon it when dealing with individual properties.
  450. Part 9: The contractual issues

  451. The first issue which arises in relation to the phase 1 contract is what documents contain or evidence the contract between SHL and Encia. Mr Cavender contends that the crucial document is SHL's letter to Encia dated 12th October 2001. That letter accepted Encia's quotations dated 3rd May and 6th September 2001, but modified the terms of those quotations and attached the terms which SHL was incorporating into the contract.
  452. Mr de Verneuil Smith, on the other hand, contends that the crucial document is Encia's letter dated 3rd May 2001. SHL accepted the terms of that letter either by conduct or by SHL's letter dated 15th June 2001.
  453. On this issue I prefer and accept the submissions of Mr Cavender. A formal order from SHL to Encia would have been normal practice and would have been expected by all parties. Indeed, SHL in its letter of 15th June 2001 expressly stated that its formal order would follow. In my view, the correspondence between May and September was essentially debating the terms which would ultimately be incorporated in SHL's formal order. It should also be noted that it is far from unusual for a specialist contractor or subcontractor to start work before all contractual terms have been agreed.
  454. I therefore conclude that the phase 1 contract came into existence in the following manner. SHL, by its order letter dated 12th October 2001, accepted Encia's quotations dated 3rd May and 6th September, subject to the modifications imposed by the order letter.
  455. The terms contained in the order letter were unremarkable. Encia did not demur at that order letter. Accordingly, that document contained or evidenced the terms of the phase 1 contract.
  456. The next contractual issue which arises is whether SHL's standard conditions, headed "Conditions of contract for subcontractors", were attached to SHL's letter to Encia dated 12th October 2001. There is certainly no reference to those conditions in the body of the letter.
  457. In relation to this issue, I have carefully considered the evidence of Mr Saunders and Mr Saul. Both witnesses were extremely fair and candid in their evidence. Each of them acknowledged the doubt which surrounds the question whether SHL's standard conditions were provided to Encia in October 2001.
  458. The evidence of these two witnesses has been summarised in parts 4 and 5 above. I have also examined the clip of documents which constitutes exhibit 1. These documents were found together in the relevant part of Encia's archive by Mr Saul.
  459. Having considered the oral and written evidence before the court, on balance of probabilities I find that SHL did not attach a copy of its conditions of contract for subcontractors to the letter which SHL sent to Encia on 12th October 2001. I reach this conclusion for four reasons:
  460. (i) SHL's letter dated 12th October 2001 makes no reference to those conditions as an enclosure. As Mr Saunders accepted in cross-examination, it was standard company practice to identify in the covering letter any enclosures sent.

    (ii) Mr Saunders has no specific recollection of enclosing those conditions with the letter dated 12th October.

    (iii) When Mr Saul retrieved the relevant correspondence from Encia's archive he did not find a copy of SHL's conditions of contract for subcontractors together with that letter. He did, however, find next to that letter (a) SHL's document headed "General requirements", and (b) SHL's document headed "Contractors' Safety Guide". Both of these documents are specifically referred to in the letter as enclosures.

    (iv) The documents disclosed by Encia do not include the 2001 edition of SHL's Conditions of Contract for Subcontractors. If those conditions had been sent to Encia in October 2001, I believe that they would have featured in Encia's disclosure.

  461. Let me now draw the threads together. For the reasons set out above, I hold that SHL's conditions of contract for subcontractors were not attached to SHL's letter dated 12th October 2001 and were not included in the phase 1 contract.
  462. Let me now turn to the phase 2 contract. There is no dispute that the contractual documents are Encia's offer letter dated 2nd July 2002 and SHL's acceptance letter dated 15th July 2002. There is also no dispute that SHL's Conditions of Contract for Subcontractors dated April 2002 were thereby incorporated into the phase 2 contract. These included the indemnity clause, which I read out in part 2 above.
  463. Encia admits that it was an implied term of both the phase 1 contract and the phase 2 contract that Encia would exercise reasonable skill and care in designing the piles and in carrying out the piling works (see paragraphs 16, 21 and 22 of Encia's closing written submissions).
  464. Having dealt with the contractual terms, I must now move on to the matter of breach.
  465. Part 10: Breach

  466. Encia admit that in respect of each of the 94 properties they breached their implied contractual obligation to exercise reasonable skill and care in designing the piles. In my note to counsel dated 21st June 2007, I formulated what appeared to be the admitted breaches of design as follows:
  467. (a) Encia drove the steel piles to a set, which was inappropriate in cohesive soils.

    (b) Encia drove the concrete piles to a predetermined length without having regard to the ground conditions on phase 2.

    (c) Encia overlooked negative skin friction.

  468. In the case management discussion with counsel on Days 12 and 13 of the trial, Mr de Verneuil Smith did not dissent from that formulation or particularisation of Encia's design breaches. I shall therefore proceed upon that basis.
  469. The crucial question which arises for consideration in respect of each of the 94 properties is: what loss and damage, if any, flows from those breaches of contract? In tackling the central question of causation, I must begin by reviewing the factors of safety of the piles as installed.
  470. Part 11: Factors of Safety

  471. There are 1,194 piles on the site supporting a total of 94 houses. The number of piles per house ranges between 10 piles for the Doulton house and 22 piles for the Aylesford house.
  472. The factor of safety of a pile is the pile's capacity, divided by the load which the pile has to carry. So long as the factor of safety is 1 or more, the pile is in equilibrium. If the factor of safety is less than 1, the pile will sink until equilibrium is achieved.
  473. The calculation of a pile's factor of safety involves making a number of assessments, such as the nature of the ground at the base of the pile, the depth and quality of the strata through which the pile passes, and so forth. It follows that neither expert can be completely confident about his calculations of the factors of safety in this case. The figures calculated by the experts involve a degree of approximation.
  474. In these circumstances, where the calculated factor of safety of a pile is 1, there must be doubt as to whether that pile is in fact adequate. There has been debate between the experts as to how high the factor of safety must be before a pile at Eden Park can be regarded as adequate. Mr Newman makes the fair point that because our knowledge of Eden Park has grown in recent years, the margin of error in calculating factors of safety has diminished.
  475. Having considered the evidence of Mr Johnson and Mr Newman on this issue, my conclusions are as follows. Where the factor of safety of a pile is 1.5 or more, one can be confident that the pile is satisfactory. Where the factor of safety of a pile is less than 1, that pile is not satisfactory and it will sink unless the load is redistributed. Where the factor of safety is between 1 and 1.5, the adequacy of that pile must be assessed in the light of all the circumstances.
  476. In calculating the load imposed upon a pile, one must add together (a) the load imposed by the house upon that particular pile, and (b) the load (if any) imposed upon the pile by negative skin friction.
  477. In calculating the pile's capacity, one must take into account both the end resistance and the shaft resistance of the pile. The shaft resistance of a pile is the support provided for a pile by the soil surrounding the shaft. This is sometimes referred to as "positive skin friction".
  478. It can be seen that when negative skin friction develops the soil surrounding the upper part of a pile ceases to provide positive support. Instead it imposes a down drag on the pile. This has a significant effect upon that pile's factor of safety.
  479. Both experts have set about the task of calculating factors of safety for all 1,194 piles. They have calculated those factors of safety on three different bases:
  480. 1. Including positive skin friction.

    2. Disregarding both positive and negative skin friction.

    3. Including negative skin friction.

  481. The experts have also helpfully agreed where negative skin friction applies and where it does not. This enables the court to select the appropriate factor of safety from the three candidates put forward by the experts.
  482. On those plots where there is genuine doubt about whether negative skin friction applies, it is helpful to have regard to the intermediate factor of safety. That is one which disregards both positive and negative skin friction.
  483. In calculating factors of safety on the three alternative bases mentioned, the experts often arrive at very similar figures. However, sometimes there are significant differences between the experts. These differences can be traced to two main causes. First, differences between ground models. Secondly, differences concerning the end resistance of piles founded in the glacial sands and gravels.
  484. Let me turn first to ground models. Both experts have modelled the ground conditions by feeding into a computer programme all of the results obtained from the various ground investigations carried out at Eden Park. The broad picture which emerges is of the boulder clay forming a channel which runs underneath the centre of the site (see figure 8 in Mr Johnson's figure and figure 4.3 in Mr Newman's report).
  485. The depth of alluvium and the depth of fill above the alluvium are greatest along the line of this channel. Thus it is along the line of this channel that the greatest amount of ground settlement has occurred to date and the greatest amount of settlement is expected in the future (see figures 16 and 19 of Mr Johnson's report).
  486. Where differences occur between the ground models of the two experts, these arise because they differ in the analysis of individual bore holes or dynamic probes. Thus in a small number of instances, the data which the experts feed into their respective computer analyses differ. Let me focus upon the instances which have been explored in cross-examination.
  487. Dynamic probe 06 ("DP06") was sunk in the back garden of plot 75; that is 40 Meadowgate Drive. Mr Johnson interprets the data from this probe as indicating that the boulder clay starts at a depth of about 11 metres. Mr Newman interprets the data as indicating that the boulder clay starts at a depth of about 5 metres. Both Mr Johnson and Mr Newman have produced graphs showing the recorded blow counts from DP06 at different depths.
  488. Having considered the rival views of the experts on this issue, I prefer Mr Johnson's interpretation of DP06. I do not think that the patch of increased blow counts at 4 to 5 metres represents the start of the boulder clay. The boulder clay starts at about 11 metres where it can be seen that the blow count progressively increases.
  489. This conclusion is supported by a reference to data from nearby. Bore hole 102, which is only a few yards away, records the top of the boulder clay at 11.5 metres. CPT38 MED, which is in the front garden of plot 74, records the depth of the boulder clay at 11.4 metres. It can be seen from Mr Newman's figure 4.3 that his interpretation of DP06 creates something of an anomaly in the contour lines at that part of the site.
  490. Dynamic probe 24 ("DP24") was sunk in the back garden of plot 60. Mr Johnson interprets the data from this bore hole as indicating that the boulder clay starts at a depth of about 10 metres, which is about 25.6 metres AOD. Mr Newman interprets the data as indicating that the boulder clay starts at a depth of about 5.5 metres, which is 21.1 metres AOD.
  491. The data from DP24 is plotted on a graph, which was debated in cross-examination. It seems to me clear that the boulder clay starts at about 10 metres. That is the point where the line goes off to the right. Above that level one can see that the ground is gradually becoming more stiff. This may be, as Mr Johnson acknowledged, because there is a layer of sand and gravel above the boulder clay. It can be seen that above 9 metres the blow count drops progressively. This is inconsistent with the presence of boulder clay.
  492. I am reinforced in this conclusion by reference to the nearby data. The boulder clay at CPT15, which is in the front garden of plot 59, starts at 9.7 metres. The boulder clay at bore hole 04, which is in the back garden of plot 61, starts at 9 metres.
  493. Bore hole 103 was sunk in what later became the front garden of plot 21. That is 18 Clover Drive. According to the bore hole log, the material between the depth of 4.8 metres and the depth of 8 metres was "... stiff brown sandy clay with some gravel and rare wood fragments". Mr Johnson concludes that the glacial till starts at the bottom of this layer. Mr Newman contends that the glacial till starts at the top of this layer.
  494. Having considered the experts' rival views, I have come to the conclusion that the layer between 4.8 and 8 metres deep at that location is made ground rather than glacial till. This is a logical consequence of the fact that it contains rare wood fragments. It is true that this ground has a respectable strength, namely a blow count of 29 on the SPT. Nevertheless, as Mr Johnson points out, some made ground does have that degree of strength.
  495. Let me now draw the threads together. In those instances which have been explored in cross-examination, the data fed into Mr Johnson's ground model appears to me to be more reliable than the data fed into Mr Newman's ground model. Insofar as the ground models differ, that developed by Mr Johnson is to be preferred.
  496. Let me turn next to the end resistance of steel piles founded in glacial sands and gravels. In respect of these piles, Mr Newman has taken a uniform end resistance of 300 kiloNewtons. That equates to 19.4 MPa (ie 19.4 megaNewtons per square metre).
  497. Mr Newman derives this figure from the results of CAPWAP tests carried out at the time of construction. The results of these CAPWAP tests are set out in table 6.2 of Mr Newman's report.
  498. Mr Johnson on the other hand condemns the results of the CAPWAP tests as unreliable. Instead, Mr Johnson derives his lower figures for end resistance from the CPT results, which he analysed using the Imperial College methodology.
  499. The base resistance figures used by Mr Johnson for each pile are set out in columns 15 and 16 of appendix 6 to his report. The cross-examination of Mr Johnson on this issue is at Day 5, pages 18 to 52. The cross-examination of Mr Newman on this issue is at Day 13, pages 102 to 159 and Day 14, pages 1 to 21.
  500. I have carefully considered the expert reports, the cross-examination and the re-examination on this issue. I find that the CAPWAP test results obtained during the construction period are not a reliable indicator of the end resistance of any of the piles. This conclusion applies in particular to the tubular steel piles founded in glacial sands and gravels.
  501. I reach this conclusion in the light of all the evidence, but in particular for the following five reasons:
  502. (i) The figure of 19.4 MPa derived by Mr Newman from the CAPWAP tests is substantially higher than the values indicated at page 122 of Tomlinson "Pile design and construction practice", fourth edition. Mr Tomlinson is a well-known authority in this field whose works are often quoted in this court in relation to foundation cases.

    (ii) Mr Newman's figure of 19.4 MPa is substantially higher than the values indicated in table 4.1 of the Steel Bearing Piles Guide, Publication P156 issued by the Steel Construction Institute.

    (iii) Overall the CAPWAP results obtained by Green Piling are so high as to suggest that something went wrong with the testing process. This was acknowledged by both experts in paragraphs 7.1 to 7.4 of their first joint statement. Indeed, in paragraph 7.4 Mr Johnson and Mr Newman both concluded that:

    "The CAPWAP test results ... were simply not credible."

    (iv) There are anomalies within the CAPWAP test results. In particular, the concrete piles which are solid and are larger than the tubular steel piles would be expected to develop higher shaft resistance and higher end resistance, but this is not what the results show (see the readings for the probe pile on plot 56, which was founded in 1.2 metres of sand and gravel).

    (v) When the results of the CAPWAP tests are plotted on a graph of load against set, for the most part they form a vertical column. One would expect to see a diagonal line showing the set diminish as the load increases. When this anomaly was pointed out in cross-examination, Mr Newman placed some reliance on the CAPWAP test results for pile 22-A3. However, those were test results which Mr Newman had previously said were incredibly high and should not be used.

  503. I now turn to the base resistance values calculated by Mr Johnson for piles founded in sands and gravels. Each of these has been calculated by reference to CPT results obtained from the vicinity of the pile in question. Mr Johnson used the Schmertmann method developed by Imperial College. This involves taking an average of the CPT results just above and just below the tip of the pile. The CTP results yield a qc value, which is multiplied by a factor in order to obtain the qb value (the base resistance of the pile).
  504. The qc values in MPa are set out in column 13 of Mr Johnson's appendix 6. The qb values in MPa are set out in column 14. These qb values are then converted into kiloNewtons of base resistance for the relevant pile in column 15.
  505. No flaw in Mr Johnson's methodology was exposed during cross-examination. Indeed, when Mr Newman came to give evidence, he very fairly acknowledged that Mr Johnson had used a reliable methodology (see Day 13, pages 109 to 110 and 128 to 130).
  506. Let me now draw the threads together. For the reasons set out above, for the piles founded in glacial sands and gravels, I prefer the end resistance figures adopted by Mr Johnson to those adopted by Mr Newman.
  507. It follows from the foregoing that on the main issues which divide the experts concerning factors of safety, I accept the conclusions of Mr Johnson and I reject the conclusions of Mr Newman. Accordingly, on those occasions where there is a material difference between Mr Johnson's factor of safety and Mr Newman's factor of safety, I shall proceed upon the basis that Mr Johnson's factor of safety is correct.
  508. At this point I should make reference to the Bullivant test piles, which Mr Johnson maintains but Mr Newman denies are helpful indicators of the performance of the original piles at Eden Park.
  509. On this issue I see considerable force in the views of Mr Newman. When load against settlement is plotted for the test piles, the result is not a hyperbolic curve, as one could expect. The line on the graph is more or less a straight diagonal line and not any form of curve (see the set of three graphs at appendix 14 to Mr Johnson's report).
  510. The explanation may well be that the test piles were jacked rather than driven and thus they did not induce any densification. It may also be the case that the test piles did not generate positive skin friction. Whatever may be the true explanation, I do not derive from the test pile results the assistance for which the claimant contends.
  511. It appears from the evidence, however, that my conclusions in respect of the test piles do not affect the factors of safety. Mr Johnson did not use the data derived from his test piles for the purpose of calculating or adjusting his figures for factors of safety (see the cross-examination of Mr Johnson at Day 9, pages 40 and 45).
  512. Let me now draw this part of the judgment to a conclusion. I have set out above the factors of safety which are required for piles at Eden Park. The factors of safety achieved have been calculated by the experts generally with very similar results. On those occasions when the experts differ, I prefer the factors of safety calculated by Mr Johnson.
  513. Part 12: How this court should assess individual properties
  514. An issue which has rumbled through this trial is what weight the court should attach to factors of safety when determining whether the piled foundations of any given house are adequate. On many occasions Mr de Verneuil Smith has urged that the condition of the property should be the governing consideration. If a house does not exhibit the degree of cracking or distortion to be expected, then the calculated factors of safety are probably wrong. These are only "paper factors of safety".
  515. Mr Cavender on the other hand urges the opposite approach. Indeed, in his closing speech he submitted that factors of safety are largely the beginning and end of this case. Mr Cavender submitted that there is a real risk in simply looking at the building, one needs to know what is going on underneath. That is revealed by the factors of safety.
  516. I have considered the submissions of both counsel, together with the expert evidence on this issue. I have come to the conclusion that the truth lies somewhere between the two extremes urged by counsel, but somewhat nearer to the position urged by Mr Cavender.
  517. It seems to me that I should hesitate long and hard before reaching a conclusion about any individual house which is inconsistent with the calculated factors of safety. I say this for four reasons:
  518. (i) Sometimes a house with inadequate piles may settle uniformly. Thus the foundation failure may not so far have caused significant cracking, tilt or distortion. A classic example of this phenomenon is plot 76, which is at 42 Meadowgate Drive.

    (ii) If the piled foundations fail, the load of the house may be shed to the ground. For a time the ground may carry the load satisfactorily, but then the ground may settle away from the ground beam, thus causing damage to the house at a later stage (see the evidence of Mr Johnson at Day 9, pages 53 to 61).

    (iii) The factors of safety have been calculated by both experts using data from a number of ground investigations and reputable computer programmes. For the most part there is a good correlation between the two sets of results. Where the experts findings diverge, there are specific reasons for the divergence, which have been explored in cross-examination. For the reasons set out in part 11 above, where there is material divergence, I prefer the factors of safety calculated by Mr Johnson. In my view, the court can have a reasonable level of confidence in those calculated factors of safety.

    (iv) This court is dealing with a residential estate where piling failure has led to devastating consequences for many families. The court should not approve any group of piles with inadequate factors of safety unless the grounds for doing so have been made out.

  519. Despite the foregoing, there are isolated instances where it is appropriate to disregard seemingly low factors of safety. Such a conclusion may be reached, having regard to the condition of the house, its location on the estate, and ground conditions at that location. An example of such a property is plot 19, which is at 14 Clover Drive. Both the expert witnesses are agreed that that property should be coloured yellow.
  520. A further consideration which needs to be borne in mind is the redistribution of loads effected by the ground beams. An isolated pile with a factor of safety below 1 may not be problematic if the load bearing on that pile is transferred to other piles capable of bearing that additional load.
  521. Likewise, it may be acceptable if part of the load is transferred to ground capable of bearing that load in a part of the site not affected by negative skin friction. In other words, the circumstances of each house need to be looked at critically, in order to determine whether the piled foundations of that house are adequate or inadequate.
  522. The next topic which I must address is the significance of the colour code. Mr Johnson and Mr Newman have adopted an extremely helpful colour code, as defined in their second joint statement, and as explained in part 1 of this judgment.
  523. I have come to the conclusion that where the experts are agreed that a property is red, I can conclude without difficulty that foundation remedial works are required. Where the experts are agreed that a property is yellow, I can conclude without difficulty that the foundations are adequate.
  524. Now, let me turn to the situation where the experts assign one of the other three colours to a property or where the experts disagree about the appropriate colour. In that situation I need to consider all of the evidence about that property in order to determine whether the foundations are adequate or inadequate.
  525. The claimant has the burden of proof on the causation issue. Accordingly, it is for the claimant to prove on balance of probabilities that foundations of any given house as constructed are inadequate.
  526. In the case of houses with inadequate foundations ("defective properties") I must next consider the question of remedial works. In the case of properties which have been remediated, the issue will be whether SHL acted reasonably in the course which it adopted. At that stage I must address Encia's defence of failure to mitigate. In the case of defective unremediated houses I must consider what remedial action is required.
  527. Four specific remedial schemes are in play:
  528. (i) Full underpinning.

    (ii) Partial underpinning.

    (iii) Demolition and rebuilding.

    (iv) Cosmetic works (ie repairs to the superstructure, leaving the foundations as they are).

  529. It is not possible for me to make a final decision about the future treatment of every individual house. In many cases further monitoring is required before this important decision can be taken.
  530. At a case management discussion on Day 12 of the trial it was agreed on all sides that one category of remedial works should be defined as "monitor and decide later". Each counsel has identified a number of properties which he contends should be put into that category. Where a house is assigned to that category the "remedial" head of damages will comprise (a) the cost of monitoring, and (b) the cost of such remedial works as are agreed by the parties or held by the court to be appropriate in the light of that monitoring.
  531. When deciding the appropriate course to take in respect of any given house, it is necessary to bear in mind two important considerations. On the one hand, underpinning work or demolition plus rebuilding are not only expensive, but also cause much disruption to the householders. These steps should not be taken unnecessarily. On the other hand, where it is clear that underpinning or similar work is required, that work should be put in hand promptly. Until that is done, the house is unmortgageable and unsaleable, a circumstance which has already caused immense problems for many residents on the estate.
  532. Mr Cavender has deployed an argument that all orange properties should automatically be underpinned now. I do not accept that argument. It is necessary to consider specifically the circumstances of each orange property in the light of the engineering evidence and the valuation evidence before the court.
  533. In relation to the blue properties, Mr de Verneuil Smith submitted that the claimant has failed to prove on balance of probabilities that any of those properties have inadequate foundations. The claimant's inability to prove its case is reflected in the need for monitoring. Mr Cavender on the other hand submitted that all of those blue properties must have defective foundations simply by virtue of being blue. They only require monitoring because they are defective.
  534. On this issue I was not hugely impressed by the extreme positions adopted by either counsel. In my view, the correct approach is to assess all of the evidence relating to each blue property. The fact that the property is classified blue is certainly a relevant consideration, but with due respect to both counsel, it is not a conclusive factor in favour of either party. This approach represents Mr de Verneuil Smith's fallback position. This approach was also, I think, accepted by Mr Cavender in the course of his closing speech.
  535. Let me now turn to remedial works for the blue properties. The fact that a defective property has been classified as blue does not mean that it must go into the category "monitor and decide later", although that will certainly be the usual outcome. I have still got to consider all of the evidence in relation to that house in order to decide whether that course or some other course is appropriate.
  536. I come next to the purple properties. These properties will generally be held to have adequate foundations. However, that is not the inevitable decision in respect of every purple property. There may be instances where the house is now stable, but cosmetic repairs are required because of earlier minor settlement.
  537. Let me now turn to those red or orange properties whose foundations will require stablisation. The two options which are in play for those properties are (a) internal repiling, and (b) demolition and rebuilding.
  538. I shall tackle the choice between those two options in part 15 of the judgment. Until then, I shall simply refer to properties in this category as requiring remedial works to the foundations.
  539. Having set out the approach to be followed, I shall now tackle individually each of the 94 properties.
  540. Part 13: The 12 properties which have been remediated
  541. The 12 properties which have been remediated are plots 4, 5, 6, 7, 9, 10, 11, 53, 56, 71, 72 and 75. These houses are 4 Barley Close, 5 Barley Close, 6 Barley Close, 7 Barley Close, 9 Barley Close, 10 Barley Close, 11 Barley Close, 32 Meadowgate Drive, 40 Meadowgate drive, 2 Hayfield Close, 3 Hayfield Close, and 18 Hayfield Close.
  542. Of those 12 properties, Encia accepted before trial that 10 properties should be classified as red. The experts were agreed that those ten properties had suffered significant progressive damage and required substantial remedial works.
  543. In respect of two properties, Encia did not originally make that concession. Those two properties are 11 Barley Close (plot 11), and 3 Hayfield Close (plot 71). In the course of the trial the experts reached the following agreement in respect of 11 Barley Close:
  544. "RLN calculates higher factors of safety as a result of the piles bearing in sand and gravel. JJ has low factors of safety and notes 57 millimetres of tilt. 40 millimetres out of plumb and evidence from BSCP of progression. RLN considers that with more information it may have been possible to salvage some piles but agrees it is highly probable that foundation remediation was required."
  545. It should be noted that the reference "RN" or "RLN" is a reference to Mr Newman and the reference "JJ" is a reference to Mr Johnson.
  546. In the course of the trial the experts reached the following agreement in respect of 3 Hayfield Close:
  547. "We agreed that there is little information to support the decision taken to remediate this building, but in the context of the low factors of safety we calculate and the evidence of the surrounding circumstances, it is highly probable that the decision was justifiable."
  548. Following these agreements, Encia very sensibly accepted that plot 11 and plot 71 should be categorised as red.
  549. It follows from the foregoing that all 12 of the remediated properties should properly be classified as red. They required substantial remedial works because they rested on unstable piled foundations.
  550. SHL contend that they acted reasonably in underpinning the properties by internal repiling. Encia contend that those 12 properties should have been demolished and rebuilt. By failing to adopt that course, SHL failed to mitigate their loss.
  551. In relation to the mitigation issue, let me begin by reviewing the law. At common law the claimant is under a duty to take reasonable steps to mitigate his loss. If the claimant fails to take such reasonable steps, then his recoverable damages are limited accordingly. What constitutes reasonable steps must be judged by reference to the circumstances prevailing at the time and not with the benefit of the spotlight of hindsight.
  552. The standard by which a claimant is judged in this regard is not an unduly harsh one because it is the defendant, as wrongdoer, who has put the claimant into that difficult situation (see Banco de Portugal v Waterlow & Sons Limited [1932] AC 452, in particular at 506). I do not accept Mr de Verneuil Smith's submission that the principles enunciated by the House of Lords in Banco de Portugal are limited by the special facts of that case.
  553. Sometimes a claimant takes expert advice upon how it should rectify a property which has been damaged by the defendant's tort or breach of contract. If the claimant consults a competent expert and thereafter follows the advice given, that is a relevant factor in relation to mitigation. Although not conclusive, this factor assists the claimant in demonstrating that he took reasonable steps to mitigate his loss (see Lodge Holes Colliery & Co Limited v Mayor of Wednesbury [1908] AC 323; Board of Governors of the Hospitals for Sick Children v McLaughlin and Harvey Plc [1987] 19 Con LR 25).
  554. The authorities in this area were comprehensively reviewed by His Honour Judge Coulson QC in McGlinn v Waltham Contractors [2007] EWHC 149 (TCC) at sections K1 to K4 of the judgment. Judge Coulson then applied the principles derived from the authorities to the issues in the case before him. I have read Judge Coulson's summary of the law and I respectfully agree with it. Although I shall resist the temptation to quote extracts from that judgment, I approach the mitigation issue in the present case in broadly the same manner.
  555. The crucial issue in the present case is whether the claimant acted reasonably in underpinning the 12 remediated properties rather than demolishing and rebuilding them. It should be noted at the outset that the scheme of underpinning by internal repiling was devised by BSCP, a competent firm of engineers, who had been advising SHL from an early stage.
  556. There came a time when the anticipated costs mounted and both SHL and BSCP gave serious consideration to the alternative of demolition and reconstruction. The meetings and correspondence in which that question was debated have been summarised in part 4 above.
  557. Ultimately, after alternative costs had been investigated, the decision was made to go ahead with underpinning rather than embark upon demolition and reconstruction.
  558. A further relevant consideration is the stance adopted by Encia. At one point Knowles, who were Encia's advisers from an early stage, suggested that demolition and reconstruction should be considered, but Knowles did not press that point. Likewise, Hill Dickinson, Encia's solicitors, at one stage raised the issue for consideration. However, neither Knowles nor Hill Dickinson, nor Encia at any stage put forward the positive case that SHL should be demolishing and rebuilding rather than underpinning.
  559. As time went on, both parties engaged the services of the consultant engineers who now act as their respective expert witnesses in this action. Mr Johnson for SHL raised serious questions for consideration in relation to remediation. However, those issues were addressed. Mr Johnson did not go on to argue that SHL should be demolishing and rebuilding.
  560. Mr Newman on behalf of Encia did not dispute that it was appropriate to underpin the red properties by internal repiling. The issue which he challenged, very diligently, on behalf of Encia was which properties should properly be classified as red. It was only in the two weeks leading up to the present trial that Encia put forward the positive case that SHL ought to have demolished and rebuilt the 12 remediated properties.
  561. None of the factors which I have mentioned so far are conclusive. Nevertheless, they do tend to weigh in SHL's favour in relation to the mitigation issue.
  562. I have carefully considered both the factual and expert evidence. Bearing in mind all the circumstances of this case, as well as the guidance given in the authorities cited above, I have come to the conclusion that SHL acted reasonably in remediating the 12 properties by internal repiling. SHL has defeated the defence of failure to mitigate.
  563. In addition to the matters mentioned above, eight specific considerations lead me to this conclusion:
  564. (i) In December 2005 the costs of underpinning four properties appeared to be somewhat less than the costs of demolition and repiling. Even though criticism is made of the cost analysis undertaken, SHL were certainly entitled to take the view that the costs of the two options were broadly similar. Mr de Verneuil Smith, in his closing speech, developed an ingenious argument to the effect that upon the information available in December 2005, Mr Murray should have calculated that demolition and rebuilding would lead to a costs saving between 15 and 18 per cent. I am not persuaded by that argument. Even if that argument were sound, however, minute calculations of this nature are not a proper basis for alleging failure to mitigate (see Banco de Portugal at page 506 and Lodge Holes Colliery Co Limited at page 325).

    (ii) When the number of properties to be remediated increased from 4 to 12 there was no reason to think that the costs balance between the two options would substantially change.

    (iii) Planning permission was required for rebuilding, but not, as it turned out, for underpinning. Obtaining planning permission would cause delay. Furthermore, some of the Eden Park residents would have opposed the planning application.

    (iv) Demolition and rebuilding would have caused far more disruption for the occupants of the 82 remaining properties than underpinning.

    (v) The view taken by the majority of SHL's directors was that demolition and rebuilding would cause greater damage to the reputation of SHL and of Eden Park than the damage to reputation which would flow from underpinning. That was a perfectly reasonable view to take at the time. Claimants are entitled to have regard to their own commercial reputation when deciding what steps to take in order to mitigate their losses (see Banco de Portugal at page 471).

    (vi) Not all underpinned houses required extensive cosmetic works. Thus for many houses the external walls and the first floor were retained intact.

    (vii) Plots 4, 7, 9, 11, 53, 56, 71 and 72 stood next to properties which were not being remediated. Demolition and rebuilding would have been particularly stressful for the next door neighbours at those locations.

    (viii) The demolition and rebuilding of isolated properties on a residential estate would have been difficult, time consuming and slow. In relation to this issue, I prefer the evidence of Mr Connors to the evidence of Mr Bone.

  565. A further issue which has been raised is whether SHL acted reasonably in incurring the costs of sleeved piles for the remedial works. Encia contend on the basis of Mr Bone's evidence that well-designed piles would not have required sleeves. If necessary, the effects of negative skin friction should be counteracted by applying bitumen to the sides of the new piles or by enlarging the piles.
  566. I am not persuaded by this argument. Horrendous problems had already been caused by piling failures and false economies at Eden Park. SHL was quite entitled to adopt a belt and braces approach in relation to the remedial piling works. In my view, sleeved piles were a wise precaution on this difficult site and not an extravagance.
  567. Let me now draw the threads together in respect of the 12 remediated properties. Encia was in breach of contract in designing and installing defective piled foundations for those 12 properties. The remedial works which SHL have carried out to those 12 properties were reasonable. SHL are entitled to recover as damages the reasonable costs of those works. It should be noted, however, that SHL cannot recover by way of damages the costs of any external works to those properties which are unrelated to the piling failure.
  568. That completes my review of the 12 properties which have been underpinned. I must turn next to the other 82 properties at Eden Park Estate.
  569. Part 14: The other 82 properties

  570. I shall now consider in turn each of the 82 properties which have not yet been the subject of remedial works. In respect of each house, I shall consider whether the piled foundations are adequate or inadequate. In respect of houses where the foundations are inadequate, I shall consider what remedial works are required. If works are required to stabilise the foundations (whether by underpinning or demolition and rebuilding), I shall say that foundation remedial works are required.
  571. If foundation movement is limited and cosmetic repairs to the superstructure will suffice, I shall say that cosmetic works are required. If there is uncertainty as to what remedial works are required, I shall put the house into the category "monitor and decide later".
  572. Plot 1. 1 Barley Close

  573. This is a Carrington house. It stands in an area where negative skin friction does not apply. On that basis all of the piles have adequate factors of safety. All piles penetrate the glacial till by a respectable length.
  574. Both experts classify plot 1 as purple. The house has suffered some very minor damage. Both experts agree that this could be the result of normal settlement of piled foundations.
  575. I find that the piled foundations of plot 1, that is 1 Barley Close, are adequate.
  576. Plot 2. 2 Barley Close

  577. This is a Langdale house which rests on 13 piles. The experts are in doubt as to whether negative skin friction applies at this location.
  578. If negative skin friction does apply, then eight piles have factors of safety below 1. If negative skin friction does not apply, then four piles have factors of safety below 1.
  579. The house has 12 millimetres of horizontal tilt and 9 to 12 millimetres of vertical tilt. Mr Johnson classifies this property as orange. Mr Newman classifies it as blue. There is a fine stepped crack on the right-hand gable wall, which shows evidence of progressive movement, as Mr Newman noted in cross-examination.
  580. Both experts are agreed that this house requires cosmetic repairs. Those cosmetic works may need to be repeated in the future. Mr Johnson believes that underpinning or partial underpinning may be required in the future (see Day 7, pages 86 to 87). Accordingly, further monitoring is required (see Day 8, pages 84 to 85).
  581. I am satisfied that the foundations of plot 2 -- that is 2 Barley Close -- are inadequate. At the very least the house will require cosmetic repairs.
  582. Having regard to the location of plot 2 (next to a block of red properties), the damage which has occurred to date and the low factors of safety of certain piles, I consider that there is a real possibility that either underpinning or partial underpinning may be required. I put this house into the category "monitor and decide later".
  583. Plot 3. 3 Barley Close

  584. This is a Newbury house. It stands in an area of negative skin friction. All of the piles have very low factors of safety. The house has 53 millimetres of horizontal tilt, which points in the direction of the channel in the boulder clay -- that is the glacial till -- which runs through the site. The foundations are clearly inadequate.
  585. The two experts have agreed that this house should be categorised red. Accordingly, I find that this house requires foundation remedial works.
  586. Plot 8. 8 Barley Close

  587. This is the home of Mr and Mrs Bell. It stands in an area of negative skin friction. All piles have low factors of safety, well below 1. The foundations are clearly inadequate.
  588. The property has suffered substantial damage. The experts have agreed that this property should be classified red. Accordingly, I find that this house requires foundation remedial works.
  589. Plot 12. 12 Barley Close

  590. This is an Ashbrook house. It stands in an area of negative skin friction. The piles have very low factors of safety, almost all below 1.
  591. The house has a tilt of 113 millimetres. The foundations are clearly inadequate. In cross-examination Mr Newman conceded that this house should be categorised red. I find that this house requires foundation remedial works.
  592. Plot 13. 13 Barley Close
  593. Plot 13 is a Doulton house. It stands on 10 piles, each with a factor of safety below 1.
  594. The house is in an area where negative skin friction applies. There are 30 millimetres of horizontal tilt across the house and 12 millimetres of vertical tilt.
  595. I am satisfied that some of that tilt is attributable to piles with low factors of safety. Both experts are agreed that this property should be classified blue and would benefit from monitoring. The experts also agreed in their third joint statement that the soft clay may be firmer than allowed for in their calculations, thus reducing the force of the downdrag.
  596. Having considered all the data about this house and the oral evidence, I find that the foundations are defective, but it is uncertain to what degree. It is also uncertain what remedial works will be required. I put this house into the category "monitor and decide later".
  597. Plot 14. 14 Barley Close

  598. This is a Doulton house. It has 10 piles, all with factors of safety below 1. It stands in an area of negative skin friction.
  599. There is evidence of slow progressive damage, although the cracking which has so far occurred is minor. There is a horizontal tilt across the house which has grown worse over the last two years and which now amounts to 36 millimetres.
  600. Both experts categorise this house as orange. Mr Johnson thinks that there is "a high likelihood" that underpinning will be required to remediate the foundations. I agree with that assessment.
  601. Having regard to the valuation evidence, plot 14 is at the moment unmortgageable and unsaleable. This will remain the case unless and until the foundations have been stabilised.
  602. My decision in respect of plot 14 -- that is 14 Barley Close -- is that the foundations are inadequate. This house requires foundation remedial works.
  603. Plot 15. 15 Barley Close

  604. Plot 15 is an Ashbrook house. It stands in an area of negative skin friction. It has 15 piles, of which seven have factors of safety below 1, and a further six piles have factors of safety below 1.5.
  605. There are 17 millimetres of horizontal tilt. The damage sustained by this property, however, is very slight. Mr Newman classifies this property as purple. Mr Johnson classifies the property as a "low risk blue" or "blue tending to purple". Mr Johnson accepted in cross-examination that any future damage to this house would be cosmetic (see Day 7, pages 89 to 90).
  606. I have come to the conclusion that the foundations of plot 15 are inadequate, but only by a small degree. Having regard to the state of the property and the expert evidence, the factors of safety are probably somewhat higher than calculated. The minor damage which has occurred to date is in part attributable to foundation settlement. The remedial action for this property will comprise cosmetic repairs to the superstructure if and when necessary.
  607. Plot 16. 8 Clover Drive

  608. Plot 16 is a Carrington house. It stands in an area of negative skin friction. It has 14 piles, eight of which have factors of safety below 1.
  609. The house has sustained 35 millimetres of horizontal tilt. Mr Newman considers that possibly a large element of this is due to foundation settlement. Both experts have classified plot 8 as blue.
  610. Having considered the oral and written evidence of both experts, I am satisfied that the foundations are defective and this has already caused the house to tilt. It is uncertain what remedial works will be required, if any. As Mr Johnson said in cross-examination, that must depend upon monitoring. I place this house in the category "monitor and decide later".
  611. Plot 17. 10 Clover Drive

  612. The experts have agreed that this property is yellow. Accordingly, I hold that the foundations are adequate.
  613. Plot 18. 12 Clover Drive

  614. Plot 18 is a Carrington house. It stands in an area of negative skin friction. It has 14 piles, seven of which have factors of safety below 1. There are two further piles with factors of safety below 1.5.
  615. This house has low levels of damage and small amounts of tilt. There is, however, some evidence of one crack widening.
  616. Originally Mr Johnson classified this house as orange, and Mr Newman classified the house as purple. In the course of the trial the views of the two experts converged and both experts agreed that it was blue.
  617. In the case of this house, like so many houses at Eden Park, the engineering issues have caused immense personal problems for the occupants. The owners of plot 18 separated in July 2003 and subsequently divorced. The court ordered sale of the house but it proved unsaleable. Ultimately the wife was compelled to sell the house to the husband at its then market value. That market value was assessed by valuers at 190,000 (compared with 250,000 three years previously). This wiped out any equity in the house and left the wife and two young children in very considerable difficulties.
  618. I am satisfied that the minor damage sustained by this house is attributable to inadequate foundations. It is probable, but not certain, that cosmetic repairs will suffice. I place this house in the category "monitor and decide later".
  619. Plot 19. 14 Clover Drive

  620. The experts have agreed that this property is yellow. Accordingly, I hold that the foundations are adequate.
  621. Plot 20. 16 Clover Drive

  622. This is a Langdale house. It stands in an area of negative skin friction. It has 13 piles, of which ten have factors of safety below 1.
  623. The property has suffered only minor damage. The horizontal tilt is 10 millimetres and the vertical tilt is 5 millimetres.
  624. Mr Johnson classifies this property as blue. Mr Newman classifies this property as purple, but would reclassify it blue if (as has happened) SHL succeeds on the CAPWAP issue. On that basis both experts recommend further monitoring. However, the only remedial works that may be required are cosmetic (see the evidence of Mr Johnson at Day 7, page 91).
  625. In the course of his closing speech Mr Cavender reminded me that monitoring is an expensive process. He submitted that there is no point in monitoring simply for the purpose of future cosmetic works. I see force in that submission. My decision in respect of plot 20 is that the foundations are inadequate, but only to a slight degree. The only remedial works are cosmetic repairs, to be undertaken if and when necessary.
  626. Plot 21. 18 Clover Drive

  627. This is a Langdale house. The experts have agreed that negative skin friction does not apply to plot 21. The house has 13 piles, all with factors of safety greater than 1. Four piles have factors of safety less than 1.5.
  628. The damage and tilt which this house has suffered is slight. Mr Johnson is unable to relate that damage to settlement. Mr Johnson classifies plot 21 as blue. Mr Newman classifies it purple.
  629. Having considered all the factual and expert evidence concerning plot 21, I conclude that SHL has not proved its case. I hold that the foundations of plot 21, as constructed, are adequate.
  630. Plot 22. 24 Clover Drive

  631. Plot 22 is an Ashbrook house. It stands in an area where negative skin friction does not apply. The piles have good factors of safety.
  632. The experts agreed in their third joint statement that this house has very minor damage which could be the result of normal settlement of piled foundations. Both experts classify plot 22 as purple. I hold that the foundations of plot 22 are adequate.
  633. Plot 23. 22 Clover Drive

  634. The experts have agreed that this property is yellow. Accordingly, I hold that the foundations are adequate.
  635. Plot 24. 20 Clover Drive.

  636. Plot 24 is a Doulton house. It stands in an area where negative skin friction does not apply. The factors of safety of the piles are for the most part satisfactory.
  637. The house has suffered negligible levels of damage, which neither Mr Johnson nor Mr Newman can relate to settlement. Both experts classify this house as purple. I hold that the foundations of plot 24 are adequate.
  638. Plot 25. 26 Clover Drive

  639. The experts are agreed that this property is yellow. Accordingly, I hold that the foundations are adequate.
  640. Plot 26. 28 Clover Drive

  641. This is a Carrington house. It stands in an area where negative skin friction applies. Although some piles appear to have inadequate factors of safety, the damage sustained by this house is minimal.
  642. The experts have agreed that such damage could be the result of normal settlement of piled foundations. Both experts classify this house as purple. I hold that the foundations of plot 26 are adequate.
  643. Plot 27. 30 Clover Drive

  644. Plot 27 is a Langdale house. It stands in an area where negative skin friction applies. It has 13 piles, eight of which have factors of safety below 1.
  645. The house has 36 millimetres of horizontal tilt and 15 millimetres of vertical tilt. The house is classified blue, tending to purple by Mr Johnson and yellow by Mr Newman.
  646. This is a difficult property to assess because of the sparsity of the data. Having considered the lengthy cross-examination of both experts in relation to plot 27, my conclusion is that because of the low factors of safety, the foundations are inadequate. However, it is unclear whether any form of remedial work will ever be required. I put this house in the category "monitor and decide later".
  647. Plot 28. 32 Clover Drive

  648. This is an Ashbrook house. It stands in an area of negative skin friction. The house has 15 piles, of which ten have factors of safety below 1. A further four piles have factors of safety below 1.5.
  649. The damage suffered by this house is slight, namely 0 to 1 on the BRE scale. The DEMEC measurements indicate that this house might be moving very slowly.
  650. Mr Johnson classifies this property as orange, but acknowledges that it might be blue. Mr Newman classifies it blue.
  651. The owners of this property were advised in July 2005 that its value had been reduced by some 60,000 as a result of the foundation problems at Eden Park. My conclusion on this property is that the foundations are inadequate and these are the cause of the slight damage which has occurred. It is uncertain what remedial action will be required for this property. I place it in the category "monitor and decide later".
  652. Plot 29. 34 Clover Drive

  653. This is an Aylesford house. It stands in an area of negative skin friction. For the most part the factors of safety of the piles are satisfactory.
  654. Both experts classify this property as purple. Mr Johnson considers that the very minor damage to this house is due to normal settlement of piled foundations. Mr Newman doubts whether that minor damage is related to settlement at all. Whichever of the two experts is correct on that subsidiary point, I am quite satisfied that the foundations of plot 29 are adequate.
  655. Plot 30. 33 Clover Drive

  656. This is an Ashbrook house. It stands in an area of negative skin friction. It has 15 piles, all with factors of safety above 1. However, six piles have factors of safety below 1.5.
  657. Originally this property showed no signs of damage. A recent BSCP report, however, reveals slight movement within the house and cracking, including stepped cracking. Both experts now classify this property as blue. As Mr Newman commented at Day 11, page 126, it is necessary to survey this house to understand what has happened to it.
  658. It is unusual for settlement damage first to manifest itself several years after construction, although that is something which can happen. Although it is probable that only cosmetic works will be required, this house requires monitoring before a final decision is made.
  659. My conclusion in relation to plot 30 is that the foundations are inadequate because six piles have factors of safety below 1.5. I place this house in the category "monitor and decide later".
  660. Plot 31. 31 Clover Drive
  661. This is a Langdale house. It stands in an area of negative skin friction. It has 13 piles, all with factors of safety at or above 1. However, six of those piles have factors of safety below 1.5.
  662. The damage to this property is extremely slight. The horizontal tilt is 11 millimetres. The vertical tilt is 8 millimetres. Mr Johnson classifies plot 31 as blue. Mr Newman classifies it as purple or, in the event that Mr Johnson's factors prevail, as blue. It is clear from Mr Johnson's oral evidence that he sees this house as one of the better blues.
  663. Having considered the cross-examination of both experts, I am not satisfied that SHL has proved its case in relation to this property. I hold that the foundations of plot 31 are adequate.
  664. Plot 32. 29 Clover Drive
  665. This is a Carrington house. It stands in an area of negative skin friction. It has 14 piles, all with factors of safety above 1. Indeed, only two piles have factors of safety below 1.5, and these are calculated at 1.4 and 1.48.
  666. The minor damage to this house is classified 0 to 1 on the BRE scale. There are 13 millimetres of horizontal tilt and 6 millimetres of vertical tilt. Mr Johnson classifies plot 32 as blue, albeit one of the better blues. Mr Newman classifies it as purple.
  667. Having considered the cross-examination of both experts in conjunction with the written evidence, I conclude that SHL has not proved its case in respect of plot 32. I hold that the foundations are adequate.
  668. Plot 33. 27 Clover Drive
  669. The experts have agreed that this property is yellow. Accordingly, I hold that the foundations are adequate.
  670. Plot 34. 25 Clover Drive
  671. Plot 34 is a Newbury house. It stands in an area of negative skin friction. It has 16 piles. They all have factors of safety above 1.5, except for pile C3, which has a factor of safety of 1.42.
  672. This house has suffered minimal damage and very little tilt. Mr Johnson classifies the house blue. Mr Newman classifies the house purple.
  673. On the factual and expert evidence before the court, SHL has failed to prove its case in respect of plot 34. I hold that the foundations are adequate.
  674. Plots 35 and 36. 23 and 21 Clover Drive
  675. The experts agree that these two houses are yellow. Accordingly, I hold that the foundations are adequate.
  676. Plot 37. 19 Clover Drive
  677. Plot 37 is a Langdale house. It stands in an area where probably negative skin friction does not apply, because this is an area of site where SHL did cutting rather than filling. This house has 13 piles, all with factors of safety above 1.5. The experts are agreed that this property is blue. This house has considerable tilt towards one corner, which is 67 millimetres lower than the highest corner. There is no significant cracking associated with this distortion which both experts regard as anomalous.
  678. Both experts consider that monitoring of plot 37 is required and that underpinning of that corner may also be required.
  679. In my view this is a case where the state of the property suggests that the calculated factors of safety are over-optimistic. On balance of probabilities I find that the foundations are inadequate, although I cannot say to what degree. I place this house in the category "monitor and decide later".
  680. Plot 38. 17 Clover Drive
  681. The experts are agreed that this property is yellow. Accordingly, I hold that the foundations are adequate.
  682. Plot 39. 15 Clover Drive
  683. Plot 39 is an Ashbrook house. It stands in an area where negative skin friction probably does not apply. All piles have adequate factors of safety. Both experts classify this house as purple. They agree that the very minor settlement related damage at this house could be within the normal range of foundation settlement.
  684. I hold that the foundations of plot 39 are adequate.
  685. Plots 40 to 45. Numbers 13, 11, 9, 7, 5 and 3 Clover Drive
  686. The experts have agreed that all these properties are yellow. Accordingly, I hold that the foundations are adequate.
  687. Plot 46. 1 Clover Drive
  688. Plot 46 is a Doulton house. It stands in an area where negative skin friction does not apply. The house has ten piles, of which two have very low factors of safety. These are piles A3 and B3. Six other piles have factors of safety below 1.5.
  689. There is no recorded damage to this property. Both experts classify plot 46 as blue, but regard the probability of future damage as low. Mr Johnson acknowledges the possibility that the ground beam of plot 46 is redistributing the load satisfactorily. He also thinks it quite possible that plot 46 will migrate to yellow.
  690. There is no Arup survey of this house. A survey by BSCP revealed no settlement related damage. The recorded complaints made by the owners to SHL concern what might be called the ordinary problems of a new house. There is nothing there related to settlement. (See Day 7, pages 60 to 61.)
  691. It is also significant that during the cut and fill operation of 2000 to 2001 the ground at this location was cut rather than filled. Indeed, more ground was cut away from this plot than from any other plot on the entire site. This means that the present ground surface once carried a substantial load and therefore is likely to be stronger than the ground surface elsewhere.
  692. Having considered the expert evidence, I am quite satisfied that the loads which ought to have been carried by piles A3 and B3 have been redistributed by the ground beam to the earth beneath and to other piles.
  693. In the result, the claimant has failed to prove its case in respect of plot 46. I find that the foundations are adequate.
  694. Plot 47. 20 Meadowgate Drive
  695. This is a Langdale house. It stands in an area of negative skin friction. It has 13 piles, all with adequate factors of safety.
  696. Both experts classify this property as purple. The experts agree that the minor damage sustained by this house may be the result of normal settlement of piles under load. I hold that the foundations of plot 47 are adequate.
  697. Plot 48. 22 Meadowgate Drive
  698. Plot 48 is a Carrington house. It stands in an area where negative skin friction applies. It has 14 piles, all with high factors of safety. The property has 47 millimetres of tilt between the front left-hand corner and the back right-hand corner. The property has cracking at or approaching category 2 on the BRE scale.
  699. There is thus an inconsistency between the seemingly high factors of safety and the tilt and damage sustained by the house. I have considered the cross-examination of both experts concerning plot 48 and its anomalies. My conclusion is that this is one of those instances where the state of the property must prevail over the calculated factors of safety.
  700. Mr Johnson suggested at Day 8, page 48, that the factor of safety calculations had probably gone adrift, and I think that this explanation is probably correct.
  701. Both experts classify this property as blue. My decision on the balance of probabilities is that the foundations are inadequate. I put this property in the category "monitor and decide later".
  702. Plot 49. 24 Meadowgate Drive
  703. Plot 49 is a Langdale house. Probably negative skin friction does not apply at this location. This house has 13 piles, all with high factors of safety.
  704. The experts have agreed that this property is purple. They have also agreed that the minor damage to this house may be the result of normal settlement of piles under load. I hold that the foundations of plot 49 are adequate.
  705. Plot 50. 26 Meadowgate Drive
  706. Plot 50 is an Ashbrook house. It stands in an area where negative skin friction applies. It has 15 piles. Pile A3 has a factor of safety of 0.98. Seven other piles have factors of safety below 1.5.
  707. The house has 20 millimetres of horizontal tilt and 5 to 7 millimetres of vertical tilt. The house has sustained damage category 1 to 2 on the BRE scale comprising cracks and doors sticking. Some internal damage is in the vicinity of pile C2, which has a factor of safety of 1.19.
  708. Mr Johnson categorises this house as blue; so does Mr Newman in the event that Mr Johnson's factors of safety are accepted.
  709. My conclusion in respect of this property is that the foundations are inadequate. I put this property in the category "monitor and decide later".
  710. Plot 51. 28 Meadowgate Drive
  711. Plot 51 is a Newbury house. It stands in an area of negative skin friction. It has 12 piles. No piles have factors of safety below 1, but six piles have factors of safety below 1.5. Mr Johnson classifies this house blue, whereas Mr Newman classifies it yellow. This house has a tilt of 20 millimetres. The house has sustained very little damage and none relating to settlement.
  712. In cross-examination, when it was put to Mr Johnson that the foundations were stable, he said this:
  713. "There is no evidence that shows that foundations are moving at the present, so on the current evidence that would appear to be the case. But the survey data is only three weeks apart, as previously -- in view of the relatively good factors of safety at this location, noting that there are one or two piles between 1 and 1.2, with negative skin friction operating, I consider it is likely that the foundations are stable, but that hasn't been completely demonstrated yet."
  714. Having considered the evidence of both experts, including the passage quoted, I conclude that SHL has not proved its case in respect of this property. I hold that the foundations of plot 51 are adequate.
  715. Plot 52. 30 Meadowgate Drive
  716. Plot 52 is a Langdale house. It is in an area where negative skin friction applies. It has 13 piles, of which eight have factors of safety below 1. Three of the other piles have factors of safety below 1.5. The house has a tilt of 19 millimetres and has sustained minor damage. Piles B1 and B2 have particularly low factors of safety and this appears to have caused a slope in the lounge floor, as Mr Newman accepted at Day 12, pages 59 to 60.
  717. Both experts now classify this house blue, Mr Johnson having downgraded from orange and Mr Newman having upgraded from purple. I find that the foundations of plot 52 are inadequate. I put this house in the category "monitor and decide later".
  718. Plot 54. 34 Meadowgate Drive
  719. Both experts agree that this house is red. Accordingly, I hold that the foundations are inadequate and remedial works to the foundations are required.
  720. Plot 55. 36 Meadowgate Drive
  721. Plot 55 is an Ashbrook house. It stands in an area where negative skin friction applies. It has 15 piles, of which nine have factors of safety below 1. A further four piles have factors of safety below 1.5. The house has 12 millimetres of tilt. The house has suffered minor damage as a result of settlement.
  722. Both experts agree that the ground around the house is settling by an appreciable amount. Mr Johnson classifies this house as red, whereas Mr Newman classifies it as orange. Both experts consider that further monitoring is required. However, Mr Johnson adds that in his view there is a high risk that underpinning will be required.
  723. Mr Cavender urges me to decide now that this property requires foundation remedial works. He relies not only upon the evidence of Mr Johnson, but also the evidence of Mr Woodruff. Unless and until the progressive movement is stabilised, the property will be unmortgageable and unsaleable, and the present owners will be trapped there.
  724. I see considerable force in these arguments in relation to this property. My decision in respect of plot 55 -- that is 36 Meadowgate Drive -- is that the foundations are inadequate and that remedial works to the foundations are required.
  725. Plot 57. 17 Hayfield Close
  726. Plot 57 is a Carrington house. It stands in an area of negative skin friction. It has 14 piles, of which 12 have factors of safety below 1 and two have factors of safety just above 1. Both experts agreed that this house is blue, indeed a bad blue.
  727. The house has 23 millimetres of tilt with level changes of about 2 millimetres recorded between January and June 2007.
  728. Mr Johnson thinks is possible that underpinning will be required for plot 57. Mr Newman regards this as a possible outcome of monitoring.
  729. My conclusion is that the foundations of plot 57 are inadequate. I put this property in the category "monitor and decide later".
  730. Plot 58. 16 Hayfield Close
  731. This is an Aylesford house. It stands in an area of negative skin friction. It has 22 piles, three of which have factors of safety below 1. Some of the other piles have factors of safety below 1.5. The tilt and damage sustained by this house are very slight. The experts have agreed that this house is purple.
  732. In cross-examination Mr Johnson said it was difficult to conclude that the state of plot 58 was due to incompetent piling because the level of damage was so slight. Mr Newman reaches the same conclusion more confidently.
  733. In my view the foundations of plot 58 are adequate.
  734. Plot 59. 15 Hayfield Close
  735. This is a Langdale house. It stands in an area of negative skin friction. It has 13 piles, one of which has a factor of safety of 0.95. Most other piles have factors of safety below 1.5. The tilt and damage sustained by this house are very slight. The experts have agreed that plot 59 is purple.
  736. In cross-examination Mr Johnson said it was difficult to conclude that the state of plot 59 was due to incompetent piling because the level of damage was so slight. Mr Newman reached the same conclusion more confidently.
  737. In my view the foundations of plot 59 are adequate.
  738. Plots 60 and 61. Numbers 14 and 13 Hayfield Close
  739. The experts have agreed that these houses are yellow. Accordingly, I hold that the foundations of both houses are adequate.
  740. Plot 62. 12 Hayfield Close
  741. Plot 62 is an Aylesford house. It stands in an area of negative skin friction. It has 22 piles, of which ten have factors of safety below 1. A further nine piles have factors of safety below 1.5.
  742. Mr Johnson classifies this house as blue, tending to purple. Mr Newman classifies this house purple, but would change to blue if Mr Johnson's factors of safety prevail.
  743. The factors of safety of the piles are so low that I conclude that the foundations are inadequate, at least to some degree. In view of the low level of damage, it is uncertain whether any remedial works will ever be required. I put this property into the category "monitor and decide later".
  744. Plot 63. 11 Hayfield Close
  745. Plot 63 is an Ashbrook house. It stands in an area of negative skin friction. It has 15 piles, of which four have factors of safety below 1. Eight further piles have factors of safety below 1.5.
  746. Both experts classify this house as blue. This house has a tilt of 58 millimetres towards the front right, although there is very little consequential damage.
  747. My conclusion is that the foundations are inadequate. However, the extent of the inadequacy is unclear. It is also unclear whether any remedial work will be required. I put this house into the category "monitor and decide later".
  748. Plot 64. 10 Hayfield Close
  749. This is a Newbury house. It stands in an area of negative skin friction. It has 12 piles, of which six have factors of safety below 1. The other six piles have factors of safety which hover around 1. The house has 18 millimetres of tilt. That tilt is towards the weakest area of the site. Both experts classify this house as blue.
  750. My conclusion is that the foundations are inadequate, but it is unclear to what degree. It is also unclear whether any remedial works will be required. I put this house into the category "monitor and decide later".
  751. Plot 65. 9 Hayfield Close
  752. Plot 65 is an Aylesford house. It stands in an area of negative skin friction. It has 22 piles, of which ten have factors of safety below 1. 11 of the other piles have factors of safety below 1.5. Mr Johnson classifies this house blue. Mr Newman classifies it purple. He classifies it blue, however, if Mr Johnson's factors of safety prevail.
  753. The house has 20 millimetres of tilt towards the front left-hand corner. This tilt points towards the weakest area of the site. The damage to the property is minor.
  754. My conclusion is that the foundations are inadequate, although it is unclear to what degree. I put this house into the category "monitor and decide later".
  755. Plot 66. 8 Hayfield Close
  756. Plot 66 is an Ashbrook house. It stands in an area of negative skin friction. It has 15 piles, of which four have factors of safety below 1. All the other piles have factors of safety below 1.5. Mr Johnson classifies this house blue. Mr Newman classifies it as yellow, but would change to blue if Mr Johnson's factors of safety prevail.
  757. This house tilts 33 millimetres at the front left-hand corner. In other words, the tilt is towards the weakest area of the site. This house stands immediately next to plot 67, which the experts classify either red or orange.
  758. I conclude that the foundations of plot 66 are defective, but it is unclear to what extent. It is also unclear whether any remedial works will be required. I put this house into the category "monitor and decide later".
  759. Plot 67. 7 Hayfield Close
  760. Plot 67 is a Doulton house. It stands in an area of negative skin friction. It has ten piles, of which seven have factors of safety below 1. The factors of safety of the other three piles are only just above 1. The house has 69 millimetres of horizontal tilt and 27 to 30 millimetres of vertical tilt. Indeed, the horizontal tilt increased by about 2 millimetres during April 2007. Mr Johnson classifies this house red. Mr Newman classifies it orange.
  761. In cross-examination Mr Johnson was firm in his view that plot 67 would need underpinning in any event. Mr Newman acknowledged that underpinning was a reasonable possibility. It should also be noted that Nationwide Building Society refused outright to remortgage this property.
  762. Having regard to the very low factors of safety and the movement of this house to date, I consider plot 67 should be categorised as red. My decision is that the foundations of plot 67 are inadequate and foundation remedial works are required.
  763. Plot 68. 6 Hayfield Close
  764. Plot 68 is a Langdale house. It has 13 piles, of which nine have factors of safety below 1. The factors of safety of the other four piles are only slightly above 1. Negative skin friction applies in this area. Indeed, plot 68 is above the central depression in the boulder clay which runs across the site.
  765. Mr Johnson classifies this house as orange. Mr Newman classifies this house as blue, although at Day 12, page 74, he appeared to incline towards orange. Indeed, at Day 8, page 108, he accepted that either full or partial underpinning was likely to be required.
  766. Plot 68 has 41 millimetres of horizontal tilt, which increased by 3 millimetres during the course of April 2007. I am quite satisfied that the movement of this property is progressive. I also accept Mr Johnson's evidence at Day 7, page 110, that it is highly likely that the house will require underpinning. Indeed, given all the features of this house, I believe it will be unmortgageable and unsaleable until the foundations have been stabilised.
  767. I hold that plot 68 has inadequate foundations and that foundation remedial works are required.
  768. Plot 69. 5 Hayfield Close
  769. Plot 69 is an Ashbrook house. It stands in an area of negative skin friction, indeed above the central depression of the boulder clay. This house has 15 piles, all of which have factors of safety below 1.
  770. There are 54 millimetres of tilt across the house. That tilt increased by 4 millimetres in the period January to April 2007. That is progressive movement at the rate of 1 millimetre per month.
  771. Mr Johnson classifies this house as red. Mr Newman classified it as blue originally but accepted red in cross-examination.
  772. I agree with the final position adopted by both experts. The foundations of plot 69 are defective. Foundation remedial works are required.
  773. Plot 70. 4 Hayfield Close
  774. Plot 70 is an Ashbrook house. It has 15 piles, 10 of which have factors of safety below 1. The factors of safety of three other piles are just above 1. Plot 70 stands in an area of negative skin friction, indeed above the central depression of the boulder clay.
  775. Both experts classify this house as orange. The house has 53 millimetres of horizontal tilt and 22 millimetres of vertical tilt. The horizontal tilt increased by about 2 millimetres during April 2007. Mr Newman said in cross-examination that plot 70 is more than likely to require underpinning. I agree with that assessment. Indeed, until the house has been underpinned, it will be unmortgageable and unsaleable.
  776. My decision in respect of plot 70 is that the foundations are inadequate and that foundation remedial works are required.
  777. Plots 73 to 74. 1 Hayfield Close and 38 Meadowgate Drive
  778. The experts are agreed that these two properties should be classified as red. Accordingly, I hold that the foundations are defective and foundation remedial works are required.
  779. Plot 76. 42 Meadowgate Drive
  780. Plot 76 is an Ashbrook house. It stands in an area of negative skin friction.
  781. On Mr Johnson's ground model plot 76 is above the end of the central depression of the boulder clay. This house has 15 piles, of which 13 have factors of safety below 1. The other two piles have factors of safety fractionally above 1.
  782. Both experts classify this house as orange. Plot 76 is unusual property which has been much discussed during the trial. The horizontal tilt is 15 millimetres and the damage sustained so far is minor. On the other hand, all four corners of the house have sunk about 5 millimetres between January and June 2007. That means the whole house is sinking at the rate of about 1 millimetre per month. It seems that the reason why so little damage has been caused to the superstructure is that all piles have been sinking in an uniform fashion.
  783. I am satisfied that instability of the datum point is not the cause of the readings obtained at plot 76.
  784. Mr Johnson considers it "highly likely" that underpinning of plot 76 will be required. I agree with that assessment. The loads of the piles of this house are effectively shed to the ground. The ground in this area is likely to sink by a further 81 millimetres over the next 25 years. In my view, underpinning is essential to stabilise this house. It is also essential to render the house mortgageable and saleable.
  785. My conclusion in respect of plot 76 is that the foundations are inadequate and that foundation remedial works are required.
  786. Plot 77. 77 Meadowgate-Drive
  787. Plot 77 is a Langdale house. It stands in an area of negative skin friction. It has 13 piles, of which seven have factors of safety below 1. The other piles all have factors of safety less than 1.5.
  788. Mr Johnson classifies this house as orange. Mr Newman classifies it as blue, but going towards orange.
  789. The horizontal tilt across this house is 35 millimetres and the vertical tilt is 8 to 10 millimetres. The horizontal tilt appears to have been increased by about 2 millimetres between January and April 2007.
  790. Both experts consider that further monitoring of this property is required before a decision is made about remedial works. Mr Johnson thinks that partial underpinning may be suitable for this property, or possibly only cosmetic repairs, (see Day 8, pages 16 and 17).
  791. I agree with both experts that further monitoring is required before any decision is made. My decision in respect of plot 77 is that the foundations are inadequate, but it is not clear to what degree. Nor is it clear what remedial works are required. I place this property in the category "monitor and decide later".
  792. Plot 78. 75 Meadowgate Drive
  793. Plot 78 is a Doulton house. It has 10 piles, five of which have factors of safety below 1. The other piles have factors of safety between 1 and 1.5.
  794. Happily, the ground conditions in this part of the site are better, even though negative skin friction applies. The horizontal tilt across this house is 18 millimetres and damage to the superstructure is slight.
  795. Both experts classify this house as purple. I accept Mr Johnson's evidence that the slight damage sustained by this property is attributable to inadequate foundations. I also accept Mr Johnson's evidence that only cosmetic repairs will be required. My decision in respect of plot 78 is that the foundations are inadequate, but only by a small margin. Only cosmetic repairs will be required to this property.
  796. Plots 79 and 80. 73 and 71 Meadowgate Drive

  797. The experts agree that these properties should be classified yellow. Accordingly, I hold that the foundations of both houses are adequate.
  798. Plot 81. 69 Meadowgate Drive
  799. Plot 81 is a Langdale house. Negative skin friction only affects the northern part of plot 81. Of the three different factors of safety calculated by the experts, it may possibly be appropriate to take factor of safety (1) for the purpose of this property (see Mr Newman's evidence at Day 12, pages 139 to 140). However, he subsequently accepted that one might apply factor of safety (2) at one side of the house and factor of safety (0) at the other side.
  800. Both Mr Johnson (from the outset) and Mr Newman (by the end of cross-examination) categorised this property as blue. Because of the uncertainty as to how and where negative skin friction operates at this location, it is not easy to identify the factors of safety of the piles. It does seem probable, however, that one pile, namely C5, has a factor of safety below 1. This house has a horizontal tilt of 22 millimetres and there are some indications of continuing movement.
  801. I have come to the conclusion that the foundations of plot 81 are inadequate, but probably only by a small margin. I put this house into the category "monitor and decide later".
  802. Plot 82. 67 Meadowgate Drive
  803. This property is unaffected by negative skin friction. The experts agree that it is yellow. Accordingly, I hold that the foundations are adequate.
  804. Plot 83. 65 Meadowgate Drive
  805. Plot 83 is a Langdale house. It has 13 piles, all with factors of safety below 1. It stands in an area of negative skin friction. This house has 24 millimetres of horizontal tilt and 28 millimetres of vertical tilt.
  806. Both experts classify this house as blue. Both experts consider that this house requires monitoring and that cosmetic repairs are the most likely outcome. I am satisfied that the foundations are inadequate, albeit by a small amount. I put this house into the category "monitor and decide later".
  807. Plot 84. 63 Meadowgate Drive
  808. Plot 84 is a Newbury house. It stands in an area of negative skin friction. It has 12 piles, all of which have factors of safety below 1. The property has 47 millimetres of horizontal tilt and up to 22 millimetres of vertical tilt.
  809. Both experts classify this property as blue and recommend further monitoring. Mr Johnson considers that after monitoring some form of underpinning is a "high possibility". Mr Newman's views on this aspect were not elicited.
  810. My decision is that the foundations of plot 84 are inadequate. It is unclear what form of remedial works will be required. I put this property into the category "monitor and decide later".
  811. Plot 85. 61 Meadowgate Drive
  812. Plot 85 is a Langdale house. It stands in an area of negative skin friction. It has 13 piles, 11 of which have factors of safety below 1. The other two piles have factors of safety fractionally above 1.
  813. A level survey of this house, which was carried out during the trial, shows substantial level differences between the middle of the front elevation and the two corners, and also between the middle of the rear elevation and the two corners. Between the middle of the front elevation and the middle of the rear elevation there is a tilt of 30 millimetres.
  814. Both experts classify this property as blue and recommend further monitoring. Mr Johnson believes that the cracking adjacent to the front door is related to level differences in that area.
  815. I note that the piles in that part of the house have particularly low factors of safety. In my view, the cracking adjacent to the front door is indeed related to differential settlement.
  816. I conclude that the foundations of plot 85 are inadequate, but it is not clear what remedial works are required. I put this house into the category "monitor and decide later".
  817. Plot 86. 59 Meadowgate Drive
  818. Plot 86 is a Carrington house. It stands in an area of negative skin friction. It has 14 piles, of which nine have factors of safety below 1. The other five piles have factors of safety below 1.3. There is a horizontal tilt of 31 millimetres across the house and a vertical tilt of 6 millimetres.
  819. Both experts classify this house as blue. Mr Johnson advocated further monitoring for this house. He considers that any remedial work is likely to be cosmetic. He would not rule out the possibility of underpinning, although that is unlikely. Mr Newman believes that there is some settlement towards the right-hand side of the house. He too advocates monitoring.
  820. My decision is that the foundations of plot 86 are inadequate, although it is uncertain to what degree. It is also uncertain what remedial works, if any, will be required. I put this house into the category "monitor and decide later".
  821. Plot 87. 57 Meadowgate Drive
  822. Plot 87 is a Langdale house. It stands in an area of negative skin friction. It has 13 piles, 11 of which have factors of safety below 1. The two remaining piles have factors of safety slightly above 1.
  823. Mr Johnson classifies this property as blue. Mr Newman classifies it yellow, but would change to blue if Mr Johnson's factors of safety prevail.
  824. The horizontal tilt across the house is 21 millimetres and the vertical tilt is up to 12 millimetres. The cross-examination of the experts in relation to plot 87 does not greatly affect the position. Mr Newman commented on the different ground models used by the two experts in their assessment. Mr Johnson made it plain that any remedial work would probably be cosmetic but he could not rule out other possibilities.
  825. I am satisfied that the foundations of plot 87 are inadequate, although it is not clear to what degree. It is also unclear what form of remedial work, if any, will be required.
  826. I put this house into the category "monitor and decide later".
  827. Plot 88. 55 Meadowgate Drive
  828. Plot 88 is an Ashbrook house. It stands in an area of negative skin friction. It has 15 piles, four of which have factors of safety below 1. Of the remaining piles, seven have factors of safety below 1.5.
  829. This house has 34 millimetres of horizontal tilt and 6 millimetres of vertical tilt. Mr Johnson classifies this house as blue, but thinks it is highly likely to become purple (see Day 8, page 123). Mr Newman moved from purple to blue during cross-examination, but was sceptical about the suggestion that there was any serious problem with this house.
  830. My conclusion is that having regard to the factors of safety, the foundations are inadequate, but only by a small margin. The appropriate form of remedial works will be cosmetic repairs.
  831. Plot 89. 53 Meadowgate Drive
  832. Plot 89 is a Newbury house. It stands in an area of negative skin friction. It has 12 piles, of which three have factors of safety below 1. Of the remaining piles, eight have factors of safety below 1.5. The house has 26 millimetres of horizontal tilt and up to 12 millimetres of vertical tilt.
  833. Mr Johnson classifies this property as blue. Mr Newman classifies it yellow, but would upgrade to blue if Mr Johnson's factors of safety prevail. Mr Johnson considers that any remedial works required after monitoring would probably only be cosmetic but he cannot exclude the possibility of underpinning.
  834. I have come to the conclusion that the foundations of plot 89 are inadequate, but it is not clear by what degree. It is also unclear what remedial works, if any, will be required.
  835. I put this house into the category "monitor and decide later".
  836. Plot 90. 51 Meadowgate Drive
  837. Plot 90 is an Ashbrook house. It is in an area where negative skin friction applies. It has 15 piles, all with factors of safety above 1.5. Both experts classify this property as purple.
  838. I find that the foundations are adequate.
  839. Plot 91. 49 Meadowgate Drive
  840. The experts agree that this property is yellow. Accordingly, I am satisfied that the foundations are adequate.
  841. Plot 92. 47 Meadowgate Drive
  842. Plot 92 is a Langdale house. It stands in an area where negative skin friction does not apply. It has 13 piles, all with factors of safety above 1, and most with factors of safety above 1.5.
  843. There is some quite large cracking in plot 92 (not plot 90, as stated in the experts' third joint statement). The experts agree that this is due to a construction fault, not differential settlement (see Day 13, pages 99 to 100).
  844. Both Mr Johnson and Mr Newman classify this property as purple. I find that the foundations are adequate.
  845. Plot 93. 45 Meadowgate Drive
  846. Plot 93 is a Doulton house. It stands in an area where negative skin friction does not apply. It has ten piles, all with factors of safety above 1. Most piles have factors of safety above 1.5.
  847. The damage to this property is described by Mr Johnson as trivial (see Day 8, page 62). Both experts classify the house as purple. I am satisfied that the foundations are adequate.
  848. Plot 94. 43 Meadowgate Drive
  849. The experts have agreed that this property is yellow. Accordingly, I find the foundations are adequate.
  850. Part 15: Future remedial works
  851. In part 14 of this judgment I have held that 13 properties require remedial works to their foundations. These are plots 3, 8, 12, 14, 54, 55, 67, 68, 69, 70, 73, 74, and 76.
  852. Four of these houses are in Barley Close. Five of the houses are in Hayfield Close. The other four houses are in Meadowgate drive.
  853. Ten of the 13 houses under consideration stand next to at least one house which will remain occupied and is not scheduled currently for remediation. SHL contend that the remedial works to those 13 houses should take the form of internal repiling. In other words, the scheme which has been successfully adopted for the first batch of houses should be applied to this batch of 13 houses.
  854. Encia on the other hand contend that this batch of 13 houses should be demolished and rebuilt. Encia contend that demolition and rebuilding deliver the following benefits:
  855. (a) Residents will obtain brand new property free of any defects.
    (b) Demolition and rebuild can be done swiftly.
    (c) Demolition and rebuild is likely to be cheaper than the massive cost of the Bullivant scheme.
    (d) The disruption caused by demolition and rebuild is unlikely to be significantly different to that experienced under the Bullivant scheme.

    (See paragraph 103 of Mr de Verneuil Smith's closing written submissions.)

  856. Let me deal with those four benefits in turn. As to the first matter, I agree that if the demolition option is pursued, the residents will obtain a brand new property free of defects. On the other hand, all the evidence before the court indicates internal repiling produces a perfectly acceptable result (see the evidence of Mr Hare and Mr Connors).
  857. As to the second matter, it is not established on the evidence that demolition and rebuilding would be quicker. Indeed, when one takes into account the need for planning permission, demolition and rebuilding will take substantially longer.
  858. As to the third matter, the only evidence adduced by Encia as to the costs of demolition and rebuilding was that given by Mr Bone. Mr Bone's figures were approximate. He very fairly accepted that this costing exercise did not lie within his expertise. Indeed, Encia have not put before the court any properly costed proposal for demolition and rebuilding. On the evidence before the court it is not possible for me to find that demolition and rebuilding would be cheaper than internal repiling.
  859. As to the fourth matter, I reject Mr de Verneuil's Smith's submission. It is true that internal repiling causes much disturbance and disruption for the surrounding residents (see the witness statement of Mr and Mrs Bell). On the other hand, I am quite satisfied on the evidence (in particular that given by Mr Connors) that demolition and rebuilding would cause substantially greater disturbance and disruption.
  860. The internal repiling scheme which has hitherto been adopted seems to me to have three clear advantages: (1) it is tried and tested and has been shown to work; (2) it has been approved by the NHBC; (3) the owners of the first batch of properties have been satisfied with the results.
  861. Having regard to all the circumstances, I find that the internal repiling scheme previously adopted is an appropriate remedial scheme for the next batch of 13 properties. However, there are three qualifications to that decision which I should set out:
  862. (i) In respect of each of the 13 houses specific consideration must be given to the question whether jacking up of the house is required. Jacking up may not necessarily be appropriate in every case.
    (ii) SHL must obtain at least three quotations for the repiling works required to those 13 properties. No doubt Bullivant will be one of the tenderers. Indeed, Bullivant may well be the successful tenderer, having gained experience of the first 12 properties. Nevertheless, SHL must proceed by means of competitive tenders in order to control costs.
    (iii) If SHL choose to demolish and rebuild all or any of the present batch of 13 properties, they are of course at liberty to do so. However, SHL cannot recover more by way of damages than the cost or the notional cost of the internal repiling scheme.
  863. Let me now turn to the 25 properties which are to be monitored. These are plots 2, 13, 16, 18, 27, 28, 30, 37, 48, 50, 52, 57, 62, 63, 64, 65, 66, 77, 81, 83, 84, 85, 86, 87 and 89. This monitoring should include a level survey taken both at the corners and at intermediate points in the middle of walls.
  864. I anticipate that when the monitoring is complete the experts will be able to agree what remedial works, if any, are required. The remedial works may take the form of total underpinning, partial underpinning, demolition and rebuilding or cosmetic works.
  865. In default of agreement between the parties in respect of any given property, the court can decide upon the appropriate remedial works at the assessment of damages hearing.
  866. In respect of the four properties where I have held that cosmetic repairs will suffice, no further elaboration is required in this judgment.
  867. Finally, for the avoidance of doubt, I should add this comment. If SHL wish to carry out more extensive monitoring or more extensive remedial works than indicated in this judgment, SHL are of course at liberty to do so, although this would be at their own expense.
  868. Part 16: other heads of damage

  869. Let me deal first with the five houses which SHL repurchased, namely plots 5, 6, 9, 10 and 56.
  870. SHL have carried out full remediation works to those properties and will recover the costs of those remediation works by way of damages.
  871. SHL are in a position to sell those five properties in good condition and with the benefit of NHBC cover at a time of SHL's choosing. It appears from the valuation evidence that each of those five properties, despite being in good condition, is currently diminished in value by 10 to 15 per cent by reason of the foundation problems.
  872. SHL are entitled to recover as a separate head of damages the amount by which each of those five properties have diminished in value. (See Payton v Brooks [1974] 1 Lloyds Rep 241; Thomas v TA Phillips (Builders) Limited [1985] 9 Con LR 72 at 87).
  873. There has been debate about the date at which diminution in value should be assessed. Mr Cavender for the claimant contends that diminution should be assessed as at the date of judgment, namely today. Mr de Verneuil Smith contends that diminution in value should be assessed at an earlier date, namely the date of breach.
  874. Both counsel agree that the governing principles are set out in the Court of Appeal's decision in Dodd Properties Limited v Canterbury City Council, [1980] 1 WLR 433. In that case the plaintiffs owned a garage which was damaged by the defendant's construction operations in the vicinity. The Court of Appeal accepted the general rule that damages for tort or breach of contract are assessed as at the date of breach. Nevertheless, the court held that general rule is subject to many exceptions and qualifications; when the circumstances so require damages will be assessed at a later date.
  875. In the present case the dates of Encia's breaches of contract were during 2001 and 2002. To adopt the language of Megaw LJ in Dodd Properties at 451, it would be "patently absurd" to assess diminution in value as at that date. In my view, it is only in 2007, when plots 5, 6, 9, 10 and 56 have been remediated, that SHL suffers this head of loss. Until 2007, no question of resale has arisen.
  876. I hold that damages for diminution in value in respect of those five properties should be assessed as at today.
  877. SHL make a variety of further claims in respect of those five properties. These claims include repurchase costs, stamp duty, Land Registry fees, utility bills, council tax and all manner of other expenses. In my view, none of these expenses are recoverable as damages. The expenses have not been caused by Encia's breaches of contract. As losses, they are too remote. It may well have been convenient for SHL to buy back five properties, and I do not for one moment criticise SHL for doing so. Nevertheless, it would have been perfectly possible for SHL to investigate the foundation problems and carry out remedial works without repurchasing any properties.
  878. Whether SHL will ultimately make a profit or a loss on the five properties which it repurchased, I do not know. Fortunately for SHL, the property market has been rising steadily in recent years, and at least some commentators think that it will continue to rise for the foreseeable future. Nevertheless, gains or losses resulting from fluctuations of the property market must be left out of account.
  879. I am satisfied that SHL will be properly compensated in respect of plots 5, 6, 9, 10 and 56, if SHL recover by way of damages (a) the cost of remedial works, and (b) diminution in value assessed as at today's date.
  880. Let me now turn to the 49 properties which are owned by householders and whose foundations are or were to a greater or lesser extent defective.
  881. This group of 49 properties falls into the following categories. Seven houses have already been underpinned. Thirteen houses are due for underpinning as a consequence of this judgment. Four houses will receive cosmetic repairs. Twenty-five houses will be monitored for a period, after which some may be underpinned, some may receive cosmetic repairs and some may require no work at all.
  882. In the case of every house which has been or will be underpinned, SHL has to meet the reasonable costs of relocating the residents in suitable alternative accommodation. These costs include rental payment, removal costs and so forth. Clearly this expenditure is a consequence of Encia's breaches of contract.
  883. The simplest way to deal with this head of damages is to treat it as part of the remediation costs. I note that this course has been adopted in appendix 9 to the Scott Schedule and I approve it.
  884. The next question to consider in respect of this group of 49 properties is SHL's claim for diminution in value. This is not a loss which SHL has suffered directly. This claim is based upon the premise that each of the 49 householders will in due course recover damages against SHL for diminution in value. However, it is not clear that this will happen. As Mr de Verneuil Smith points out in paragraph 113(d) of his written closing submissions, some householders may not suffer any diminution in value at all. This is because, on Mr Woodruff's evidence, the blight will fade away in a period of three to five years after the completion of the remedial works.
  885. On the present evidence it is quite impossible for me to predict how a future court will assess any claims for diminution in value which may be made by the 49 householders against SHL. Some of those householders will be original purchasers who have owned their houses since about 2002 or 2003. Other householders will be subsequent purchasers who have no direct contract with SHL (see appendix 4 to Mr Woodruff's report).
  886. Clearly these subsequent purchasers are entitled to have defects remedied pursuant to the NHBC scheme. However, the legal basis for their claims against SHL for diminution in value is not clear to me.
  887. Let me now focus upon those householders who do, one way or another, successfully recover against SHL for diminution in value. Upon what date will that diminution be assessed?
  888. Although the date of breach is the general rule, the court will have regard to the circumstances of the particular case (see Dodd Properties). I am not convinced that the court will necessarily take the same date of assessment in respect of each property. In short, I have come to the conclusion that in the present litigation (to which the householders are not parties) it is impossible for me to predict which householders will recover damages for diminution in value or the date upon which such diminution will be assessed.
  889. Although I cannot predict the outcome of future claims against SHL for diminution in value, it is clear that such claims will be made and that at least some will be successful. Insofar as SHL incur future liability for diminution in value, SHL are entitled to recover the amount of that liability by way of damages against Encia. In my view, the best way to deal with this head of damages is by granting SHL an indemnity against any liability for diminution in value to the 49 householders (see the reasoning in Household Machines Limited v Cosmos Exporters Limited [1947] 1 KB 217; Vokins Holdings Limited v Robin Moors Allnutt & Partners [1996] CLC 584; Padden v Arbuthnot Pensions & Investments Limited [2004] EWCA Civ 852.)
  890. In relation to each of the 49 properties now under consideration, Encia make the following plea in column 9 of the Scott Schedule:
  891. "There is no existing loss or damage or claim which gives rise to an indemnity. The courts will not provide declaratory relief in respect of speculative or hypothetical matters."
  892. I accept the general principle asserted, namely that the court will not grant declaratory relief in respect of speculative or hypothetical matters. This principle is borne out in the authorities cited above. See, for example, the judgment of Kennedy LJ in Padden at paragraph 24. Nevertheless, it is neither speculative nor hypothetical that SHL will face at least some claims for diminution in value in the present case. A declaration of an entitlement to indemnity is the proper remedy for this court to grant in the exercise of its discretion.
  893. I come next to what might be called the residual claims in respect of the 49 properties. The claimant pleads these claims in respect of each property as follows in column 9 of the Scott Schedule:
  894. "1. Damages for distress and inconvenience (see Watts v Morrow [1991] 4 All ER 937 (CA) and Farley v Skinner [2002] 2 AC 732 (HL)).
    "2. Loss of use/amenity -- to be assessed (if any).
    "3. Loss of earnings -- subject to proof."
  895. So far as damages for distress and inconvenience are concerned, the Court of Appeal has indicated that such damages should be modest in amount. See Watts v Morrow [1991] 1 WLR 1421 at 1439 to 1443 and 1445.
  896. The second authority pleaded by the claimant in relation to damages for distress and inconvenience is Farley v Skinner [2002] 2 AC 732. In Farley v Skinner the House of Lords approved the approach of the Court of Appeal in Watts v Morrow. Indeed, at page 751 Lord Steyn said this:
  897. "Like Bingham LJ in Watts v Morrow [1991] 1 WLR 1421, 1445H, I consider that awards in this area should be restrained and modest. It is important that logical and beneficial developments in this corner of the law should not contribute to the creation of a society bent on litigation."

  898. Although the general approach of the courts is clear on the authorities, I cannot predict what damages under this head might be recovered by any given householder. Likewise, I cannot predict whether any given householder will make any recovery for loss of use or loss of earnings. It is clear from the evidence before the court and unsurprising that the circumstances of individual householders differ greatly. My conclusion in respect of these potential heads of claim is that they should all be embraced by the indemnity.
  899. The precise wording of the indemnity will require some thought. The wording adopted by Lewis J in Household Machines Limited provides a useful starting point.
  900. My first draft of the declaration for indemnity reads as follows:
  901. "SHL is entitled to recover from Encia such damages (if any) as in law are due from SHL to the owners of plots 2, 3, 4, 7, 8, 11, 12, 13, 14, 15, 16, 18, 20, 27 and 28, 30, 37, 48, 50, 52, 53, 54, 55, 57, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 81, 83, 84, 85, 86, 87, 88 and 89 in respect of (a) diminution in value, (b) distress and inconvenience, or (c) incidental expenses in consequence of any breach by SHL of a contractual duty to provide adequate foundations."
  902. I would be grateful for counsel's comments on and improvements upon that draft.
  903. I turn next to the 40 houses which have adequate foundations. In respect of these houses, Encia accept that they were in breach of a contractual obligation to exercise reasonable skill and care in design. This gives rise to an admitted liability for nominal damages of 2 per property or 80 in all. Nevertheless, says Mr de Verneuil Smith, despite that breach, and perhaps by good fortune, the foundations of these houses are in fact adequate. Accordingly, Encia have no further liability to SHL in respect of these properties.
  904. The 40 houses which fall into this group are the following: plots 1, 17, 19, 21, 22, 23, 24, 25, 26, 29, 31, 32, 33, 34, 35, 36, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 49, 51, 58, 59, 60, 61, 79, 80, 82, 90, 91, 92, 93 and 94.
  905. If one looks at Mr Johnson's figure 8 or Mr Newman's figure 4.3, it can be seen that broadly speaking these 40 houses stand in areas where the contours of the glacial till are high. In other words, the foundations of these houses are adequate, not because of any design skill on the part of Encia but because of the pattern of water flow at the end of the last ice age.
  906. I accept Mr de Verneuil Smith's submission that the owners of these 40 properties can have no claim in damages against SHL. They own stable houses with good foundations. The owners of these 40 houses cannot base any claim against SHL upon the fact that SHL sold to other persons nearby houses with defective foundations.
  907. Part 17: The claim for a contractual indemnity
  908. In respect of phase 2, SHL have the benefit of the indemnity contained in clause 13 of the Conditions of Contract for Subcontractors. In my judgment, that indemnity clause does not entitle SHL to recover any additional monies beyond those which are recoverable as damages. The indemnity clause does, however, provide an additional legal basis for recovery in respect of the phase 2 houses.
  909. Only one of the houses which SHL bought back forms part of phase 2. That is plot 56, 18 Hayfield Close. SHL's entitlement to remedial costs and to diminution in value in respect of that house is based not only upon damages for breach of contract, but also upon an indemnity under clause 13.
  910. Let me now turn to houses owned by householders, the foundations of which are or were to a greater or lesser extent defective.
  911. 32 properties in this category form part of phase 2, namely plots 48, 50, 52, 53, 54, 55, 57, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 81, 83, 84, 85, 86, 87, 88 and 89.
  912. The damages and common law indemnity to which SHL are entitled have been set out in parts 13 to 16 above. SHL are entitled to precisely the same remedies in respect of these properties on the basis of the indemnity contained in clause 13.
  913. I come finally to the 15 houses in phase 2 whose foundations are adequate. These are plots 47, 49, 51, 58, 59, 60, 61, 79, 80, 82, 90, 91, 92, 93 and 94.
  914. SHL have suffered no loss and incurred no liability in respect of these 15 properties. Accordingly, SHL have no rights under the indemnity clause in respect of that block of 15 properties.
  915. Part 18: Conclusion

  916. For the reasons set out above, SHL succeed on liability. SHL are entitled to nominal damages in respect of 40 properties and to substantial damages and indemnities in respect of 54 properties. I request counsel to agree the precise wording of the court's order.
  917. This trial commenced on 4th June 2007 and has occupied the court in all for some five weeks. I congratulate the solicitors on both sides for their efficient preparation of the evidence and compilation of the bundles. These are not easy tasks in litigation on this scale.
  918. I also congratulate all three counsel for their excellent and economic presentation of the case on both sides which has enabled this trial to be concluded precisely within its allotted time. In the result there will be judgment for the claimant.


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