Surveyors failing to notice structural damage — Purchase of long lease — Purchasers discovering structural damage — Freeholders liable for structural repairs under lease — Freeholders repairing and paying for damage — Plaintiff issuing proceedings against surveyors for negligence — Appeal against judge’s award of damages dismissed
The plaintiffs were prospective purchasers of a maisonette on the third and fourth floors of a five-storey terrace house which had been converted by property developers into four dwellings. The developer converted the property after consulting constructional engineers. The plaintiffs instructed the first defendant to carry out a full structural survey of the property, which was undertaken by the second defendant, a surveyor. The purchase of the long lease was completed in September 1985. The leases of each of the four dwellings in the house contained a covenant that the developers were responsible for structural repairs. In 1988 it was discovered that the maisonette suffered from structural defects resulting from the conversion which had existed at the time of the survey and which had not been in the surveyor’s report. After two years of negotiations, the developers carried out and paid for the necessary remedial repairs. The plaintiffs issued proceedings against the defendants for negligence.
The judge found for the plaintiffs and assessed the damages as the difference between the value of the property without the defects and its value with the defects at the date of the purchase. The defendants appealed against the award of damages only, contending that it had been wrong to calculate the damages as the difference between the price of the property in its defective condition and the price at the date of purchase, on the ground that the defect had been discovered in 1985 and, had it then been brought to the attention of the developers, they would have remedied it prior to sale. Accordingly, there would have been no diminution of value and damages should have been nominal. The defendants further contended that in any event the plaintiffs had avoided their loss by reason of the repairs undertaken by the developers.
Held The appeal was dismissed.
1. In assessing the market price of the property in its defective condition, a hypothetical sale of the property in its defective condition was assumed to have taken place. For the purposes of that assessment the willing vendor was not the developer but a hypothetical vendor and therefore it was not correct to explore the surrounding circumstances in order to ascertain the valuation figure. Accordingly, it was not appropriate to take into account the defendants’ claim that the defects would have been remedied: see Philips v Ward [1956] 1 WLR 471.
2. Having regard to the intervening events and the long interval of time between the discovery of the defects, the repairs executed in 1990 were not part of a continuous transaction of which the purchase of the lease as a result of the surveyor’s negligence was the inception. Furthermore the repairs, undertaken at the plaintiffs’ insistence, were res inter alios acta and therefore collateral to the surveyor’s negligence. Therefore the defendants were liable for the damages as awarded.
3. Per Gibson LJ dissenting: Although the general rule was that the measure of damages was the price paid less the market value of the property at the date of the breach it did not follow that the diminution of the loss suffered could not be taken into account. The plaintiffs had taken steps to eliminate their loss by procuring the remedying by the developer of the defect that had eliminated their loss and could not be allowed to obtain double recovery by an award of damages against the defendants: see British Westinghouse Co v Underground Electric Railways [1912] AC 673.
Adrian Brunner QC and James Palmer (instructed by Lloyd Cooper) appeared for the plaintiffs; Edwin Johnson (instructed by Stephenson Harwood) appeared for the defendants.
