Building society valuation — Defect — House sold at auction after repossession — Whether “head and shoulders” inspection of roof space would have revealed defect — Whether defect substantial — Court of Appeal upholding liability but allowing appeal in part on damages
The plaintiff, E, wished to purchase 40 Armytage Road, Heston, Middlesex, in 1986. The building society obtained a valuation report from the first defendant who was an employee of a firm of surveyors. E paid for the report which stated that the building was of non-traditional construction of pre-cast concrete and stated that there was “no evidence of any serious defect in the examined areas of the premises … modernised and improved to a good standard throughout”. He found the price of £56,000 reflected the premises’ present condition. E bought the house on reliance of the building society valuation without a structural survey. However, the surveyor had failed to notice that one of two large concrete beams (the purlins), which spanned between the side walls was not centrally placed, so there was a 40mm gap on one side. That defect came to light when E tried to sell the house for £79,000 and as a result that sale fell through. Thereafter, E and his family were evicted and the building society repossessed the property. It failed to be marketed and was eventually sold by auction in 1992 for £29,000. E brought proceedings against the surveyor and the firm for which he worked. At first instance, the official referee found the firm liable in negligence and awarded damages of £36,000 representing the difference between £56,000 and a valuation, by an expert at the trial, of the house at £20,000. He also awarded damages of £6,000 for worry and distress. The surveyors appealed.
Held The quantum of damages to be reduced; liability on negligence affirmed.
1. It was agreed that if the surveyor was liable, all the members of the firm, including former partners, were also liable.
2. The judge had rejected the defence that a reasonably competent surveyor looking into the roof space when making a valuation survey could not have been expected to see the gap of 40mm. The judge had made his own “head and shoulders” inspection of the property and concluded that any surveyor ought to have seen, noted and reported the gap at the end of the purlin. That conclusion was manifestly one with which the appeal court could not interfere.
3. The defendants submitted that the judge could only properly have found that if the surveyor had reported the gap at the end of the purlin, E would still have gone ahead with the purchase, relying on the fact that the judge did not make a finding that the gap amounted a “serious defect”.
4. That had been a difficult question on which the court’s mind had fluctuated during the argument. Although no express finding had been made that the gap at the end of the purlin amounted to a serious defect and although the house had stood there for 30 years or so without appearing to be in any way unsafe; the judge did have before him evidence that the imbalance in the positioning of the purlin was dangerous and he was entitled to think that if a surveyor had stated that in evidence at the trial in 1993, then another surveyor might well have said it in 1986.
5. On damages, it was agreed that E was entitled to the difference between the value of the house in 1986, in the condition represented by the surveyor’s report, and its actual value. The only hard evidence before the judge was the auction sum of £29,000, which was clearly preferable to an acceptance of a figure of £20,000; damages would be reduced accordingly. Damages for inconvenience and distress were to be reduced to £4,000.
John Greenbourne (instructed by Cameron Markby Hewitt) appeared for the surveyors; Brian Leech (instructed by Burch Phillips & Co, of West Drayton) appeared for E.
