Structural survey — Property about 200 years old — Building stated to be in “reasonable condition for its age” — Remedial work budgeted for in report — After-purchase investigation showing very extensive works required — Plaintiffs advised only value site value — Breach of contract alleged — Whether surveyors falling below accepted standards — Whether any duty in tort — Measure of damages — “Diminution in value” — Plaintiffs awarded general and special damages
The plaintiffs wished to buy a property at 72 High Causeway, Whittlesey, Cambridgeshire, and arranged for a structural survey in addition to the building society valuation. The defendant firm of surveyors were contacted and the survey proceeded on the basis of their printed conditions. The plaintiffs claimed that they had made it clear that they required information on the state of the structure and cost of repairs and whether it would be worth buying the property and if so at what price. The plaintiffs also contended that they had relied on the report, inter alia, that “the property was in reasonable condition for its age and we discovered no serious structural defects… that would … advise … against the proposed acquisition.” The report also budgeted for remedial works. The plaintiffs went ahead with the purchase but, in the event, repair costs would have far exceeded the budgeted figure cited. Another survey recommended that the property’s only value was its site value. As a result of the local authority issuing a dangerous structure notice, bracing had to be inserted in the front wall. Thereafter the plaintiffs moved into a flat in Whittlesey, stating that they could not afford to demolish and rebuild the property.
Held Plaintiffs succeeded in their claim.
1. The plaintiffs had established that they required the detailed information on the structure and cost of repairs and that the survey was not carried out in order to satisfy the building society.
2. All relevant matters were not gathered together in the report, so that the obvious conclusion, ie that the house was not a good buy at other than its site value, was not drawn to the attention of the ordinary house purchaser. At the very least, the purchasers should have been warned not to go ahead unless further structural investigations were made.
3. The defendants were in breach of contract with regard to the report, but they also failed in their continuing contractual duty when, on a second inspection after the purchase, the plaintiffs were encouraged to stay in the property and to spend money on it.
4. With regard to the assessment of damages, the rule that the proper measure of damages was the difference between the value of the property in its assumed good condition and the value in the bad condition (see Philips v Ward [1956] 1 WLR 471) was inapplicable. In the present case no good condition could be assumed. Therefore, the measure to be adopted was “the difference between the value of the property as it was described in the defendants’ report and its value as it should have been described”: (Perry v Sidney Phillips & Son (1982) 263 EG 888). The value of the property as described in the report was therefore, in the instant case, the same as the price paid. The main head of damage, therefore, was the difference between the price paid of £82,500 and the true value of the property, being the net site value, of £32,500. The diminution of value amounted to £50,000 plus interest at the judgment rate of 15% for the period from September 16 1988 (ie the date that the plaintiffs moved into the property) to date of judgment. On the other heads of damage, covering the costs, inter alia, of extricating themselves from the property, amounting to £8,636.74, interest was also to be awarded at 15%; interest on the modest damages for distress and inconvenience should be paid at the rate of 2%, from judgment date.
Michael Parroy QC (instructed by Shepherd Harris & Co) appeared for the plaintiffs; and James Guthrie (instructed by Roythorne & Co, of Spalding) appeared for the defendants.