Negligence — Preliminary issue — Assumed negligence — Damages — Plaintiffs paid higher price than defendant’s valuation — Whether plaintiffs suffered any loss — Whether damages for worry, distress and inconvenience recoverable
For the
purposes of the preliminary issue the parties agreed: (1) that the defendant
firm of valuers valued in June 1988 for mortgage loan purposes a dwelling-house
at £37,000, which the plaintiffs purchased in August 1988 in reliance on that
report and valuation for £42,000; (2) that the property was defective and the
defendants negligent such that the actual value of the property in June 1988
was £32,000 and in August 1988 £37,000; and (3) the plaintiffs incurred
expenditure and suffered inconvenience from the defects. The preliminary issue
was whether the plaintiffs had suffered any loss and, if so, were entitled
additionally to damages for inconvenience. On behalf of the plaintiffs it was
contended that damages were payable equal to the difference between the price
paid (£42,000) and its market value in the defective condition (£37,000). This
was a ‘no-transaction’ case because the plaintiffs would not have proceeded had
the report revealed the defects. Further, by reason of the claim being in tort,
additional damages were payable for inconvenience. For the defendants it was
argued that the plaintiffs had suffered no loss because damages are for the
difference between the valuation (£37,000) and its value with defects at the
date of purchase (£37,000).
favour of the plaintiffs. Since Watts v Morrow [1991] 2 EGLR 152
any purported distinction between a ‘no-transaction’ case and a ‘successful
transaction’ case is no longer of significance. The measure of damages for
breach of the duty to exercise reasonable care and skill is the same in tort as
in contract. Where the price paid was in excess of the defendants’ valuation,
the amount of the valuation is not substituted for the price paid as the first
component before deducting the value of the property in its defective
condition. Had the plaintiffs been advised of the defects, and that the
property was worth only £32,000 in June 1988, they would not have proceeded at
all or would have negotiated a reduction in price to reflect the existence of
the defects; they paid too much for the property because they were not told of
the defects. The plaintiffs were therefore entitled to the difference between
the market value of the property in August 1988 (assumed to be the price paid
of £42,000) in the reported condition and its value at the time subject to
defects (£37,000). The plaintiffs were also entitled to recover damages for
physical inconvenience and discomfort caused by the defendants’ breach of duty
and mental suffering directly related to that inconvenience and discomfort,
such effects being foreseeable. They were also entitled to recover, subject to
proof, items of expenditure incurred by them in consequence of the defendants’
breach of duty, which did not form part of the repair costs.
The following
cases are referred to in this report.
Broadoak
Properties Ltd v Young & White [1989] 1
EGLR 263
County
Personnel (Employment Agency) Ltd v Alan R
Pulver & Co [1987] 1 WLR 916; [1987] 1 All ER 289; [1986] 2 EGLR 246,
CA
Ford v White & Co (1964) 1 WLR 885; [1964] 2 All ER 755;
[1964] EGD 283; (1964) 190 EG 595
Hardy v Wamsley-Lewis (1967) 203 EG 1039
Hayes v James & Charles Dodd [1990] 2 All ER 815
Heywood v Wellers [1976] QB 446; [1976] 2 WLR 101; [1976] 1 All ER
300, CA
Hingorani
v Blower (1975) 238 EG 883, [1976] 1 EGLR
104
Jarvis v Swans Tours Ltd [1973] QB 233; [1972] 3 WLR 954; [1973] 1
All ER 71, CA
Perry v Sidney Phillips & Son [1982] 1 WLR 1297; [1982] 3 All
ER 705; [1982] EGD 412; (1982) 263 EG 888, [1982] 2 EGLR 135, CA
Philips v Ward [1956] 1 WLR 471; [1956] 1 All ER 874, CA
Treml v Ernest W Gibson & Partners [1984] EGD 922; (1984) 272
EG 68, [1984] 2 EGLR 162
Watts v Morrow [1991] 1 WLR 1421; [1991] 4 All ER 939; [1991] 2
EGLR 152; [1991] 43 EG 121; (1991) 26 Con LR 98
This was the
hearing of a preliminary issue in a claim by the plaintiffs, Alan Terence Shaw
and Jennifer Ann Shaw, against the defendant firm, Halifax (SW) Ltd, for
damages for a negligent valuation report.
Graham Walters
(instructed by Anthony Jacobs & Co, of Cardiff) appeared for the
plaintiffs; Jonathan Acton Davies (instructed by James Jones & Jenkins, of
Cardiff) represented the defendants.
Giving
judgment, JUDGE JONES said: This is the trial of a preliminary issue.
The preliminary issue may be conveniently introduced by reading parts of the
statement of claim.
1. The
plaintiffs were at all material times contemplating the purchase of a dwelling
house at 48 Brunswick Street, Canton, Cardiff. In or around June 1988 they
applied to the Mortgage Corporation for a loan by way of mortgage to enable and
assist them to purchase the same, and they paid £70 in respect of a valuation
report to be obtained by the Mortgage Corporation. At about June 1988 the
Mortgage Corporation instructed the defendants to prepare a valuation report
pursuant to the request and payment.
The defendants
are Halifax (SW) Ltd, trading as Hartnell Taylor Cook Residential.
2. The
defendants themselves inspected the property and reported thereon by a report
of 20 June 1988. A copy of that report was sent to the plaintiffs. The report
placed a value on the property of £37,000 with a reduction in value of £2,000
in respect of certain essential repairs.
Those repairs
are not material to the trial of the issue. The statement of claim continues with
allegations that the property was defective in a significant number of respects
and that the defendants were negligent in failing to detect and report on each
and every defect and in other respects. That first allegation is, however, the
substance of the case against the defendants.
As to damages,
para 9 of the statement of claim is in these terms:
9. By reason
of the foresaid matters, the plaintiffs have suffered loss and damage. The
plaintiffs were obliged to carry out essential repair work (which is then
particularised) and they were also unable to enjoy normal residence of the
property until the repair work had been carried out.
— the
paragraph continues —
The
plaintiffs claim damages as being the difference between the actual value of
the property and the price paid therefore together with damages (afterwards
particularised) in respect of essential repairs loss and inconvenience.
Further, or in the alternative, the plaintiffs claim damages as the cost of
carrying out repair work together with additional costs as hereinafter
particularised in respect of essential repairs, loss and inconvenience.
There are then
particulars of various items of loss.
The issue to
be tried is whether, even if all other material matters are resolved in their
favour, the plaintiffs have suffered any and if so what loss. The basis upon
which the issue is to be tried has been agreed and set out in writing and is in
these terms:
Assuming
without deciding that:
(1) on 20 June 1988 the defendants valued 48
Brunswick Street, the property, at £37,000 in its current condition as there
described.
(2) In reliance on that report, valuation, and
the mortgage offer based thereon the plaintiffs agreed to purchase the property
and on 11 August 1988 exchanged contracts to purchase the property.
(3) The purchase price was £42,000.
(4) The property was defective in the various
respects alleged in paragraph 5 of the statement of claim and the defendants
were negligent in the various respects alleged in paragraph 6 of the statement
of claim, and in consequence the actual value of the property on 20 June 1988
was £32,000 and on 11 August 1988 was £37,000.
(5) The valuation mentioned in paragraph 4 above
takes into account the cost of repairs necessitated by the defects referred to
in paragraph 4 above. The plaintiffs incurred the expenditure particularised in
paragraph 9 of the statement of claim, together with inconvenience resulting
from the said defects.
Preliminary
Issue: Have the plaintiffs suffered any and, if so,
what loss? (If the plaintiffs have
suffered loss in respect of inconvenience, the Preliminary Issue be confined to
answering whether such loss is in law recoverable and does not extend to
quantification of that head of loss.)
The parties’
respective positions may be stated quite shortly. Mr Graham Walters, for the
plaintiffs, contends that the plaintiffs have suffered loss. He accepts that as
a result of the decision of the Court of Appeal in Watts v Morrow [1991]
1 WLR 1421, the plaintiffs cannot proceed upon the basis that the cost of
repairing and making good the defects is to be awarded as the measure of
damages. What he submits is that the plaintiffs would not have purchased the
property but for the negligent report. This is a ‘no-transaction’ case; the
claim is in tort; the plaintiffs are entitled to such damages as will put them
into the position in which they would have been had the tort not been
committed. These damages are equal to the difference between the price paid for
the property and its market value in the defective condition at the date of
purchase. That difference is £5,000, the difference between £42,000 and
£37,000.
In addition,
Mr Walters submits that the plaintiffs are entitled upon the authorities,
particularly since this is a claim in tort, to damages for inconvenience and
also entitled to recover the costs of certain emergency work carried out and
costs incurred in investigating the defective condition of the premises. I need
not at this stage rehearse the arguments in relation to this head since they
will appear sufficiently when I come to deal with it.
Mr Jonathan
Acton Davies, for the defendants, first does not accept that this is a
no-transaction case. However, he says the principle is unaffected by that
consideration. The measure of damages in a case where a surveyor’s report has
negligently failed to disclose defects is the same in contract as in tort. The
central question raised by the preliminary issue is whether a plaintiff has
suffered any loss when he acquires a property which on the day of its acquisition
is worth the same figure which appears in a negligently prepared surveyor’s
report. The measure of damages in such cases, Mr Acton Davies submits, is the
difference between: (1) the value of the property without defect, and (2) its
value with the defect as at the date of the purchase. In support of that
proposition Mr Acton Davies refers to a number of authorities and also to Jackson
and Powell on Professional Negligence at para 3-112. I need not refer
specifically to the authorities at this stage. Continuing his submissions, Mr
Acton Davies contends that the price paid, as such, hence, is not the first
component in the calculation of the measure. Generally the price paid may, as a
matter of fact, represent the value without the defects, but that must depend
upon the particular facts of the case. In the present case the plaintiffs paid
£42,000 for the property, £5,000 in excess of the defendants’ valuation. It is,
contends Mr Acton Davies, the defendants’ valuation, and not the price paid,
which is the figure for the first component in the measure.
As to the
second component, the value of the property with the defect has been variously
described in the authorities as, for example, ‘the market value of the
property’ in Perry v Sidney Phillips & Son [1982] 1 WLR 1297
at pp1304 and 1306, and Ford v White & Co [1964] 1 WLR 885 at
p888. In Watts v Morrow, the second component was referred to [at
p1445A] as ‘The value of the house in its actual condition . . .’. Whatever
formulation is applied, Mr Acton Davies contends the figure to be inserted in
the present case as the second component is £37,000, which is assumed for the
purposes of the preliminary issue to be the actual value of the property as a
consequence of the defects on the date of exchange of contracts.
It will at
once be apparent why Mr Acton Davies contends that the plaintiffs have suffered
no loss: the figure for the first component is the defendants’ valuation to be
£37,000, the figure for the second component is the actual value at date of
purchase, £37,000, hence no loss. As to the claim for damages for inconvenience
and consequential loss, Mr Acton Davies relies, first, upon passages in Watts
v Morrow to which I shall need to refer in due course. Second, his
submission is that if he succeeds upon his first submission that the plaintiffs
are not entitled to recover primary damages, then the plaintiffs are unable to
recover damages for inconvenience or for consequential loss. The way he puts it
is that, without any other actionable injury, no damages can be recovered under
these further heads.
Negligence
but no loss?
The man on the
Clapham or any other omnibus might feel some surprise, even perhaps a sense of
injustice, were he to be told the assumed facts and the result for which the
defendants contend. On the assumed facts: (1) the defendants negligently failed
to detect and/or report upon defects in the property; (2) the plaintiffs agreed
to purchase the property relying upon the defendants’ report; (3) in
consequence the plaintiffs own a property with defects whose value is
substantially less than it would have been without those defects. Yet the
plaintiffs are said to have suffered no loss and to be entitled to recover
nothing from the defendants.
It is no
reflection upon the industry of counsel or their very able submissions, which
have assisted me greatly, when I say that I do not propose to review the
authorities which they have helpfully cited to me or to cite extensively from
those authorities. Having reserved judgment, I have had the opportunity to
consider all those authorities fully and have had regard to them. Furthermore,
I have the advantage of the very recent authority of Watts v Morrow where,
if I may say so with respect, the law in this area has been extensively
reviewed and restated. Further, I have reached a conclusion that the issue in
this case can in fact be resolved by quite a simple and straightforward
approach.
I do not
accept Mr Walters’ contention that upon the assumed facts the case before me
must be treated as a no-transaction case. The statement of claim, it seems to
me, does not plead that. However that may be, it is not a fact which it is
stated in the written statement of issue is to be assumed. But even if this
were a no-transaction case, the result, in my judgment, would be the same. I
agree with Mr Acton Davies that, after Watts v Morrow in a
surveyor’s negligence case such
successful transaction case is no longer of significance.
The claim in
the present case is in tort. In Watts v Morrow there was, of
course, a contract between the plaintiffs and their surveyors. However, in my
judgment, where the claim in contract is the usual one for breach of the duty
to exercise reasonable care and skill, the measure is the same in contract and
in tort. It would be contrary to common sense for the measure to be different
in those circumstances. Moreover, I am satisfied that the tenor of the
authorities is that the measure is the same whether the claim is brought in
contract or in tort, or, as in a number of the cases, in both. Mr Walters, as I
understood him, does not dispute that. What he says is that because in the
cases the price paid has come to be taken as the first component in the measure
for the calculation of the loss, the measure has in fact become the tortious one.
Mr Walters’ contention is that the measure is the difference between the price
paid and the actual value of the property. Mr Walters relies among other
authorities for this proposition upon Perry v Sidney Phillips &
Son [1982] 1 WLR 1297. At p1306 of the report, Kerr LJ said:
It seems to
me abundantly clear that this case is covered by a trilogy of similar cases
where property has been bought in reliance on negligent professional advice.
Those cases are Philips v Ward [1956] 1 WLR 471 CA; the decision
of Mr Justice Pennycuick in Ford v White; and, finally the
approval of those cases in this Court in Simple Simon Catering Ltd v Binstock
Miller & Co (1973) 117 SJ 529. The effect of those three decisions can
be summarised in the way in which it was conveniently stated by Mr Justice
Pennycuick in Ford v White where he said at page 888 of the
report:
‘In the
simple case of the purchase of property at a price in excess of its market
value as a result of wrong advice, the measure of damage must be the difference
between’
— for
convenience I will reverse the order in which he put it —
‘(1) the price actually paid, and, (2) the market
value of the property at the date of purchase.’
What I venture
to observe in relation to that passage and other authority in similar terms is
that I do not understand the price paid, whatever it may be, to be the
first component. In Hardy v Wamsley-Lewis (1967) 203 EG 1039, the
value of the house as described in the defendant’s report and its actual value
were respectively assessed at £4,300 and £3,500. The plaintiff had nevertheless
purchased it for £4,600. He was awarded the difference between £4,300 and
£3,500 in damages. The element of the overpayment between £4,300 and £4,600 was
attributable to the plaintiff’s own action in overpaying. Hingorani v Blower
(1975) 238 EG 883, [1976] 1 EGLR 104 appears to have been decided on a
similar basis. I intend no disrespect at all when I say that in the various
authorities, sometimes even in different judgments in the same authority, the
same concepts have been expressed in different language. The descriptions given
and the words used have been chosen in the light of and based upon the
particular facts of the case. As Pennycuick J observed in Ford v White,
which was a solicitor’s negligence case, each judge in Philips v Ward
assumed or held that the price paid was equivalent to the value in assumed
good condition or as described in the defendant’s report, and treated the two
expressions as interchangeable.
The formulation
of the measure by Ralph Gibson LJ in Watts v Morrow was in these
terms: at [1991] 1 WLR 1421 at p1429 the learned lord justice said:
This Court .
. . held that the proper measure of damages
— and he is
here referring to the judgment of the court in Philips v Ward —
was the
difference in money between the value of the property in the condition
described and its value as it should have been described, namely £4,000. It is
necessary to set out some passages in the judgments.
Ralph Gibson
LJ then continues (and this is the passage which is particularly relevant for
my purposes):
It has been
common ground on this appeal that the diminution in value rule is more
accurately to be expressed as the difference between the price paid and the
value in its true description, at least where no point is taken, as in this
case, that the plaintiff chose to pay above the market value.
That final
qualification, if I may respectfully say so, appears to me both necessary and
important.
Mr Acton
Davies points out that in the preliminary issue it is not stated that it is to
be assumed that the price of £42,000 was paid in reliance on the report. The
written preliminary issue states that reliance upon the report was as to the
decision to purchase. There is simply a statement as to the price paid.
Certainly, it is plain from the preliminary issue that it is to be assumed that
there was reliance as to purchase. I agree that it is not stated in the issue
that it is to be assumed that the purchasers paid the price of £42,000 in reliance
upon the report. But neither is the assumption to be made that they would have
still paid £42,000 had they known of the defects; obviously not.
I do not
accept that because the price paid was in excess of the defendants’ valuation,
the amount of the valuation is then to be substituted for the price paid as the
first component of the measure. In my view, neither Hardy v Wamsley-Lewis
nor Hingorani v Blower provides support for such a
contention. Para 6 of Mr Acton Davies’ skeleton argument does not follow, as
the opening word ‘thus’ seeks to convey, from para 5. The assertion there made
with respect to Mr Acton Davies is, in my view, fallacious. Admittedly, the
plaintiffs paid £42,000 when the report they received indicated that the house
was worth £37,000, but what they were not advised but ought to have been
advised was that the property had defects and by reason of those defects was
worth not £37,000 but £32,000 as at June 20 1988. Had they been so advised,
they would not have paid £42,000 as at August 11 1988, but either would not
have proceeded at all or would have negotiated a reduction in the price to
reflect the existence of the defects. What the plaintiffs have done, and as a
direct consequence of the defendants’ assumed negligence, is to make an
overpayment. They paid too much for the property because they were not told of
the defects and their effect upon value when they ought to have been.
If, in
addition to such overpayment, the plaintiffs made an overpayment for reasons
unrelated to the defendants, clearly such further overpayment would not be
recoverable.
But, in my
judgment, it is really beyond argument that they can recover the pecuniary loss
which they have suffered by reason of the overpayment which they made because,
in consequence of the defendant’s assumed negligence, they were ignorant of the
defects and correspondingly lower value of the property. The property did not
have the higher value which it would have had without the defects but the
plaintiffs, because of the defendant’s assumed negligence, paid for it as
though it did. They have lost the amount of the overpayment.
To the first
part of the question raised in the preliminary issue, I am in no doubt that the
answer is: ‘Yes’.
I hope it is
sufficiently clear from the reasoning which I have just set out why it is that
I have come to the view that this is essentially a relatively simple and
straightforward case.
Amount of
the loss
Again I
consider that the answer, consistently with the authorities, is a reasonably
straightforward one. The plaintiffs are entitled to the difference between the
market value of the property without the defects and its market value in the
defective condition; or, to put it in other terms, to the ‘diminution in value
of the property’, that is, the amount by which the value of the property has
been diminished by the unreported defects. The actual value of the property on
August 11 1988 was £37,000. Its value in an assumed condition without the
defects was obviously higher. If the price paid of £42,000 was the price which
would reasonably have been paid on that date in the open market at arm’s length
by a willing buyer to a willing seller for the property without the defects,
the plaintiffs’ loss is £5,000; that is, the difference between £42,000 and
£37,000. If the market value of the property on the basis that it did not have
the defects on August 11 1988 was less than £42,000 the plaintiffs’ loss is
such market value
above the market value of the property; the excess which they have paid over
and above the market value of the property plainly cannot be a liability of the
defendants. If the market value of the property without the defects was more
than £42,000, the loss remains £5,000.
It is not
clear from the preliminary issue whether it is accepted that the price paid of
£42,000 was the market value of the property on August 11 1988 on the assumed
basis that the property was free from defects. I have to observe that it seems
to me to follow from the preliminary issue that such was the market value of
the property. I say that because it is agreed for the purposes of the issue
that the value of the property in its defective condition increased from
£32,000 on June 20 1988 to £37,000 on August 11 1988. Its value in an assumed
condition without the defects must have increased correspondingly, presumably
from £37,000 on June 20 1988 to £42,000 on August 11 1988.
I have taken
August 11 1988 as the date which is to be applied as the date for assessment of
damages. Counsel are in broad terms agreed that such is the appropriate date,
though Mr Walters was of the view that County Personnel (Employment Agency)
Ltd v Alan R Pulver & Co [1987] 1 WLR 916, gives a discretion.
The headnote to that authority, at para 2, is in these terms:
That the
overriding rule in assessing damages was to ascertain the sum that would place
the injured party in the same position as he would have been if he had not
sustained the wrong; that, accordingly, no basis for assessing damages for
negligent advice would be applied automatically so as to defeat that rule and,
in applying the rule, it was necessary to select a date that would reflect
accurately the loss sustained which was usually but not necessarily the date of
the breach of duty.
I observe in
relation to the present case that if £37,000 represented the value of the
property without the defects on June 20 1988 and £42,000, the corresponding
value on August 11 1988, the loss is the same at both dates, that is the loss at
June 20 1988 is £5,000, being £37,000 less £32,000, and, as I have already
said, on August 11 1988 also £5,000, being £42,000 less £37,000. Where property
values and also possibly repair costs which may, of course, affect the amount
of the diminished value remain constant, so will the loss. Even where, as
applies to the relevant period in this case, property values are rapidly
changing, here increasing, the difference between the two components will
remain reasonably constant. Both components will rise or both will fall and the
difference between them will remain reasonably constant. Over time there may be
some divergence or convergence, depending whether property values are rising or
falling. In the present case, however, it seems to me that the result will not
be affected whether the date for assessment is taken as August 11 or the
earlier date of June 20.
Clearly, what
is impermissible is to take as one component of the measure the value on one
date and as the other component the value on a different date. That is, in
effect, what Mr Acton Davies has done: (1) £37,000 value at June 20, (2)
£37,000 value at August 11. The values for both components must be as at the
same date.
Consequently,
provided that the price paid of £42,000 does represent the market value, the
primary loss, as I have indicated, is £5,000.
Damages
for inconvenience and consequential loss
The plaintiffs
have additional claims for costs in respect of investigative and emergency work
and for damages for inconvenience. I have already read para (5) of the
preliminary issue. I have to repeat, as I observed in argument, and as I think
was accepted by counsel, its meaning is not completely clear. However, I
approach this aspect of the issue on the basis that I have to decide whether
the plaintiffs are entitled to recover, in addition to the primary loss with
which I have already dealt, any consequential losses and what has been referred
to as damages for inconvenience.
Mr Acton
Davies for the defendants met these claims in this way. He referred first to Watts
v Morrow. I shall need to refer fairly extensively to the passages
to which he drew my attention in Watts v Morrow and I will do
that shortly. The second limb of his argument now falls away.
Distress
and inconvenience
In Watts
v Morrow, at p1440, Ralph Gibson LJ said:
As to the law
[and he was here dealing with general damages, the award for distress and
inconvenience] it is, in my judgment, clear that Mr and Mrs Watts were not
entitled to recover general damages for mental distress not caused by physical
discomfort or inconvenience resulting from the breach of contract. It is true
that in Perry v Sidney Phillips & Son [1982] 1 WLR 1297 Lord
Denning MR justified the award of damages for anxiety, worry and distress, ie
‘modest compensation’, by reference to the holiday cases of Jarvis v Swan
Tours Ltd [1973] QB 233 and Jackson v Horizon Holidays Ltd [1975]
1 WLR 1468 and to Heywood v Wellers [1976] QB 446, a solicitor’s
case. I do not, however, accept that Perry’s case is authority for that
proposition. It is, I think, clear that, in that case, the award of damages,
which was upheld, was for ‘vexation, that is the discomfort and so on suffered
by the plaintiff as a result of having to live for a lengthy period in a
defective house which for one reason or another was not repaired over the
period between the acquisition by the plaintiff and the date of trial’:
See per Oliver,
LJ at p1304H.
Ralph Gibson,
LJ, continues:
Further, in Perry
Kerr LJ said, at p1307:
‘It should be
noted that the judge has awarded these [damages for vexation and inconvenience]
not for the tension or frustration of a person who is involved in a legal
dispute in which the other party refuses to meet its liabilities. If he had
done so, it would have been wrong, because such aggravation is experienced by
almost all litigants. He has awarded these damages because of the physical consequences
of the breach which were all foreseeable at the time.’
The judgment
of the learned lord justice then continues:
Mr Jackson’s
submission is, I think, correct. In Bailey v Bullock [1950] 2 All
ER 1167 Barry J, in a case of solicitor’s negligence, held that damages for
inconvenience and discomfort could be recovered for the solicitor’s failure to
get possession of premises for his client but not damages for annoyance and
mental distress. So holding, he relied on the judgment of Scott LJ in Groom v
Crocker [1939] 1 KB 194, 224 where Addis v Gramophone Co Ltd [1909]
AC 488 was held to be a conclusive authority against general damages for injury
to reputation or feelings. Barry J contrasted that decision with that of Hobbs
v London and South Western Railway (1875) LR 10 QB 111 where damages
for physical inconvenience were upheld for breach of a contract of carriage.
His lordship
then refers to Jarvis v Swans Tours and also to Heywood v Wellers.
Then, at p1141B, he continues:
In Hayes v
James & Charles Dodd [1990] 2 All ER 815 Purchas LJ, with reference
to a claim to damages for mental distress in a claim against a surveyor, said,
at p826:
‘I agree with
the approach adopted by Staughton LJ, reflecting, as it does, the judgment of
Dillon LJ in Bliss v South East Thames Regional Health Authority [1987]
ICR 700 at 718, namely that damages of this kind are only recoverable when the
subject matter of the contract or duty in tort is to provide peace of mind or
freedom from distress.’
I lay emphasis
upon the words ‘or duty in tort’.
The judgment
of Ralph Gibson LJ further continues:
If, then, the
plaintiffs, for breach of a contract of this nature, are entitled only to
damages in respect of physical discomfort or inconvenience resulting from the
breach, it is clear, as in Perry v Sidney Phillips & Sons [1982]
1 WLR 1297, that such damages are recoverable where, as contemplated by the
defendant, the plaintiffs move into the property and live there in physical
discomfort because of the existence of unreported defects such as an
evil-smelling cesspit or a leaking roof. But what of physical discomfort caused
not by the defects but by the process of repairing them in a case where, as
here, the surveyor has not warranted that there are no defects? Thus, in this case, there was no discomfort
caused by any defect in the roof: it was replaced before it leaked or
collapsed. Mr Jackson, rightly, I think, did not contend that damages for
physical discomfort are not recoverable where caused by the carrying out of
repairs to negligently unreported defects even though the surveyor is not in
law liable for the cost of those repairs. The concession
that, upon the plaintiff occupying the house as his home in reliance on the
report, he would in fact have to live there while the repairs are done and it
is reasonable for him not to do so. We do not have to decide whether, if the
plaintiff has to rent other accommodation during the carrying out of repairs,
such cost will be recoverable in the absence of any contractual warranty as to
the existence of defects requiring repairs, and I would reserve my decision
upon it.
Then, having
considered the judgment of Judge Bowsher QC, in the court below, at p1442C of
the report, Ralph Gibson LJ says:
In my view,
in the case of the ordinary surveyor’s contract, damages are only recoverable
for distress caused by physical consequences of the breach of contract.
Bingham LJ
also dealt with damages for distress and inconvenience at p1445 of the report.
He says, dealing of course with the position in contract because this was a
contractual case:
A
contract-breaker is not in general liable for any distress, frustration,
anxiety, displeasure, vexation, tension or aggravation which his breach of
contract may cause to the innocent party. This rule is not, I think, founded on
the assumption that such reactions are not foreseeable, which they surely are
or may be, but on considerations of policy.
But the rule
is not absolute. Where the very object of a contract is to provide pleasure,
relaxation, peace of mind or freedom from molestation, damages will be awarded
if the fruit of the contract is not provided or if the contrary result is
procured instead. If the law did not cater for this exceptional category of
case it would be defective. A contract to survey the condition of a house for a
prospective purchaser does not, however, fall within this exceptional category.
In cases not
falling within this exceptional category, damages are in my view recoverable
for physical inconvenience and discomfort caused by the breach and mental
suffering directly related to that inconvenience and discomfort. If those
effects are foreseeably suffered during a period when defects are repaired I am
prepared to accept that they sound in damages even though the cost of the
repairs is not recoverable as such. But I also agree that awards should be
restrained . . .
To repeat what
I have already said, Watts v Morrow was, of course, a case in
contract. There are other cases, two in particular, upon which Mr Walters has
relied. The first is Treml v Ernest W Gibson & Partners*, a
decision of Popplewell J. In his judgment Popplewell J set out various items of
claim; among those items of claim at item 10 was vexation and inconvenience. It
is also to be observed, since this is relevant to the plaintiff’s claim for
consequential loss, that Popplewell J dealt at item 3 with the cost of
emergency supports, at item 5 with the hire of Acroprops, at item 6 with the
cost of further support and indeed at item 7 with accommodation and item 8
removal costs. It is clear from his decision that damages were awarded for what
was described as vexation and inconvenience; and if I may respectfully say so,
as the headnote to the Estates Gazette report says, ‘The judgment is
notable for the detailed analysis of heads of damages for negligence’.
*Editor’s
note: Also reported at (1984) 272 EG 68, [1984] 2 EGLR 162.
There is a
further decision relied upon by Mr Walters. It is a decision of Judge Fox
Andrews, sitting, of course, as an official referee. It is Broadoak
Properties Ltd v Young & White†. The judge held in that case
that the measure of damages which he took to be the difference between the
market value of the property in its actual state and the price actually paid
did not rule out the recovery of certain consequential losses in addition. The
judge mentioned in particular expenses reasonably incurred in investigating the
true state of the premises, costs incurred, whether building costs or
professional fees, for temporary works to remove nuisance or danger and damages
for inconvenience suffered by the plaintiffs. Those were all matters for proof
at the trial.
† Editor’s
note: Reported at [1989] 1 EGLR 263.
Mr Walters
submits that the position in tort is wider than it is in contract. But for the
passage which I have read from Watts v Morrow, I would have
accepted Mr Walters’ submission on the basis of the previous authorities. That
would have led to what, to my mind, would have been the undesirable result that
the damages recovered differ whether the claim is brought in contract or in
tort. As I have said earlier in this judgment, that seems to me not to accord
with common sense and principle in the sense that it is very difficult to see
why there should be a difference in damages between a claim in negligence for
failure to take reasonable care and a claim in contract for a breach of the
contractual duty to use proper care and skill. By reason of the passages that I
have read from Watts v Morrow and in particular the passage from
the judgment in Hayes v James & Charles Dodd [1990] 2 All ER
815 referred to by Ralph Gibson LJ, I am of the view that there is now clear
Court of Appeal authority to the effect that damages of the kind which Ralph
Gibson LJ was discussing in the passages which I have read (that is, for lack
of peace of mind and general distress) are recoverable only when the
subject-matter of the contract or duty in tort is to provide peace of mind or
freedom from distress. That is not so in the present case.
Consequently,
so far as the claim for what have been called damages for inconvenience is
concerned, I answer the preliminary issue in this way: ‘Yes’, the plaintiffs
are entitled to recover damages for inconvenience, but those damages are of the
kind and are limited as laid down in the judgments of Ralph Gibson LJ, and Bingham
LJ, to which I have referred in Watts v Morrow: that is, damages
are recoverable (and subject to proof thereof) only for physical inconvenience
and discomfort caused by the defendant’s breach of duty and mental suffering
directly related to that inconvenience and discomfort. In my judgment, in the
case before me, the effects were foreseeable. The amount of such damages I am
asked by the preliminary issue not to consider.
Other
claims
That leaves me
with the claims in respect of consequential losses. I confess that I have had
some difficulty with these in that, since the precise meaning and effect of
para (5) of the issue is not clear, I am not sure precisely what it is that is
to be assumed and is being claimed under this head. In the course of argument,
Mr Walters referred to item 1 in the particulars to para 9, that is storage of
furniture, also to item 4, electricity costs. There are also contained in those
particulars item 5 and item 6, consulting engineers’ report and building
surveyors’ report.
I deal with
the further claim for consequential losses in this way. In so far as any of
these items are properly to be regarded as repair costs, plainly they are not
recoverable. In so far as they are not part of the costs of repair, then I
consider upon the basis in the authorities relied upon by Mr Walters, Treml v
Ernest W Gibson & Partners and Broadoak Properties Ltd v Young
& White and in accordance with ordinary principles for recovery of
damages in tort, they are recoverable. It seems to me that anything further in
this regard must be, as I think was Mr Acton Davies’ position in the event that
I was against him, a matter for evidence at the trial. Consequently, I answer
this aspect of the question raised in the preliminary issue in that way, that
is that the plaintiffs are entitled to recover, subject to proof thereof, items
of expenditure incurred by them in consequence of the defendant’s breach of
duty, which do not form part of the repair costs.
