Report on timber rot, including estimate for repairs, sought by vendor of property from timber preservation firm–‘If estimate accepted, job done and paid for, otherwise firm got nothing’–Work ordered by purchaser, with vendor’s agreement–Firm paid by purchaser, and purchaser’s name written on 20-year guarantee–Firm held to owe purchaser a duty of care, but not, on the facts, to have been in breach of it–Observations on measure of damages in such cases
This was a
claim by Mr Michael Alan Bourne and his wife, Mrs Sandra Joyce Bourne, of 11
Durham Road, Lower Edmonton, London N9, against McEvoy Timber Preservation Ltd,
of Chadwin Road, London E13, for damages for negligence.
Mr G B W Nurse
(instructed by Seifert, Sedley & Co) appeared for the plaintiffs, and Mr
Patrick Phillips (instructed by L Bingham & Co) represented the defendants.
Giving
judgment, BRISTOW J said: In May 1970, Mr Michael Bourne, the plaintiff in the
action, who was then engaged to be married, was interested in buying no 11
Durham Road, London N9. The house was owned by a property company, London City
& Westcliff Properties Ltd (‘LC&W’); it was empty, and was in the
process of being done up–or ‘tarted up,’ as a witness put it–with a view to
sale. The price was £4,250, and Mr Bourne needed a 90 per cent mortgage, so he
got in touch with his solicitors and they started negotiations with the
Co-operative Permanent Building Society. On May 19, following a visit to the
site by the building society’s surveyor, the society wrote in these terms:
Dear Sir and
Madam,
With
reference to your recent application I have now received a report from the
society’s surveyor, and whilst the advance of £3,825 can be made, this will be
subject to a sum of £150 being retained until the following work has been
completed to the satisfaction of the society’s surveyor:
1. Remedy dampness to back addition walls.
2. Obtain specialist report on timber rot and
woodworm infestation and carry out their recommendations.
3. Provide 9 in x 6 in metal air gratings to
back walls for underfloor ventilation.
4. Re-point open joints of brickwork and back
wall parapet and chimney-back.
5. Overhaul and repair roof slating and felt
valley gutters.
6. Discharge bathroom waste pipe directly over
gulley.
No doubt you
will let me know whether you wish to proceed on this basis.
On June 3 Mr
Bourne’s solicitors communicated the contents of that letter to LC & W’s
solicitors. They proposed that LC & W should share the cost of putting
things right, which they estimated at £400-£500. Meanwhile LC & W instructed
McEvoy Timber Preservation Ltd (the defendants) and K Fearnley Ltd, both of
them companies specialising in the remedial treatment of timber affected by dry
rot or beetles, to report and estimate for the eradication of woodworm, dry
rot, etc. The defendants reported on June 11 1970, and their estimate was £128.
Fearnleys reported on June 18, their estimate was £178. If your estimate was
accepted, you got the job and were paid for the job; if not, you got nothing.
On June 24 LC & W’s solicitors wrote to Mr Bourne’s solicitors in these
terms:
Dear Sirs,
We write
further to our letter of June 8 and our recent telephone conversation and
advise that we have taken our clients’ verbal instructions. We are informed
that our clients have obtained an estimate for eradication of the woodworm with
a 20-year guarantee in the sum of £128, and it is our clients’ proposal that
you should pay this sum and our clients will carry out the other necessary
repair work.
Mr Bourne’s
solicitors communicated the effect of this letter to Mr Bourne. There is no
evidence that he was shown the defendants’ report. The defendants’ evidence was
that in the ordinary way LC & W themselves contracted with the defendants
for the work to be done, paid the bill and were given the 20-year guarantee
made out in blank in respect of the work carried out. The defendants regarded
this guarantee as attaching to the house. In this case, however, Mr Bourne,
with the agreement of LC & W, himself instructed the defendants to carry
out the necessary work. On August 4 he completed and signed the acceptance of
the estimate which had been enclosed with the report sent on June 11 to LC
& W by the defendants. Mr Bourne paid the bill, and was named as the client
on the guarantee. Until Mr Bourne instructed them to do the work, the
defendants did not know of his existence, though they knew that their
inspection and report must be in connection with a proposed sale of the house.
They knew that a building society, before lending at any rate the full amount
on mortgage, might want to be satisfied of the condition of the timbers, might
want to know there was a 20-year guarantee and might well see the report. They
did not know whether the prospective buyer would see and rely on the report or
not, though, of course, if instructed by an occupier to inspect and report,
they knew that that occupier would rely on them.
By August 19
the work was done and the guarantee was given. In early September the building
society’s surveyor, having had a sight of the guarantee, released the £150
retention money. The sale to Mr Bourne was completed and he went into
occupation. In July 1971 the lavatory cistern in the bathroom in the back
addition on the first floor fell from the wall. The cistern bracket screws
pulled away from the wall because the wooden pad in which they had been fixed
was in an advanced state of dry rot. The lead supply pipe to the cistern was
bent, the ball valve stuck open and water under full mains pressure came into
the house until Mr Somers, a local emergency service plumber who was called in,
was able to retrieve the situation. Mr Somers at once
Bourne called in Mr Somers’ old friend Mr Smith, of Timber Care Ltd, who are in
the same line of business as the defendants. Mr Bourne also got in touch with
the defendants and asked them if they regarded themselves as responsible and
would put things right under the guarantee. Mr Smith did such opening up as he thought
necessary, and reported on August 31 1971. He found dry rot in the flat roof
above the bathroom, the ceiling joists, the lintel box frames, the
skirtingboards and the flooring timbers. The brickwork of the flank and
partition walls was infected, and so were the rear wall and attached timbers of
the first-floor centre room on which the back addition abuts.
The defendants
also inspected after Mr Smith, taking advantage of the opening up which he had
done. The only real difference between their report of September 3 and Mr
Smith’s report was that they did not find that the bathroom and middle room
flooring had been attacked, though conditions were such that they thought an
attack was likely. From the condition of the wall where the cistern had been,
and the fact that a replacement cistern had by then been installed, they
concluded that it was a leaky cistern which had been the cause of the outbreak.
Neither they, Mr Smith nor Mr Somers discovered a further outbreak of dry rot
at the other end of the bathroom and over the passage into the bathroom where
there is a trap door to the flat roof, or an extensive area of wet rot over the
bedroom beyond the bathroom in the back addition. These did not come to light
until Mr Somers was stripping the roof of the back addition in the process of
dealing with the first outbreak. The cost of putting right the first outbreak
is agreed to have been £455.67. The additional cost of making good attributable
to the further dry rot outbreak was £248.81. No claim is made on Mr Bourne’s
behalf in respect of the cost involved in the wet rot trouble, approximately
£150. In this action, Mr Bourne claims that in making their inspection and
report dated June 11 1970, on the instructions of LC & W, the defendants
owed a duty of care to him, and that if they had performed it, they would have
found the dry rot which was found in 1971. He claims the £704.48 cost of making
good the dry rot trouble, plus unquantified and unparticularised general damage
for the disturbance and inconvenience caused by the remedial work. The
defendants say that in the circumstances of this case they owed no duty to Mr
Bourne: that if they did owe a duty to him, they performed it, in that they
made a careful examination of the house and did not find the dry rot, because
there were no visible signs of it then, or indeed until the cistern pulled away
from the wall, and there were no suspicious circumstances which could have led
a careful specialist inspector to do more than make a visual examination.
For Mr Bourne,
Mr Nurse argued that he was the defendants’ ‘neighbour’ in the sense defined by
Lord Atkin in Donoghue v Stevenson [1932] AC 562. He was a person
so closely and directly affected by their act or omission, that they ought to
have had him in contemplation as being so affected when they were directing
their minds to their inspection or report. Mr Nurse relied primarily on Dutton
v Bognor Regis Urban District Council [1972] 1 QB 373. There the Court
of Appeal unanimously decided that the council was liable to the buyer of a
house built under their building by-laws made under the Public Health Act 1936
for the negligence of their surveyor in approving the foundations, which had in
fact been built on the site of an old rubbish tip. As appears, for example,
from the judgment of the Master of the Rolls at pp 391-2, and of Sachs LJ at p
406, the ratio decidendi was based upon the control over building work
entrusted by Parliament to the local authority, which the court held carried
with it a duty of care to subsequent purchasers and occupiers of the house, the
very people whom Parliament intended to protect. Accordingly the decision in
that case, and the review of the law geared to the question in issue in that
case, whether there was a duty situation in those circumstances, is of little
help on the question whether there is a duty situation between the plaintiffs
and defendants in the circumstances of this case. Nor do I get much help from Clayton
v Woodman (Builders) Ltd [1962] 2 QB 533, also relied on by Mr Nurse.
There an architect, who knew that the workmen would act on what he said, told a
workman to cut a chase in a gable when the architect should have known it was
unsafe for the man to do so without previously shoring it. The architect was
held to owe a duty of care to the workman. The architect and workman were in
direct, though not contractual, contact, and the duty situation is easy to see.
On behalf of
the defendants, Mr Phillips submits that the guidelines by which you can judge
whether a ‘duty situation’ exists for people in the position of the defendants
were really set in the last century by two cases which were considered in Hedley
Byrne v Heller & Partners Ltd [1964] AC 465. In Le Lievre
v Gould [1893] 1 QB 491, mortgagees of a builder lent him money on the
faith of certificates given by a surveyor employed by the builder and not in
contractual relations with the mortgagees. The Court of Appeal held that the
surveyor owed no duy to the mortgagees to exercise care in giving his
certificates. In Hedley Byrne’s case the House of Lords held that the
basis of the decision in Le Lievre’s case, that there was no contract
between the surveyor and the mortgagee, was wrong, but the decision itself
might well be right, because the surveyor did not know anything about the
mortgagees or the terms of the mortgage and his certificates were shown to the
mortgagees without his authority (see Lord Reid at p 488, Lord Devlin at p 519
and Lord Pearce at p 535). In Cann v Willson (1888) 39 Ch D 39,
valuers instructed by an intending mortgagor sent their valuation direct to the
mortgagee’s solicitors and the mortgagee acted on it, lent on mortgage and
suffered loss (when the mortgagor defaulted) because the valuation was
careless. Chitty J held that the valuer owed a duty to the mortgagee, and the
House of Lords, in Hedley Byrne’s case, decided that he had been right.
In Hedley Byrne’s case itself, it is again easy to see the duty
situation between the plaintiffs and the merchant bankers who were asked for
the reference. They knew of the plaintiff, they knew what he wanted the
reference for, and they knew that it was likely that the plaintiff would act
upon it.
Applying the
principle illustrated by the authorities to the facts of this case, in my
judgment I have to test whether there was sufficient proximity between the
plaintiff and the defendants to give rise to a duty situation by asking myself
this question: at the time the defendants made their inspection and reported to
LC & W, their principals, did they know, or ought they to have known, that
the purchaser of the house might well be affected in the decisions which he
took by the contents of their report? In
my judgment the answer to that question on the evidence in this case must be
‘yes.’ The defendants knew the house was
being ‘tarted up’ for sale. The defendants knew their report might go to the
mortgagees. The fact that it might go to mortgagees meant that their findings
must affect the value people would put on the house. What was the right value
to put upon the house must affect LC & W, the sellers, the mortgagees (if
any), and most probably the third person concerned in the sale transaction, the
buyer. The defendants regarded the buyer as the beneficiary of their work, if
they got the job LC & W would fill in the buyer’s name on the 20-year
guarantee of their work, and the defendants would honour the guarantee in the
hands of the occupiers from time to time of the house. In fact, before the sale
contract and mortgage negotiations were concluded on July 30, Mr Bourne knew though
he had not seen the report, that as a result of the specialist examination to
report on timber rot and wood-
building society conditions for the release of the last £150 of the loan.
Mr Bourne also
claims that the defendants were obliged by the terms of their 20-year guarantee
to make good the effect of any dry rot which ought as a result of a careful
survey to have been disclosed in the survey report. Mr Nurse did not argue this
head of the claim, but made it clear that he intends to do so on appeal, if so
advised. It is enough to say that, in my judgment, on its true construction the
guarantee extends only to subsequent trouble in timber treated as a result of
the survey and not to omissions in the survey itself.
The duty of
care being in my judgment established, was it carried out, or was it
broken? The 1970 survey was carried out
by Mr Peter McEvoy, who gave evidence about it. He had really no recollection
of that survey, other than what appeared in his notes, transcribed in his
report. He said that in houses of this age and type the trouble is usually with
woodworm. Next comes wet rot, of which no complaint is made in this case. In
only two per cent of the inspections he has carried out has he found dry rot.
He did not note any damp places outside leading him to suspect trouble inside.
He did not note that the blank wall of the back addition was made of place
brick, which is not impervious to wet, and had no damp course at the top to
stop water percolating down inside. He did not note that the flat roof of the
back addition slopes in towards the main building, so involving a risk of damp
getting into the main wall and the flat roof timbers if there was any defect in
the water-proofing of the flat roof to the main wall joint, lying as it does
beneath the pitched roof gutter level. He did not note the trap door in the
roof of the back addition, always a danger point to the ingress of water. He
made no check by probing the timbers which would have been at risk if damp had
come in at the points which I have mentioned. He noted certain symptoms showing
where conditions needed checking, and checked them. In no case did he find
signs of dry rot or of a situation so conducive to dry rot as to be worth
noting in his report. He says, and I accept, that there were no visible
indications of the attack of dry rot which, in view of the situation in 1971,
he accepts may well have already started by 1970. In short, Mr Peter McEvoy
detected no signs of dry rot in 1970 and remains convinced that what was found
in 1971 was not evident at his inspection in 1970.
Dr W P K
Findlay, the author of several books and pamphlets on dry rot and an expert in
this field, inspected the house in October 1974. Having regard to the extent of
the outbreak found in 1971, he was of opinion that if Mr Peter McEvoy had
prodded the exposed bathroom window-frame woodwork in 1970 it would have
already been soft as a result of dry rot. He thought that the damp condition of
the back addition wall ought to have made a surveyor look at the joists where
they abutted on that wall, and that if he had, there would have been something
there to see. He thought that had Mr Peter McEvoy prodded the pad holding the
cistern, it would already have been soft. He himself would have tested the
window-frames by prodding as a matter of routine. Mr Smith, of Timbercare Ltd,
18 years in the business and regarded by Mr Somers as a very keen surveyor and
a reliable, trained observer, said that when he carries out a survey all he can
do is to report on his suspicions if there is any evidence which causes him to
form suspicions, for example the presence of damp in a wall, distorted timbers,
blistered paintwork and certain other visible signs. When he was called in, in
1971, what he saw behind the site of the cistern pad, and the state of that pad
itself, strongly suggested that the neighbouring timbers would be infected and
led him to do the opening up that he did. But even in 1971, there was no visible
indication of dry rot on what could be seen of the window-frame.
The problem
for those in the position of Mr Peter McEvoy or Mr Smith is formulated
succinctly in technical note no 44 of the Ministry of Technology Forest
Products Research Laboratory, written by Dr Findlay. At p 4 he says:
Since dry rot
usually starts where timber is in contact with damp brickwork it often remains
concealed from view until it has reached an advanced stage, and sometimes the
collapse of a floor board is the first sign that there is anything wrong. When
inspecting a house for dry rot, look out for any irregularity or waviness in
the surface of panelling, skirting or window linings and test the suspected
areas with a sharp tool.
There is no
evidence of any such irregularity or waviness even in 1971. There is no
evidence that when Mr Peter McEvoy and Fearnleys did their inspections in the
summer of 1970 the place brick flank wall of the back addition or the joint
between the back addition flat roof and the back wall of the house proper were
damp. Even when he opened up as far as he thought necessary in 1971, Mr Smith
did not spot the second outbreak of dry rot which was ultimately found, along
with the wet rot in the back addition roof, by Mr Somers in the process of
doing the remedial work. Neither Mr Peter McEvoy nor Fearnleys in 1970, nor Mr
Terence McEvoy nor Mr Smith in 1971, spotted the trap door outbreak of dry rot.
There was nothing to see which would have caused suspicion that it existed. It
is for the plaintiffs to satisfy me on the balance of probabilities that Mr
Peter McEvoy, when he made his inspection in the summer of 1970, did not
exercise reasonable care. On the evidence called before me, I am not satisfied
of this, and so the plaintiffs’ claim in this action fails.
It is
therefore not necessary to deal with the question of damages, but it may be
helpful to the parties if I express my conclusion on what the true measure of
damages would have been, if I had been satisfied that the defendants had been
negligent. If Mr Bourne had known that the house was infected by dry rot to a
substantial extent in the areas in which in 1971 the making good cost £704.48,
he would have had the option of going on with the purchase of the house or of
not buying it. He fairly said in evidence that he could not say what he would
have done. If he had chosen to go on, it is reasonable to assume that something
would have been knocked off the price by agreement. This is what happened in
respect of the work required by the building society surveyor other than that
called for in the defendants’ report. How much would have been knocked off must
be a matter of speculation, but the remedial work, with all its attendant
inconvenience to the plaintiffs, would have had to be done anyway. In view of this,
in my judgment, the plaintiffs have no claim in this case for general damages
for the inconvenience arising out of the remedial work, and the whole cost of
the dry rot remedial work cannot be the correct measure of damages. The
remedial work arising from the wet rot, in respect of which no claim is made,
must of course have contributed to the plaintiffs’ inconvenience. In my
judgment, what the plaintiffs would have been entitled to get by way of
compensation is the difference in value in 1970 between 11 Durham Road without
any dry rot, that is, in a condition indicated by the report calling for action
over woodworm only following upon specialist examination for woodworm and rot,
and 11 Durham Road with dry rot on a scale leading to what was found in 1971.
Authority for
this approach is to be found in the decision of the Court of Appeal in
Philips v Ward [1956] 1 All ER 874. Mr Nurse relied upon the
judgment of Sachs LJ in Dutton’s case at p 408 as authority for the
proposition that the cost of making good the defects was the proper measure of
damages, plus something for general inconvenience during repairs. Philips v
Ward was not cited to the Court of Appeal in Dutton’s case, where the
argument was primarily concerned
circumstances of the duty situation in Dutton’s case a different measure
of damages was there appropriate. In my judgment, I am bound by the decision in
Philips v Ward, and the fact that here the ‘duty situation’ arises
in the absence of contract does not affect the measure of damages. No evidence
was led of the difference in value in 1970 of 11 Durham Road with and without
dry rot, though Mr Phillips, for the defendants, said in argument that, if
liable, his clients would be content with an award of £455.67, the cost of
making good the dry rot found by Mr Smith when the cistern came away.
There will be
judgment for the defendants.
