Negligence — Structural survey — Failure to detect substantial structural defects — Liability admitted during trial leaving issue as to damages only — Movement of walls due to inadequate design of roof and inadequate resistance of walls — Discussion of questions of principle affecting the basis of assessment of damages — Position as to damages for distress and inconvenience and for costs of removal and temporary accommodation where primary measure of damages is as laid down in Perry v Sidney Phillips & Son
a husband and wife, purchased the property in question, a two-storey
dwelling-house, in April 1985, in reliance on a favourable report by the
defendant firm of surveyors — The plaintiffs paid £56,250 for the house — The
defendants’ report was a structural survey of the property — Unfortunately, the
defendants had failed to detect substantial structural defects — As a result of
the inadequate design of the roof, enabling it to spread, and the insufficient
resistance of the walls, the front and rear walls had been forced apart, the
outward movement of the rear wall near the top amounting to as much as 36 mm —
The necessary remedial works would have included some transfer of load to
internal walls and chimney, improved triangulation and stiffening of the span
from the main ridge to the hipped end, numerous ties and straps and the
substitution of a structural wall for a non-structural partition — The
plaintiffs brought the present action alleging negligence
ground that the correct measure of damages was that stated by the Court of
Appeal in Perry v Sidney Phillips & Son as the difference between the price
actually paid and the price which a purchaser properly advised at the date of
purchase would have paid — This measure is best described not as a loss of
value but as an excess cost or overpayment — The cost of remedial works was not
as such the appropriate measure in the present case — The plaintiffs’ claims
for separate heads of damage in respect of distress and inconvenience and in
respect of costs of removal and temporary accommodation while remedial works
were carried out gave rise to questions of principle which the judge considered
in the light of the primary measure of damage and case law
from Perry v Sidney Phillips & Son that a separate sum was recoverable under
the head of distress and inconvenience if it had not already been taken into
account in the valuation on which the price assumed to be paid by a properly
advised purchaser was based; duplication must, of course, be avoided — That
appeared to be the basis on which
of it, a separate head of claim for costs of removal and of temporary
accommodation during completion of repairs was very difficult to reconcile with
the case where the measure is not based on the cost of carrying out repairs at
all but on the difference between the price paid and the price which should
have been paid — However, although there cannot be a separate head of claim in
such a case, the prospective cost of repairs is clearly a relevant element to
take into account in assessing the amount by which the property was overpriced;
and the costs of removal and temporary accommodation are as relevant as the
repair costs themselves in relation to the assessment
with these matters of principle, Judge Hicks considered their application to
the facts — He found that in 1985 there would have been private purchasers
willing, at the appropriate price, to proceed with the purchase of the property
notwithstanding knowledge of its defects — They would have endeavoured to
negotiate a reduction in the price in the light of their information and any
advice they received — The judgment goes into the calculations in detail, making
the necessary adjustments to reflect 1985 prices — In the end, however, he came
to the conclusion that the discovery of the extent of the defects in the house
would have been as unpleasant a surprise to the vendor as to the purchaser and
she might have feared that the sale would go off altogether — In such a case
the reduction in price might well have been more than the carefully calculated
prospective costs — Taking these considerations into account, the judge
assessed the likely reduction in price at £11,000 — This was the amount of the
overpayment due to the defendants’ negligence and consequently, subject to set
off and interest due, the amount recoverable from them — The plaintiffs
conceded that the defendants were entitled to set off the sum of £218.50 which
they counterclaimed in respect of fees — After deducting the £218.50, adding
the sum of £1,600 for distress and inconvenience, and adding interest due, the
total amount payable by the defendants was £20,009.88
The following
cases are referred to in this report.
Hood v Shaw [1960] EGD 238; (1960) 176 EG 1291
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
Roberts v J Hampson & Co [1989] 2 All ER 504; [1988] 2 EGLR 181;
[1988] 37 EG 110
Treml v Ernest W Gibson & Partners [1984] EGD 922; (1984) 272
EG 68, [1984] 2 EGLR 162
Walker v Giffen Couch & Archer [1988] EGCS 64
Wilson v Baxter Payne & Lepper [1985] 1 EGLR 141; (1985) 273 EG
406
In this action
Timothy Alexander Bigg and his wife, Katherine Harriet Bigg, sued the
defendants, Howard Son & Gooch, a firm of surveyors, for damages in respect
of a structural survey carried out by the defendants in relation to a house at
2 Waltham Road, Woodlands Park, Maidenhead, Berks.
Thomas Corrie
(instructed by Simmons & Simmons) appeared on behalf of the plaintiffs;
Monique Allan (instructed by Rayfields) represented the defendants.
Giving
judgment, JUDGE HICKS QC said: This is an action by the plaintiffs, Mr
and Mrs Bigg, for damages for breach by the defendants, Howard Son & Gooch,
of a contract made on or about April 3 1985 under which the defendants, who are
surveyors, made a structural survey of a two-storey dwelling-house at 2 Waltham
Road, Woodlands Park, Maidenhead, Berks, and advised the plaintiffs by way of a
written report as to its structure and condition. In reliance on that advice
the plaintiffs bought the house for £56,250 and completed the purchase on May
14 1985. The alleged breaches consist of lack of reasonable care and skill in
carrying out that survey and giving that advice, manifested in a failure to
detect or report upon substantial structural defects.
When the trial
began the alleged breaches were still denied, but on the afternoon of the
second day Miss Allan, on behalf of the defendants, admitted liability as
pleaded and the trial proceeded on the issue of damages alone. I am therefore
concerned only with that issue.
For the
purposes of this judgment it is sufficient to describe the nature of the
defects quite briefly. By a combination of inadequate design of the roof,
enabling it to spread, and of inadequate resistance on the part of the walls to
the forces thereby created, the front and rear walls had been forced slightly
apart. At the two positions in the rear measured by Mr B Mursell FRICS, the
plaintiffs’ expert, the movement was entirely outwards and was greatest at or
near the top, amounting to a maximum of 36 mm in one case and 16 mm in the
other. The one measurement at the front showed a more variable movement, with
slight bulges in both directions; the maximum movement outside a vertical taken
from the foot was 9 mm at the top and the maximum inward movement 10 mm at a
height of 2 m from ground level.
It was agreed
between the expert witnesses for the parties that the position could at the
date of purchase have been stabilised and the house made structurally sound by
remedial works to an agreed specification and sketches 2619/SK2C, 3B and 4B put
in evidence, that that is still the case, and that that would be the
appropriate method of dealing with the defects. Again, I need describe the
nature of those works only briefly. In the roof there would be some transfer of
load from the outside walls to the internal walls and chimney, improved
triangulation and stiffening of the span at the transition from the main ridge
to the hipped end, and ties to restrain the front gable wall at high level. At
first-floor level there would be six ties or straps, each anchoring the front
and rear walls to the outer six joists. Finally, the short non-structural
partition wall at both levels between the internal chimney and the south-end
wall would be demolished and rebuilt as a structural wall bonding into the chimney
and the end wall, and thus stiffening the latter.
It is common
ground between the parties, and I agree, that the measure of damages is that
established by the Court of Appeal in the case of Perry v Sidney
Phillips & Son [1982] 1 WLR 1297, which is, in my understanding, best
expressed as the difference between the price which the plaintiffs actually
paid for the house and the price which a purchaser properly advised by
competent surveyors would have paid at the date of the purchase. It is
fundamental to this measure of damages that the consequence of the surveyors’
negligence has not been to leave the plaintiffs with a less valuable building
than he would otherwise have obtained (there never was a sound building to
acquire), but to cause him to pay more than the actual building was worth, and
if a shorthand phrase is desired it is therefore best described not as ‘loss of
value’ or even ‘diminution in price’ but rather as something like ‘excess
cost’, ‘price inflation’ or ‘overpayment’. That is why the cost of remedial
work is not as such an appropriate measure of damage.
So much is
agreed, but Mr Corrie, for the plaintiffs, submits that there are two further
recoverable heads of damage not accepted by Miss Allan for the defendants:
first, anxiety, distress and inconvenience and, second, the cost of removal and
accommodation elsewhere while remedial works are carried out. Each needs to be
considered both in the light of the principle underlying the primary measure of
damage and by reference to authority.
Damages for
discomfort and inconvenience pending and during repair would plainly be
recoverable if the cost of repairs were the primary measure of damages. They
would be assessed by reference to a period expiring when the repairs have been
or will be carried out or (if earlier) ought reasonably to have been carried
out. That cannot be the basis on which (if at all) damages for distress are
recoverable in addition to what I have called excess cost. The question must in
principle be whether this element has been taken into account in the valuation
evidence which is the basis for the court’s finding as to the price which a
properly advised purchaser would have paid. That, in my view, was the basis
upon which an award under this head was made in Perry v Sidney Phillips
& Son itself, as Oliver LJ indicates at p 1305A. It also seems to have
been the basis upon which it was disallowed in a case at first instance upon
which Miss Allan relied, Walker v Giffen Couch & Archer
[1988] EGCS 64, so far as the very brief case summary available reveals,
although it does not appear that Perry v Sidney Phillips & Son
was cited. In my view, I am bound by the authority of Perry v Sidney
Phillips & Son to hold that a separate sum is recoverable under this
head, at least if there is no evidence upon which it can be taken into account
in the sum awarded under the primary head and provided that it is not assessed
on a basis
that it is a ‘once for all’ award, rather than one at a weekly or monthly rate
over a period.
The cost of
accommodation during repairs is a different matter. It seems to me that in
principle it is consistent only with a claim of a different kind, in which a
plaintiff is entitled to obtain, or not to be deprived of, a sound building and
where the cost of repair is accordingly recoverable as the primary head of
damages. In so far as the prospective cost of repair at the date of purchase is
relevant, not as the measure of the damages itself but as material evidence in
assessing the amount of excess cost, then the likely need for and probable cost
of vacating the premises during repair can readily be taken into account, with
the repairs the costs themselves, in arriving at the price which a properly
advised purchaser would have paid, and in that event such an item plainly need
not and should not be awarded separately, because that would involve
duplication.
No such
additional head of damages is envisaged in Perry v Sidney Phillips
& Son and I am not aware of any decision binding upon me in which it
has been awarded. Mr Corrie relied upon two decisions at first instance. In Hood
v Shaw (1960) 176 EG 1291 Paull J described the primary measure of
damages as ‘the difference between the value of the house you get and the value
of the house you have a right to expect’ (p 1292). That seems to envisage an
entitlement on the part of the plaintiff to the house he had ‘a right to
expect’, which would of course justify the award of cost of repair and, if appropriate,
cost of accommodation but would be inconsistent with Perry v Sidney
Phillips & Son. That may have coloured Paull J’s approach, although
it is right to say that he did not in fact award the cost of repair directly
but used it as a factor in assessing the ‘depreciation of value’. He then
allowed the cost of accommodation during repair in addition. As to that
decision there seems to me to be three further considerations to bear in mind.
The first is that it was decided before the basis of the primary head of
damages had been authoritatively stated and explained in Perry v Sidney
Phillips & Son. The second is that Paull J was influenced in reaching
his decision by an obiter dictum of Romer LJ in Philips v Ward
[1956] 1 All ER 874 as to the recoverability of the removal and other costs
thrown away by a plaintiff who resells the defective property, which seems to
me to be an altogether different issue. The third is that he manifestly had not
taken this element into account in arriving at his award for ‘depreciation of
value’, so that there was no element of duplication. For these reasons, with
great respect to Paull J, I do not feel impelled by that decision to depart
from the conclusion which seems in principle to be indicated.
Mr Corrie’s
other authority was Treml v Ernest W Gibson & Partners (1984)
272 EG 68, [1984] 2 EGLR 162, but there the parties had agreed that the
plaintiff was entitled to the cost of accommodation during repairs, so no
decision on that point was called for or reached.
I therefore
conclude that no separate award of damages for the cost of accommodation during
repair is appropriate in cases of this kind, alternatively that if such an
award is ever appropriate it is not so when the likely need for and probable
cost of vacating the premises during repair, as foreseeable by a purchaser
buying at the relevant date with knowledge of the defects, has been taken into
account in assessing what price he would have been prepared to pay.
I therefore
turn first to the valuation evidence. There was a sharp divergence of opinion
between Mr K P Thompson [FRICS], the expert witness for the plaintiffs, and Mr
M J Timberlake, [ARICS], the corresponding witness for the defendants, as to
the types of prospective purchasers who would have been in the market for such
a property, with knowledge of its defects, in 1985 or who, if they made an
initial offer without such knowledge, would remain interested after obtaining
it. Mr Thompson considered that there would have been no private purchasers and
that the only sale which could be envisaged was one to a small
builder/developer, who would incorporate the necessary repair with works of
modernisation and improvement with a view to resale at a profit. Mr Timberlake
considered that private purchasers would have been in the market. They agreed
that most private purchasers require substantial mortgage advances and the
difference between them on this issue turned essentially upon whether
mortgagees and, in particular, building societies would have been prepared to
lend to a purchaser, with no more onerous condition than a retention linked to
the expected cost of remedial work, pending its completion, as Mr Timberlake
believed, or whether they would have been wholly unprepared to lend or (which
would in practice come to much the same thing) would have required a 100%
retention until the remedial work was completed, as was Mr Thompson’s view.
On this issue
I find the evidence of Mr Timberlake the more convincing. Although Mr
Thompson’s report is expressed in terms of the attitude of lending,
institutions it became clear at the outset of his cross-examination that he
disavowed any knowledge of the factors influencing building societies, the
principal such institutions, other than the recommendations of the surveyors
involved and was, in essence, speaking only of the advice which he, as such a
surveyor, would have given. He agreed with Mr Timberlake, however, that at that
time there was a great deal of mortgage money available. Mr Timberlake, on the
other hand, said in effect that he and other surveyors who carried out surveys
regularly for a number of major building societies did not operate in isolation
but received regular guidance from the senior staff surveyors of the societies
as to matters of policy and the attitude of the society concerned to situations
of common occurrence. He said that, although there had been a time when
building societies had had virtually a monopoly and had tended to be choosy, a
different attitude had prevailed from about the late 1970s or early 1980s.
There was much more competition from other lending institutions and the
guidance to him and to other such surveyors had been not to prevent a purchase
from proceeding when there were remedial defects but to deal with such defects
by recommending retentions to cover the expected cost of the works. The
attitude of lenders generally was not to be concerned with defects provided
that they could be repaired.
It was
submitted on behalf of the plaintiffs that I should prefer Mr Thompson to Mr
Timberlake because Mr Thompson’s office is at Maidenhead, in the close vicinity
of the property, whereas Mr Timberlake is based some 12 miles away and has
little recent experience in the immediate area. The present issue, however,
does not in my view much depend, if at all, upon such narrow geographical
delimitations, and I find that mortgage advances would have been available
subject to a retention of the estimated cost of remedial works. I also accept
Mr Timberlake’s evidence that remedial work of this kind would be paid for upon
completion and the retention money released within a matter of days of payment,
so that a bridging loan would not be difficult or expensive.
Given the
availability of a mortgage Mr Thompson and Mr Timberlake were agreed that in
1985 there was a balanced but buoyant market, with plenty of purchasers. It was
submitted on behalf of the plaintiffs, however, that even in that situation,
and with mortgage money available, private purchasers would not have been
prepared to proceed, and reliance was placed in that regard upon the fact that
on August 3 1988 the plaintiffs offered the house for sale through Mr
Thompson’s firm and upon Mr Bigg’s evidence that when the defects were
disclosed to the two most seriously interested inquirers they did not proceed
further.
The
significance of that evidence, which I accept, is affected by the realism of
the asking price, the then state of the market, and how the defects were then
disclosed. The price asked was £149,950 and was fixed by the agents with
knowledge of the defects and Mr Bigg says that one or both of the prospective
purchasers referred to the house as ‘underpriced’ (which must have meant
underpriced if in sound condition). On the other hand, Mr Thompson’s own
current valuation is £85,000 and he considers that the market has fallen 25%
since 1988, which would give a level of £113,300 then; he regards £149,950 as
being the value in 1988 in sound condition, not with its defects. Mr Timberlake
thought the asking price should have been £130,000/£135,500. As to the state of
the market, it is common ground that there was a boom in 1988 until at least
the end of July, when multiple mortgage relief for joint purchasers was
abolished. Mr Timberlake says that there was a significant reduction in the
flow of purchasers as July 31 approached, and then it was ‘as if a tap had been
turned off’, and a significant amount of property came back on the market.
Activity fell off immediately, although prices held up for some nine months.
There were a lot of collapsed ‘chains’. Mr Thompson, on the other hand,
considered that the market was not weakening in August 1988; that did not
happen until September. As to how the defects were disclosed, that was done by
Mr Bigg himself; I do not know in precisely what terms, but his advice from Mr Mursell
at that time was that unsightly external buttresses were required to deal with
the defect.
Of those
factors, the evidence as to the realism of the price is confused and does not
enable any firm conclusions to be drawn as to its effect on purchasers. Nor am
I prepared to find that the manner in
Miss Allan suggested. As to the state of the market, however, I accept Mr
Timberlake’s evidence in preference to that of Mr Thompson, and in my view that
sufficiently explains the failure to sell in August 1988, which accordingly
should not displace the conclusion to which the evidence as to the position in
1985 would otherwise lead.
I therefore
find that in 1985 there would have been private purchasers who would have been
willing, at the appropriate price, to proceed with the purchase of the
property, notwithstanding knowledge of its defects. It is common ground that if
there were such purchasers they would obtain the advice of their surveyors as
to the probable cost of remedial work, probably after consulting a structural
engineer as to the nature of the work required, and would endeavour to
negotiate a reduction in the purchase price on the basis of that information.
The advice as to cost would be in general terms rather than on the basis of a
detailed specification, priced item by item. It is, however, agreed that the
specification before me represents a proper scheme of the kind which would have
been contemplated by a purchaser’s advisers. Such a purchaser would also be
advised as to the value of the property after repair. As to that, there is
agreement that the value of the house in 1985 had it been in the condition
described by the defendants was £56,250, the price actually paid, but
disagreement as to whether some discount must be allowed off that sum in order
to give the value after the agreed remedial work was done. There is also
disagreement as to the probable cost of the remedial work, as to whether the
occupiers should be assumed to remain in residence while it was done, and as to
whether a purchaser would have been able to obtain a reduction in price exactly
matching his prospective loss and expense, or a larger one, or a smaller.
Taking the
areas of dispute in order, there was first a great deal of evidence and
argument about the alleged ‘blight’ on houses which have been the subject of
structural repair. In my view, there are two distinct questions, although they
were frequently confused. The first is whether a future purchaser would obtain
knowledge of the structural history before entering into a contract, whether by
a survey report, the vendor’s replies to inquiries, or otherwise. I do not
think it was seriously disputed that he would, and I find that that is so. The
second question is whether the appearance of the building, and especially the
exterior, would at first sight (and without any knowledge of the history) alarm
such a purchaser or put him off by giving the impression that something was
substantially wrong. This was in dispute, the difference centring on the
visibility or otherwise of the patches of new rendering over the wall-plates
held by the outer ends of the new ties. In my view, the likelihood is that the
first purchaser before reselling would paint or otherwise treat the rendering,
after which the work would not be visible to a casual inspection by a lay
observer from ground level. Nor would such an inspection disclose the slight
deviations from the vertical in the front and rear walls. I conclude that all
these matters would have only a marginally depressing effect on the value of
the house after repair and I would assess the amount of that effect at 1985
prices at £1,250, bringing the value of the repaired house down to £55,000.
The second
dispute was as to the probable cost of repair, and it is convenient to deal
with that in conjunction with the third, as to the need for and cost of
accommodation for the purchaser and his family during the works.
Both Mr
Mursell, for the plaintiffs, and Mr J D Wood [MIAS], for the defendants, had
costed the agreed specification, item by item. There were naturally differences
between them of varying magnitudes as to particular items, and in both
directions, but I am satisfied that I need not and should not go into details
of this kind, because in the event it became clear that substantially the whole
of the net difference was accounted for by one factor. Mr Mursell had taken
labour rates, on the basis that they were appropriate for work in an empty,
unfurnished building, and then applied an ‘uplift’ of 40% to reflect the fact
that this house would still be furnished and would be visited by the occupiers,
although they would not on his assumptions be living there. Mr Wood applied no
such ‘uplift’, although his assumption was that the house would be not just
furnished but occupied. At first he said that his labour rates, which were
based on local contractors’ day-work rates, allowed for occupation, but taking
his evidence as a whole I am satisfied that no such element was included.
If Mr
Mursell’s prices at January 1990 are adjusted to eliminate his 40% uplift of
labour costs, they represent a basic cost of £4,216 for labour and £1,598 for
other items, while Mr Wood has £4,018 for labour and £1,524 for other items.
(For this purpose I take labour to be 72 1/2% of the total cost before
‘uplift’, which, within a close margin of error, accords with the evidence of
both experts.) Mr Wood did not allow for
the cost of light, heat and power, so I accept Mr Mursell’s figure of £1,598
for the non-labour costs. As to labour, the difference between them is not
great and we are dealing not with the actual cost of repairs but with an
approximate figure relevant only as the background to the assumed negotiation
of a price, so it is sufficient to take the mean of £4,117.
The question
then is whether to add any, and if so what, ‘uplift’ to the labour costs.
Taking first the assumption that the house is furnished but not occupied, I am
satisfied that Mr Mursell’s 40% is much too high. There are already specific
items for dealing with furniture and carpets in the rooms in which work is
actually carried on, although not for removing furniture to other rooms, as
would in some cases be required. The additional work occasioned by that and by
protecting or moving furniture, carpets and curtains situated elsewhere would
in my view be modest. Mr Wood, when pressed to give an answer ‘off the cuff’,
said 20% at most, and I consider that 15% would be the appropriate figure. That
would increase labour costs to £4,736 and the total to £6,334. Neither expert
had allowed for contingencies, but both agreed that 5% would be appropriate,
and that brings the total up to £6,650. There is an agreed factor of 101/140 to
translate to the prices which would have been contemplated at the date of
purchase, giving £4,798, to which must be added 12 1/2% professional fees and
15% VAT on both building costs and fees, giving a total of £6,207. Since this
basis assumes that the purchaser and his family are not in occupation he would
have to add the cost of accommodation elsewhere to estimate his total costs.
That accommodation might take various forms, and the purchaser in question
might have a large or small family, but the only evidence before me was that
relating to the cost of hotel accommodation for the present plaintiffs, which
was not seriously challenged and would at current prices, discounted by the
same factor for inflation, have been £2,346. Added to the building costs of
£6,207, that gives a total of £8,553.
Second, taking
the assumption that the house remains occupied, Mr Mursell and Mr Wood agreed
that the standard work on the subject recommends an uplift of 50% to 100% in
labour costs in such circumstances. Relevant factors in deciding the
appropriate point within that bracket are the proportion of the house needed by
the occupants, the proportion affected by the works, the extent to which the
two overlap and the extent to which work can be done from the outside. Taking
these factors into account I consider that the appropriate uplift here would be
75%. That increases basic labour cost to £7,205 and the total before
contingencies to £8,803 or with contingencies to £9,243. Reduced for inflation,
that gives £6,668, and with fees and VAT £8,627. In these circumstances I do
not consider that it is either necessary or appropriate to decide whether a
purchaser would or would not in fact have remained in occupation during the
work. It is not necessary because the net difference in total cost is so small.
It is not appropriate because I am not awarding damages based on the cost of
repair but simply considering what reduction of price a purchaser would have
been likely to achieve. The necessary and sufficient finding for that purpose
is one as to the total costs which he would contemplate, which I put at £8,600.
With the expected reduction of £1,250 in the value of the repaired house, that
gives a total of £9,850.
There remains
the issue of how that would affect the price actually paid for the defective
house. Mr Timberlake considered that a vendor would not be prepared to concede
the full cost of repair, and on his assumed costs of £6,500 assessed the likely
reduction at £2,750 or 42.3%, which on £9,850 would give £4,167. In support of
that, Miss Allan relied heavily on the evidence that Mr Bigg obtained a
reduction of only £950 despite being advised by the defendants of the need for
roof works to a cost of £1,500 to £2,000. I am unimpressed by that analogy for
a number of reasons. The work was not immediately necessary, the price quoted was
‘top price’ for complete reroofing, and the defect was of the kind which any
purchaser would have expected in a house of that age, even before obtaining a
survey. The vendor, or rather her son, who negotiated for her, no doubt
regarded it as something of a ‘try-on’, and indeed the only surprise is that Mr
Bigg achieved the measure of success which he did.
The situation
which would have obtained had the structural defect
there would have been private purchasers in the market the vendor would
nevertheless have been negotiating in circumstances in which the discovery of
the defect would have been as unpleasant a surprise to her as to the purchaser,
and with some real apprehension that the sale might easily go off altogether. I
consider that in such circumstances the reduction in price would be at least
equal to the anticipated costs and fall in residual value, and probably rather
more. As Paull J said in Hood v Shaw (supra):
I think by
and large probably the value has dropped by at least the cost of the work,
probably a bit more, on the ground that people do not like having to spend
money on doing a major operation to a house and not knowing what they may find
when they do that major operation.
Taking those
considerations into account I assess the likely reduction in price at £11,000,
and that is therefore the amount of the overpayment flowing from the
defendants’ negligence and the damages recoverable under that head.
As to damages
for anxiety, distress and inconvenience, there was a great deal of evidence
from Mr and Mrs Bigg on this score, principally in their proofs of evidence. If
I simply say, as I do, that I accept it, without reciting it in detail, that
does not in any way imply any lack of understanding with or sympathy for the
situation in which they found themselves. I have not taken this aspect into
account in assessing the overpayment of price, nor was there any evidence on
which I could have done so. I have been referred to and assisted by the cases
of Wilson v Baxter Payne & Lepper (1985) 273 EG 406* and Roberts
v J Hampson & Co [1989] 2 All ER 504.† Applying the principles as to this head of
damage arrived at earlier in this judgment I assess the award under it at
£1,600.
*Editor’s
note: Also reported at [1985] 1 EGLR 141.
† Editor’s
note: Also reported at [1988] 2 EGLR 181.
The plaintiffs
concede that the defendants are entitled to set off against the plaintiffs’
damages the sum of £218.50 counterclaimed for fees.
That leaves
the question of interest. As to the damages for anxiety, distress and
inconvenience, there is no dispute that the appropriate rate is 2% from the
date of issue of the writ, December 22 1988. That amounts to £32 per annum or
£36.56 to date.
On the award
for excess price Mr Corrie argues for a rate of 15%, or failing that for
short-term investment rate. Miss Allan says that even the latter is too high
and the figure should be 11 1/2%. She was also disposed to suggest that it
should not run from the whole period since the date of completion, May 14 1985,
but I cannot see any ground for any such curtailment; that was when the excess
price was paid and the plaintiffs have been out of their money ever since. As
to rate, there seems to me to be no good reason why the plaintiffs should
receive a lower rate before judgment than after, and the judgment rate is, and
has since before May 14 1985 been, 15%. I therefore take that rate, which
should also apply to the sum due on the counterclaim, to which precisely the
same considerations as to period and amount apply. That is most simply dealt
with by deducting £218.50 from £11,000 and calculating interest at 15% on the
balance of £10,781.50, which is £1,617.22 1/2 per annum or £7,681.82 to date.
There will
therefore be judgment for the plaintiffs for a total of £12,381.50 damages and
£7,718.38 interest (£20,099.88).
