Negligence–Structural survey–Whether chartered surveyor negligent–Assessment of damages
their purchase of 72 High Causeway, Whittlesea, Cambridgeshire, the plaintiffs
instructed the defendant firm to carry out a standard structural survey of the
property–The defendants’ conditions of engagement made reference to the
limitations of the report where parts of the property were unexposed or
inaccessible–The plaintiffs believed they could rely on the defendants’ report
without providing access to the roof voids for inspection–The defendants’
report noted that parts of the structure had fallen into disrepair but
concluded that the structure was in a reasonable condition for its age; the
report recommended certain work to be carried out–Following the plaintiffs’
purchase, the defendants’ surveyor carried out a further survey with access to
the roof void–In the event there were substantial defects in the property and
by September 1990 the plaintiffs moved out as they saw no alternative to total
demolition of the property and the purchase of another house
that ‘the structure of the property was in a reasonable condition for its age’
was not correct–The defendants’ surveyor failed to gather all the relevant
matters together in the report and draw the obvious conclusion, which was that
the house was not a good buy at any price other than the site value–There were
serious bulges in some of the walls–The defendants’ surveyor ought to have made
further examination or put suspicions as to the cause in his report and
recommended further investigation–The defendants were negligently in breach of
contract in relation to both the original report and the subsequent
investigation–By reason of the later investigation the plaintiffs were
encouraged to stay in the property and spend more money on it and their damages
were increased–There was no liability in the tort of negligence–Damages
assessed on the difference between the value of the property as it was
described in the surveyor’s report and its value as it should have been
described, namely £50,000; additional damages awarded for distress and
inconvenience arising out of the physical consequences of the defendants’
breach
The following
cases are referred to in this report.
Hill v Debenham, Tewson & Chinnocks [1958] EGD 328; (1958)
171 EG 835
Philips v Ward [1956] 1 WLR 471; [1956] 1 All ER 874, CA
Tai Hing
Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986]
AC 80; [1985] 3 WLR 317; [1985] 2 All ER 947; [1985] 2 Lloyd’s Rep 313, PC
Watts v Morrow [1991] 2 EGLR 152; [1991] 43 EG 121
This was a
claim by the plaintiffs, Neil Alexander Heatley and Patricia Margaret Heatley,
for damages against the defendant, William H Brown Ltd, arising out of a
structural survey report and advice concerning 72 High Causeway, Whittlesea,
Cambridgeshire.
Michael Parroy
QC (instructed by Shepherd Harris & Co, of Enfield) appeared for the
plaintiffs; and James Guthrie (instructed by Roythorne & Co, of Spalding)
represented the defendants.
Giving
judgment, JUDGE PETER BOWSHER QC said: The defendants are surveyors and
valuers who are sued for alleged breach of contract and negligence in and about
surveying and reporting upon a house known as 72 High Causeway, Whittlesea,
Cambridgeshire (‘the property’).
The plaintiffs
are husband and wife. On July 30 1988, they became interested in buying the
property for occupation by themselves and their three children, who were then
aged 4, 2 and 1. About six miles from Peterborough, which has good rail links
to London and York where the plaintiffs’ relations lived, the property was well
situated for the plaintiffs. Moreover, the plaintiffs were attracted by the
character of the property and by the size of the accommodation, which was much
more generous than their existing home.
The property
is L-shaped. A two-storey building (the main building) fronts on to the street
and abuts the pavement. The front of the main building faces west and the
left-hand end faces north. The main building fills the whole of the frontage to
the street, apart from a narrow passageway between the south gable wall and the
neighbouring property. From the northern end of the east face of the main
building there lies an extension whose main face is to the south, forming a
courtyard behind the main building. The rear extension is in two parts: a
two-storey part with a dormer roof (the ‘dormer extension’) and then a
single-storey part (the ‘single-storey extension’). The whole property is old
and the dormer extension is probably about 200 years old. The building is at
the front of a very long narrow site, which apparently used to form a part of a
market garden. On each of two sides of the site is a high brick wall about 100
years old. The garden contains various outhouses. The property has considerable
charm. It is in a quiet road, surrounded by a number of very attractive
properties, in a conservation area, within a short walk of Whittlesea town
centre.
The property
was advertised for sale at £89,500. It had three living rooms, five bedrooms
and a kitchen and bathroom. The only we and the kitchen and bathroom were in
the single-storey extension. There was no garage and no access to the
quarter-acre garden for a garage.
When the
plaintiffs first visited the property, they were told by the vendors, Mr and
Mrs Searle, that the roof of the dormer extension had recently been repaired:
they added that there was every possibility that the plaintiffs might obtain a
grant for reroofing this extension. It appeared from evidence at the trial that
the local authority had in fact refused to make a grant for that purpose on the
ground that the general condition of the dormer extension was such that it was
not worth spending money on the roof alone. The first plaintiff noticed that
there were no access points to the three roof spaces (above the main building,
the dormer extension and the single-storey extension) and he asked whether Mr
Searle had any objection to entry being made to allow inspection of the roof
voids. Mr Searle said that he had no objection.
Mr Searle told
the plaintiffs that the asking price was a reduction from the original price of
£95,000 because there was no central heating. The plaintiffs offered to buy for
£89,500 subject to contract and survey and subject to the plaintiffs’ being
able to get a suitable mortgage. The plaintiffs calculated that they expected
to net about £50,000 from the sale of their existing house and needed to borrow
about a further £42,000 to cover the purchase price plus fees relating
to purchase. While they could have borrowed more than that sum, in the event
they borrowed only £32,500.
On August 15
1988, Mr Ian Matthew [FRICS], a valuation surveyor, acting on behalf of the
Abbey National Building Society, inspected the property. On August 16 1988, he
reported to the building society as follows:
This old
house has been extended and altered from time to time. Amongst the many defects
we observed rising dampness, damp penetration to exterior walls and pantile
roof, weak and defective ceilings, woodworm and old electric wiring. Some
settlement has occurred in the past and although we did not observe significant
recent movement the applicants should seek the advice of a structural engineer
regarding the stability of the 4 1/2 inch brick walls. In the rear garden is a
large willow tree and roots from this are probably affecting the drains and
brick outbuildings. . . . We do not want to make a retention in view of the
margin of security. However we understand that the applicants are obtaining a
full structural survey report. In our opinion this is essential prior to
purchase and a full survey might well uncover defects not mentioned in our
brief general observations. . . . Some old houses in Whittlesea are affected by
settlement.
The pantile
roof to which Mr Matthew referred was the roof of the dormer extension. The 4
1/2-in brick walls were walls of the single-storey extension. I was reminded of
Mr Matthew’s observation that some old houses in Whittlesea are affected by
settlement, during a view on October 14 1991 when I observed that brickwork
between first- and ground-floor windows in a number of old properties showed
signs of displacement and rebuilding. When Mr Matthew gave evidence, it became
clear that by his advice that a construction engineer should be instructed he
meant that there should be a structural survey by either a building surveyor or
a structural engineer.
On behalf of
the defendants, the point was strongly and properly made that it did not occur
to Mr Matthew that this property might be worth only its site value or that the
plaintiffs should be advised not to buy, and he was aware of his potential
liability to a purchaser as well as to his clients, the building society. But
against that it was pointed out that Mr Matthew was surveying for a different
purpose than the purpose required by the plaintiffs; he was not a structural
surveyor, he advised a structural survey, he himself relied on the defendants’
structural survey, and he said that if the exposure of the building society had
been greater he would have advised against giving the loan.
Mr Matthew’s
report did not come to the attention of the plaintiffs before they contracted
to buy the property. They had instructed their own surveyor before they knew of
Mr Matthew’s recommendation that there should be a full structural survey,
although they knew that Mr Matthew had inspected the property on August 15
because the vendor told them so and they anticipated that he would advise a
structural survey.
From his
experience as a housebuyer, the first plaintiff knew that, because of the age
of the property, the building society would require a structural survey in
addition to the usual building society valuation, but I am entirely satisfied
that that was not the only or main reason why the plaintiffs obtained a
structural survey. After inquiries, the first plaintiff contacted Mr Michael E
Stanton [FRICS] of the defendant company.
Mr Stanton is
in charge of the defendants’ offices in Cambridgeshire, varying between two and
three in number. Starting as an apprenticed carpenter and joiner in the early
1960s, he later became a chartered surveyor. At the time of receiving
instructions from the plaintiffs he was an Associate and now is a Fellow of the
Royal Institution of Chartered Surveyors. From 1968 to January 1986, Mr Stanton
worked for local authorities. His work included responsibility for such things
as dangerous structure notices. From 1986 to January 1987, Mr Stanton worked
for the Property Services Agency.
On August 16
1988, the first plaintiff telephoned Mr Stanton’s office and as a result Mr
Stanton rang him back. Mr Stanton took particulars of the property and made it
plain that he would not proceed until the plaintiffs had sent to him a signed
copy of the defendants’ printed conditions together with a cheque for £667
(including VAT) for his fees. The same day, Mr Stanton sent the plaintiffs a
copy of the defendants’ ‘Conditions of engagement for a standard structural
survey’. Those conditions were typed on three and a half A4 pages. No point was
taken under section 2 of the Unfair Contract Terms Act 1977.
The
defendants’ conditions included the following terms:
1. The
purpose for which the survey is required shall be as agreed between the client
and the surveyor. The surveyor will advise the client as to his opinion of the
state of repair and condition of the property specified by the client in
accordance with the scope, assumptions and conditions of engagement relating to
the report commissioned by the client.
2. In making
the report the following assumptions will be made:
. . .
(c) That the property and its value are
unaffected by any matters which would be revealed by a local search and replies
to the usual enquiries
. . .
3. The report
will be provided for the stated purpose and for the sole use of the named
client. It will be confidential to the client and his professional advisers.
The surveyor accepts responsibility to the client alone that the report will be
prepared with the skill, care and diligence reasonably to be expected of a
Chartered Surveyor but accepts no responsibility whatsoever to any person other
than the client himself. Any such person relies on the report at his own risk.
. . .
4. It is not
practical to inspect those parts of the structure which are covered, unexposed
or inaccessible. However, within those constraints it is our policy to give as
clear a picture as possible on the overall condition of the property. Unless
prior arrangements have been made for opening up and the removal of furniture,
fitted floor coverings etc, the exceptions may include:
. . .
(b) Unexposed wall areas and inaccessible voids
including cavities.
(c) Inaccessible sub-floors, joists and covered
floor surfaces;
. . .
(h) An opinion on the condition of parts of the
property not inspected should not be construed as making an implied
representation nor statement about such parts.
5. The
paragraphs in the heading ‘purpose and scope of report’ further detail the
extent and limitations of the inspection.
PURPOSE AND
SCOPE OF REPORT
. . .
2. . . .
Inspection will, therefore exclude both the roof space if there is no readily
accessible hatch, joists and wall plate details where covered by loft
insulation and outer surfaces of the roof if they cannot readily be seen. . . .
(i) Externally, all roof areas will be inspected
as closely as practicable from ground level. . . . The interior of accessible
roof voids will be inspected in detail and inaccessible connecting voids will
be inspected to the extent practicable.
(ii) . . .
The surface of all floors not covered with fixed coverings will be inspected as
far as practicable and loose boards lifted where possible . . . Where there are
fixed coverings these will not normally be lifted but the surveyor will lift
loose areas sufficiently to identify the nature of the finish beneath.
. . .
(ix) Where repair costs are given they are for
guidance purposes only and should not be construed as a quotation nor estimate
and should be substantiated prior to purchase by proper competitive quotations
or estimates.
The first
plaintiff signed those conditions on August 17 and returned them with a cheque
for the defendants’ fees.
Also on August
17, the first plaintiff rang Mr Stanton again.
Either in their
first telephone conversation on August 16 or in their second conversation on
August 17, the first plaintiff and Mr Stanton discussed the absence of access
to the roof voids. They both agree that roof voids were discussed in terms
which made it plain to Mr Stanton that there were no existing means of access
to the roof voids. Beyond that, the parties disagreed about this conversation,
but Mr Stanton’s recollection was vague and in cross-examination consisted
mainly of a reconstruction of what he would have said. For the most part, I
prefer the account of this telephone conversation given by the first plaintiff.
When the first plaintiff raised the question of lack of access to the roof
voids, Mr Stanton said that he would not himself make any access holes, the
plaintiffs would have to arrange that through a builder. I accept from the
first plaintiff that Mr Stanton warned him that should he not proceed with the
purchase he would have to pay for the holes being made good. With this in mind,
the first plaintiff asked Mr Stanton if he could get an adequate impression of
the roof’s condition from the outside and he replied that he should be able to
do so. Mr Stanton claimed that he added that you cannot say that roof timbers
are sound or unsound as a definite statement without going into the roof void:
I do not accept that he expressed himself as clearly as that. In any event, the
plaintiff did not arrange for access to the roof voids and Mr Stanton did not
advise him before or after the inspection of the property that he should
definitely arrange for access to the roofs before purchasing the property. Mr
Stanton’s notes regarding this property begin with the words ‘Requested to
inspect roof voids’.
Not
unreasonably, the first plaintiff decided that as Mr Stanton
the plaintiffs need not incur unnecessary costs.
In his written
report, Mr Stanton wrote: ‘We strongly recommend that proper access hatches be
formed into each roof space to facilitate maintenance inspections in the roof
voids’. In cross-examination, he said that the exterior of the roof did not
lead him to advise that access should be gained to the roof voids before
purchase.
In advance of
discussing the report, I should say at this point that in the context of this
conversation it was reasonable for the plaintiffs to think that they could rely
on the report for the purpose of deciding whether to purchase without providing
access to the roof voids for inspection by Mr Stanton.
Mr Stanton
accepted that he was specifically asked at some point by the first plaintiff to
give an opinion on the price of the property and also to give some guidance as
to the repair costs of the defects he found.
It was
submitted on behalf of the defendants, having regard to the decision of the
Privy Council in Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986]
AC 80, that in view of the detailed terms of the contract there is no room for
any liability in tort and that the liability of the defendants lay in contract
only. I accept that submission.
The covering
letter sent with those conditions was addressed to ‘Mr Heatley’. It was
submitted on behalf of the defendants that the ‘named client’ referred to in
clause 3 of the conditions of engagement was Mr Heatley alone. Counsel’s
written submission contained the following:
The contract
is with the first plaintiff only. The correct analysis of the position is that
he contracted also as agent for the second plaintiff, she being, jointly with
him, purchaser of the property. In this situation she has the benefit of the
contract and is also bound by its terms. . . . The practical effect in the
present case is only that as a matter of law . . . damages are only recoverable
by the first plaintiff, although general damages may include compensation for
the additional effect on him of his wife and family’s physical inconvenience
and discomfort.
I accept that
the correct analysis of the position is that the first plaintiff contracted
also as agent for the second plaintiff, she being, jointly with him, purchaser
of the property and that she has the benefit of the contract and is also bound
by its terms: but I reject the remainder of the submission. Since the first
plaintiff contracted as agent for the second plaintiff as well as on his own
behalf, both of them are for all purposes parties to the contract and both are
entitled to damages for its breach (if any). In the circumstances of this case,
the reference to ‘the named client’ must be taken as a reference to both plaintiffs
notwithstanding that only one of them is named in the covering letter. This
finding may not have any effect on the total amount of any award of damages,
but the form of the judgment may affect their rights as between each other and
may have implications as regards the Inland Revenue and also as regards legal
aid assessments.
The duty
accepted by the defendants in condition 3 is related to ‘the stated purpose’,
which relates back to condition 1, ‘The purpose for which the survey is
required shall be as agreed between the client and the surveyor’. It is plain
from the first plaintiff’s written statement (which stood as his examination in
chief) and from the defendants’ telephone message book that the first plaintiff
asked and paid for a full structural survey and that he disclosed that the
property was 18th century. As I have already indicated, the first plaintiff
showed his concern about the roof and made it plain that he expected that in a
property of this age some repairs would be required and he wanted to have an
indication of their cost at the same time as having the information about the
structure which would be revealed by a full structural survey. While it was not
expressed concisely in a single sentence, it must have been plain to the defendants
and agreed that the purpose of the survey was that the plaintiffs should be
informed and advised whether the state of the structure was such as to justify
the expenditure of whatever was required in the way of necessary repairs and
consequently whether it was worth buying the property and at what price.
It was
submitted on behalf of the defendants that the purpose of the survey was simply
to satisfy the building society and that the plaintiffs did not themselves rely
on it. I reject that submission. It is inconsistent with the conversations
between the first plaintiff and the defendants before the inspection of the
property and it is also inconsistent with the care taken by the plaintiffs
(established in cross-examination of the first plaintiff) to read and study the
report when they received it.
Para 4(ix) of
the ‘Purpose and Scope of Report’ attached to the conditions of engagement
should be read in the light of the agreed purpose of the report. The statement
that repair costs are ‘for guidance purposes only’ must mean, in the context,
for guidance in achieving the purpose of advising whether the state of the
structure was such as to justify the expenditure of whatever was required in
the costs of necessary repairs.
Mr Stanton
inspected the property on August 18. By August 19, the first plaintiff was
already pressing for Mr Stanton’s report because he wanted to speak to the
vendor and to have the report with him when he did so. Mr Stanton told the
first plaintiff that it was his practice not to discuss his findings until the
client had his report. The report was dated August 22, but it was not ready
until August 24 1988, when it was collected by the plaintiffs, together with
one copy, from the staff in Mr Stanton’s office. Although the plaintiffs wanted
to meet Mr Stanton, he was not available when they called at his office, and
they did not in fact meet him before they signed the contract to purchase.
The plaintiffs
had persuaded themselves, or had been persuaded by the vendors, that they had
to make a decision whether or not to go ahead with the purchase on that day,
August 24. They had been told by the vendor that there were other people
interested in buying and they thought that by comparison with other properties
they had viewed this property had real character. Another consideration was
that the completion date for the sale of their existing home was September 16
1988.
The plaintiffs
read the report with care, although they were not skilled in building. The
original document was produced in evidence. That document is marked by a number
of ticks and underlinings in pencil which, on the balance of probabilities, I
find were made by the first plaintiff. The first plaintiff also identified some
brief comments, also in pencil, as having been written by him. It is plain that
the plaintiffs did indeed read the whole document with some care. The first
plaintiff said, and I accept, that the plaintiffs based their decision to go
ahead with the purchase mainly on the introduction to the report and on its
conclusion and on the budget figures for remedial works given at the conclusion
of the report.
I also accept
the evidence of the first plaintiff that after reading the report he was able
to speak to Mr Stanton on the telephone to discuss it and he was assured by Mr
Stanton that subject to the remedial works listed in the report the property
was ‘OK’. Mr Stanton did not in that conversation warn of any major structural
defects.
The
introduction and the conclusion of the report relied on by the plaintiffs were
in the following terms:
3.0 STRUCTURAL
CONDITION AND REPAIR
We confirm
that we found the property to be in a reasonable condition for its age and we
discovered no serious structural defects or other major short comings that
would lead us to advise against proceeding with the proposed acquisition as
planned. It is apparent, however, that certain parts of the structure have been
allowed to fall into disrepair over the years. Consequently, there are now
several defects and items of disrepair which have to be remedied and these
should be carefully considered and borne in mind in any prepurchase
negotiations. It is appropriate therefore to report upon the various structural
elements under specific headings as follows:
. . .
CONCLUSION
17.00 This is an attractive property with some
character set in a very convenient location. We generally found the structure
of the building to be in a reasonable condition for its age, although there are
some defects and items of disrepair requiring attention which have been
highlighted in the body of this report. We strongly recommend that the
suggested works and investigations are undertaken as the consequences of
delayed maintenance in an old property of this type are invariably more serious
than in a building of modern construction. We would suggest the following
budgets be set aside for remedial work to the various parts of the property but
would state that these may be varied when you seek quotations from contractors
depending on their workload and the extent of the work being carried out.
Damp proof
course and associated replastering works: £3,000.
Brickwork
repair; repointing; cement render north elevation: £2,500.
New electrical
installation: £1,500.
De-infestment
treatment to softwood timbers: £500.
To replace
roof and floor repair: £1,000.
Valuation–Assuming
there are no onerous restrictions which we are aware of [sic], we are of
the opinion that the current market value in its present condition would be in
the region of £84,000 for freehold with vacant possession upon completion.
Subject to
the purchaser being fully aware of the foregoing we can see no reason why the
proposed purchase should not proceed as planned. However, we would point out
that whilst our survey was as detailed as circumstances
were covered, unexposed or otherwise inaccessible and we are unable to comment
upon the condition thereof.
On August 24
1988, with the aid of Mr Stanton’s report, and in particular by reference to
the figures given for guidance as to the likely cost of remedial works
totalling £8,500, the plaintiffs persuaded Mr and Mrs Searle to reduce the
purchase price by £7,000 to £82,500 (that is, £2,000 below Mr Stanton’s
valuation) and on that basis and relying on the report given by the defendants,
the plaintiffs told Mr and Mrs Searle that they were going ahead with the
purchase.
On August 25,
the building society made an offer of a loan which the plaintiffs accepted.
That offer was conditional upon a structural survey report to be obtained by
the plaintiffs.
The plaintiffs
sent a copy of the defendants’ report to the building society but, possibly
owing to a prolonged postal strike, the building society did not receive it, so
the plaintiffs sent their only remaining copy, without taking a further copy
for themselves. The plaintiffs were then without a copy of the report until
October 8 1988 when, at their request, they received a further two copies of
the report from the defendants.
Mr Matthew was
satisfied by Mr Stanton’s report, in view of the comparatively small amount of
the loan, and the building society approved the loan.
On September
8, the contract of sale was exchanged stating September 16 as the completion
date and on September 16 1988 the plaintiffs moved into the property.
Before
entering into the contract the plaintiffs did not get any estimates to
substantiate the figures given in the defendants’ report.
Detailed
investigation of the property has since shown that much more extensive repair
work is required to the property than is detailed in the body of the report
given by the defendants, and the cost of repairs would on any footing be far
greater than the cost of repairs put forward by the defendants as guide. There
is a strong body of opinion, which is disputed by the defendants, that the
property was worth only its site value and that the only sensible thing to do
was to knock the whole property down and rebuild. I have to resolve the dispute
as to what is required by way of repair. There are even greater disputes as to
what ought to have been discovered and reported on by the defendants in 1988
within the restrictions then imposed on them and within the limitations stated
in their report.
The burden of
proof rests upon the plaintiffs to prove breach of contract on the part of the
defendants with all that means for the professional reputation of the
defendants. Did they fall below the standard to be expected of the ordinary
careful surveyor? It is not enough to
show that the defendants gave the plaintiffs wrong advice. It is not enough to
show that where there was room for two views they took the wrong view. I must
be careful not to be wise after the event: I must not look at the premises as
they now are or see what has in fact happened: rather I must put myself back in
the position which [Mr Stanton] found himself in in [1988], and judge the
matter by the evidence as to the conditions which then existed. The plaintiffs
must prove, in order to succeed, an absence or a lack of skill on the part of
the defendants: see Hill v Debenham Tewson & Chinnocks (1958)
171 EG 835 per His Honour W K Carter QC. As regards the conditions
existing at the time of the original inspection, it is not suggested that the
structure has become any worse, but some defects have become more apparent
either because of opening up of the building or because attention has been
drawn to them.
Matters
developed quickly after the plaintiffs moved into the property.
On September
23 1988, the second plaintiff’s sister and Mr Anthony Lister [ARICS] (now that
sister’s husband) called in for a short visit in the evening. Mr Lister is a
quantity surveyor. He expressed disquiet about the property and asked if he
could return to look at the property in daylight, which he did on September 26.
Mr Lister gave
evidence. Objection was rightly taken to his giving any opinion evidence (no
leave having been given for him to give expert evidence), but the evidence of
what he saw is important as contemporaneous evidence of what was there to be
seen. Mr Lister was concerned about damp and the possibility of dry rot. No
real complaint is made about this: the defendants had warned about damp and in
fact there was no dry rot. On examination of the front wall he found that many
areas of the render to the front wall were hollow. He also saw that certain
floors and walls of the dormer extension and the single-storey extension were
distorted and overloaded. He also saw a large willow tree in the garden and
queried whether it had affected the drains. The plaintiffs had already found
that the drain from the wc blocked regularly and that the drain outside the
utility room was blocked by roots, and there were also roots in the floor of
the utility room.
As a result of
the concern expressed by Mr Lister, the first plaintiff asked Mr Stanton to
visit the property again. He agreed to do so and a fee of £30 per hour was
agreed. As a result, Mr Stanton visited again on September 30 1988. This was
the first time that he met the plaintiffs.
Counsel for
the plaintiffs submitted that the defendants were at this time under a
continuing duty under the original contract. I accept that submission. Counsel
also submitted that arising out of this visit and the advice given in relation
to it the defendants were under a duty in tort. I disagree. There was plainly a
contractual agreement in relation to this visit and, in my judgment, that
agreement was impliedly subject to all the previously agreed conditions. There
was no room for any duty in tort.
Among the
requests made by the first plaintiff to Mr Stanton was a request that he should
inspect the roof voids through access holes which were made by the first
plaintiff. Mr Stanton agreed to do that and did so on his visit on September
30.
Following that
visit, Mr Stanton sent to the plaintiffs a letter dated October 5 1988. There
was some dispute over whether it was intended that this letter should be shown
to a builder to enable him to undertake work on the property. I find that the
first plaintiff did ask for the letter for that purpose and that it was intended
by the defendants to be used for that purpose, otherwise a number of dimensions
and other details would not have been included. The principal significance of
this letter is that it shows that after inspecting the roof voids and noting
that in the roof of the main building certain ceiling joists, ceiling binders,
and purlins were overspanned and overstressed, the defendants did not withdraw
any of the previous recommendations for repair and added further
recommendations for repair in the roof of the main building and of the
single-storey extension. This would have some significance in the assessment of
damages.
On November 12
1988, a Mr Trevor Storey, a carpenter and joiner, gave an estimate for doing
work to timbers in the roof. He did the work in November or December and was
paid. Mr Storey had refused to do one of the things recommended in the letter
of October 5, namely, to anchor to the new timber the triangular area of
brickwork at the top of the gable of the north gable wall. Mr Storey said that
the brickwork was visibly from the inside in such a poor state that if he
drilled into it the wall would fall down. The defendants’ response was that the
letter began with a requirement that it should be read in conjunction with the
defendants’ original report and that report contained a recommendation that
that brickwork should be taken down and rebuilt: accordingly, the plaintiffs
ought to have realised that the intention was that the wall should be rebuilt
before being tied back to the new timber. No doubt that is right but little
turns on it.
On January 17
1989, at the plaintiffs’ request, Mr Stanton visited the property again. By
then the first plaintiff had done a certain amount of work on the property
which had the effect of opening up a number of apparent defects which were
shown to Mr Stanton.
In May 1989,
Mr Manning of the district health department of the Fenland District Council
inspected the property in connection with an application for a grant for work
on the property. He sent a list of defects to the plaintiffs, but no evidence
was called to prove the defects on that list.
The plaintiffs
became so perturbed that Mr Heatley personally instructed Mr Robin Hall
[FRICS], of Snow & Astill, of Leicester, to make a further survey and
report, Mr Hall reported on August 21 1989. In that report he summarised his
conclusions as follows:
In conclusion
we would say that had we seen the property prior to your purchase we would have
strongly advised against proceeding with the purchase.
. . . we are
unable to let you have a valuation of the property as it is so far outside our
normal location of work . . .
We would
however say that we consider that it would be difficult to substantiate any
value at all other than site value as a prospective purchaser is unlikely under
any circumstances to buy the property in its present condition.
On December 1
1989, the plaintiffs’ solicitors wrote a letter before action to the
defendants. In that letter, the plaintiffs’ solicitors referred to certain
advice which had been given by some structural engineers named Travers Morgan
Two Ltd. No evidence has been called from that company and no more is known of
their involvement
local authority in March 1990. No inference can be drawn from the failure of
the plaintiffs to call evidence from that company or from another firm of
surveyors instructed on behalf of the plaintiffs.
The writ in
this action was served on the defendants on December 8 1989.
On December 18
1989, the first plaintiff went to see the local authority and was referred to
Mr Manning, the engineering services manager with responsibility for dangerous
structure enforcement procedures. According to Mr Manning’s notes, the first
plaintiff invited the initiation of the dangerous structure procedure against
himself ‘to pressurise his solicitor to get the vendor to do something’. I have
heard no evidence of any complaints addressed to the vendor. It is possible
that Mr Manning misunderstood the first plaintiff and that the first plaintiff
in fact mentioned pressure on the solicitor to get the defendants to do
something.
Mr Manning
visited the property on December 19 1989. He noted that the first-floor timbers
to the dormer extension had sagged excessively and the first-floor walls of the
dormer extension lean outwards, that the gable of the north wall leans in, that
there was a pronounced sag in the roof facing the road above the more northerly
window and a less pronounced sag above the southerly window, and there was an
outward bulge in the west wall of the main building between a ground-floor bay
window and the bedroom window at the northern end. He noted that the floor at
the north-west end of the main building (that is the floor in the bedroom
behind the bulge to which I have referred) was excessively springy and from the
inside the wall in the south-west bedroom bulged 40 mm outwards. By taking off
a skirting board he was able to ascertain that the front wall in the north-west
bedroom had bulged outwards and was only just sitting on the brickwork. He was
also able to see that there was an oblique crack in an internal wall between a
box room and the north-west bedroom: that latter crack would probably not have
been visible at the time of Mr Stanton’s first inspection.
Having visited
the property, I comment at this point that the photographs of the property do
not give an adequate impression of the roof of the main building as seen from
the ground. I agree with Mr Manning’s description of the roof.
In a letter of
December 12 1989 to the plaintiffs, Mr Manning confirmed those findings. Mr
Manning also gave evidence about those observations. At the plaintiffs’
request, Mr Manning inspected again with a consulting engineer instructed by
the council and by letter dated February 8 1990 told the plaintiffs that the
consultant confirmed his views. Under threat of a dangerous structure notice,
the plaintiffs had bracing inserted in the front wall to make it secure and
they ceased to use the dormer extension, it being agreed that the dormer
extension should be demolished, though it has not yet been demolished. On May
21 1990, the plaintiffs were given planning permission to demolish the dormer
extension and the single-storey extension and to rebuild.
In September
1990, the plaintiffs with their children moved into a flat in Whittlesea. In
their evidence they stated that they saw no alternative to total demolition of
the property and the purchase of another house. At present they cannot afford
to demolish and rebuild the property (if that were practicable) or to buy
another house. They are legally aided.
In the light
of all the evidence now available, the decision of the plaintiffs to move from
the property and to buy another house is entirely reasonable. Moreover, in the
light of all that evidence, it is clear that the advice given by the defendants
which I have quoted was wrong. It does not, of course, follow that it was
necessarily given in breach of contract.
I turn to
consider the report given by the defendants dated August 22 1988. The report
should, of course, be read as a whole and it is plain that the plaintiffs did
indeed read all of it with care. Many, though not all, of the defects existing
in the property were mentioned in the report. On behalf of the plaintiffs some
of the statements in the body of the report are criticised and further
criticisms are made that important matters were omitted. As to omissions, it is
said that some matters were noticed by Mr Stanton and wrongly disregarded when
it came to writing the report and others which ought to have been noticed were
not noticed. But the central criticism, which I find is well founded, is that
Mr Stanton failed to gather all the relevant matters together in his mind and
draw the obvious conclusion, which was that the house was not a good buy at any
price other than the site value. It may be that a skilled surveyor who read the
report as a whole might doubt its conclusions, which were directly contrary to
the obvious conclusion, but there was no reason why the plaintiffs or any other
ordinary house purchaser should do so.
Para 3.00 of
the report was misleading in the statement ‘we discovered no serious structural
defects or other major shortcomings that would lead us to advise against
proceeding with the proposed acquisition as planned’. That statement went to
the heart of the agreed purpose of the report. As Mr Stanton acknowledged in
cross-examination, he did see serious structural defects, and on the evidence
it appears that the serious structural defects which he saw, even without
others which he ought to have seen but did not, should have led the defendants
to advise against proceeding with the purchase. Turning to the conclusion on
p16 of the report, it was not correct that ‘the structure of the building [was]
in a reasonable condition for its age’ and the suggestion that ‘the following
budgets be set aside for remedial work’, totalling £8,500, was very misleading
indeed.
Without
referring to every part of the body of the report, I shall mention some parts
of it.
Mr Stanton
examined the roof of the main building with the aid of binoculars from the
outside. He reported: ‘Apart from a slight sag in both the front and rear
slopes this roof remains true and even with no signs externally to indicate any
deterioration, apart from the slight sagging of the supporting timber
framework’. Later, having commented that there was no access to the roof voids,
he wrote: ‘We strongly recommend that proper access hatches be formed into each
roof space to facilitate maintenance inspections in the roof voids’. By the
reference to ‘maintenance inspections’ the defendants indicated no need for
access hatches to be made to the roof voids before purchase. Mr Stanton
continued:
It is
difficult to assess the condition of the timbers in the roof voids without
actually visually inspecting them, however, the external roof slopes on the
main roof seem to indicate some deflection of the common rafters particularly
in the centre of the roof towards the eaves. This may indicate that some
strengthening of the purlins is required. From within the first floor roofs [sic:
rooms] it can clearly be seen that the ceilings undulate considerably. One can
assume that the undulations are caused by the deflection of the timber joists.
This could indicate damaged ceiling joists through say beetle infestation or
rot. On the other hand it may be that the timbers were rough hewn and were
twisted as indeed branches often are.
To say that
there was a slight sag in the front and rear slopes of the roof was to make a
serious understatement. Mr Hall in his first report wrote: ‘there is evidence
of considerable movement in the underlying structure, the roof lines being very
uneven’. Mr Manning referred to a ‘pronounced sag’ at the north end of the
front of the roof and a ‘less pronounced sag’ at the other end. Mr Malcolm York
[BSc CEng, MIStruct E, MICE], a structural engineer from John Burrow &
Partners, who inspected in April and June 1991, wrote:
Externally
the front, west, slope has significant sagging easily visible from ground
level, particularly to the north end where deflection estimated to be over 50mm
(2in). To the south end sag less but still noticeable. Rear slope partly
covered by dormer to north, again sags but less severe.
The sagging was
indeed easily visible from the road on my view.
Mr Stanton put
forward two possible explanations, beetle infestation or rough-hewn timbers. In
cross-examination he admitted that there was a third possibility which he
should have considered, namely that the roof had been overloaded when a new
roof covering had been put on (as Mr Stanton knew) about 15 years earlier. Mr
Stanton said that a roofer does not put a heavier load on a roof without
strengthening the timbers and for that reason it did not cross his mind that
the roof had been deflected by an over-heavy covering. He assumed that any
obviously defective timbers would have been repaired 15 years before and that
if the new roof covering was heavier, appropriate strengthening works would
have been done. It cannot be right for a surveyor to assume that building works
have been done properly. It is his job to check.
Inspection of
the roof from the outside showed a substantial deformity in the roof which
should have led any reasonably careful surveyor to advise that the property
should not be bought without an inspection of the roof void. A proper
inspection of the roof void would have revealed, as it did to Mr York (but not
to Mr Stanton when he looked in the roof void after purchase), that the roof of
the main building needed to be totally replaced.
With regard to
the walls of the property, the defendants reported:
7.00 MAIN WALLS
The property
is constructed with mainly 9′ solid brick load bearing perimeter
however, appear to be in mainly 4.5′ brickwork with some timber shiplap
boarding over cladding to the north face.
Part of the
south gable end wall to the main part of the building and the east elevation of
the main building together with the south elevation of the rear wing are
covered with some sort of creeper. We do not know what kind but it makes the
inspection of the wall surfaces very difficult. The majority of the walls are
generally in a sound upright condition and as far as we can say, not having
inspected the foundations, they are structurally sound.
It emerged
that the creeper had very little limiting effect on Mr Stanton’s inspection.
There was no creeper on the north and west faces of the main building. A
contemporaneous photograph and inspection of the suckers from the creeper
remaining on the wall showed that the creeper on the south wall had been
limited to a small part at the top of the gable. The east wall of the main
building had been substantially shielded from inspection, but that wall was not
in fact substantially defective. The south wall of the dormer extension was so
bad that despite the creeper the defects could be seen from the sagging window
frame, from a door opening in the upper part of the wall, and also from the
inside of the wall.
It was quite
wrong to say that the majority of the walls were in an upright condition. They
were seen by Mr Stanton not to be upright for the most part and, at the very
least, he had no or inadequate ground for describing them as being in sound
condition. In cross-examination Mr Stanton agreed that the following walls were
not upright: the north, south and west walls of the main building and the north
and south walls of the dormer extension. He also agreed that the east wall of
the dormer extension is unsound. I do not accept Mr Stanton’s assertion that
the walls were acceptable in terms of the age of the building. However old the
building may be, the walls are either upright or not, though in the case of an
old building it may well be proper to say that the walls are not upright but in
view of their age this is acceptable because they have been checked and found
to be sound.
The north
gable wall to the main building was correctly described by Mr Stanton as
constructed in 9in brickwork from the ground to the first floor and in 4.5 in
brickwork from there upwards. The triangle at the top of the gable is severely
distorted, as can be seen clearly from ground level. The brickwork is dished
inwards, going in in the middle of the triangle and back out again at the top,
though it does not come back out sufficiently to extend out from the vertical
centre line of the wall. Mr Stanton misdescribed this section of the wall as
leaning outwards, though it would be more accurate to describe it as leaning
inwards, an obviously more dangerous state. With regard to this brickwork, Mr
Stanton advised that ‘some amount of rebuilding will be required’. He also
recommended that this wall should be rendered. He added that ‘this work should
be carried out after first repairing the defective and distorted brickwork at
the top of the wall’. The amount of rebuilding of brickwork required was not
made clear. In fact, certainly the whole of the top of the gable needed to be
taken down and rebuilt. In evidence, Mr Stanton tried to minimise the need for
rebuilding by suggesting that the erection of a light-weight timber wall which
he had advised on the inside of that wall to provide thermal insulation would
also provide support for that wall. That suggestion was not supported by any
expert evidence and it is plainly unfounded. When it was put to him in
cross-examination that the report does not say that the wall is unstable and
does not convey any sense of urgency and does not state the area of brickwork
to be rebuilt, Mr Stanton replied: ‘I take the point that it was not as
explicit as it could have been’. He accepted that there was a serious
structural defect in the north gable. He also accepted that the figure of
£2,500 given at the end of the report would have to cover the cement render of
the whole of the north gable apart from new brickwork at the top and would also
have to include repair and rebuilding of brickwork both on the north elevation
and elsewhere.
Of the
brickwork to the south wall of the dormer extension, Mr Stanton wrote:
The south
side wall to the rear two storey wing is also covered in creeper. We were able
to see that the brickwork is distorted but it is very difficult to determine
the condition of the brickwork beneath the creeper, one could reasonably expect
to have areas of pointing and maybe isolated areas of defective brickwork.
Although the wall is distorted it does not appear to be structurally unstable.
The brickwork over the top of the dining room window opening shows sign of
sagging. This does not appear to reflect in any damage to the brickwork above
it and we would suggest it is not current or progressive.
Although it is
understandable that the creeper prevented Mr Stanton from giving an opinion
about the pointing or the appearance of the bricks, he was able to, and did,
see the sagging over the window and the distortion in the brickwork. He said
that he felt that he understood what was happening despite the creeper. He
correctly advised that the roof had to be replaced. He also noted that the floor
of the first-floor room was sagging very badly despite support from an upright
timber in the centre of the ground-floor room.
Mr Stanton
advised that the roof and the floor to the first floor of the dormer extension
together with a part of the brickwork to the south wall should be removed and
replaced. All the experts, including Mr Rodney Auckland [FRICS], a building
surveyor called on behalf of the defendants, agreed that if that were done as
Mr Stanton had advised, the south wall of the dormer extension would fall out,
possibly bringing with it other parts of the building. In his budget costings
at the end of the defendants’ report, Mr Stanton had allowed £1,000 for
replacing the roof and this floor in the dormer extension and repairing. He
accepted that those costings made no allowance for the support of the building
while the work was done, nor did the costings allow for the fees of an
architect or engineer to design a new dormer roof which would not (as the
present one does) spread out from the base of the dormer, pushing out the
walls. Mr Auckland costed the work of taking off the roof and removing the
floor and rebuilding at £5,321. That costing included doing this work on the
single-storey extension, but even so, Mr Stanton was right to admit that on
those figures he was several 100% out in his costings for the dormer extension
and that his estimate of £1,000 for the roof and floor of the dormer extension
was basically and fundamentally inaccurate.
The general
view of the experts was that the only sensible thing to do with the dormer
extension was to demolish it and rebuild. That view does not depend on
inspection of roof voids or anything else which was not open to inspection by
Mr Stanton. Moreover, in his manuscript notes made during his inspection, Mr
Stanton wrote: ‘This rear wing is old and probably should be demolished’. He
said that this referred to the dormer extension, and from the context that
appears to be the case. He said that when he sat down with the notes to write
the report it occurred to him that the dormer extension might be renovated. It
was not explained what were the reasons for moving from the view in favour of
demolition of the dormer extension to partial taking down and repair. In the
light of his note that the dormer extension ‘probably should be demolished’ Mr
Stanton admitted that para 3.00 of his report was totally misleading in saying
‘we discovered no serious structural defects’. Counsel for the defendants did
not remove the effect of this admission by pointing out that para 3.00 in fact
said: ‘we discovered no serious structural defects . . . that would lead us to
advise against proceeding with the proposed acquisition as planned’.
The front wall
was much considered in evidence before me. As one faces the front wall from the
road, the front door is at the left-hand (south) end, and a wide bow window is
on the left. Above are two bedroom windows. The whole wall is covered in
Tyrolean render. Mr Stanton in his report wrote of this wall:
7.01 The front (west elevation) has a cement
render and pebble dash finish and has recently been redecorated. The bottom of
the cement render terminates in a bell mouth with three courses of bricks below
the bell mouth forming a plinth which has been painted with bitumen. The
rendered surfaces generally appear to be satisfactory, however, there are
hollow areas of render at either end of the elevation adjacent to the front
door and bow window. This we would suggest is due to moisture penetration through
the ends and could also occur at higher level.
In his
manuscript notes, he wrote:
Area of hollow
render south end adjacent to front door
Also north end
bow window
may also be
higher up either end
could not see
any sign of cracking
The wall is
generally plumb apart from odd bulge.
The words
‘could also occur at higher level’ in the report and the words ‘may also be
higher up either end’ in the notes strongly suggest that Mr Stanton did not
test the wall above his reach when standing on the pavement, either by standing
on a ladder or by leaning out of a bedroom window. His oral evidence did not
alter that impression. There was no explanation for failing to confirm whether
on this fairly small area of wall there was further hollow render as he
suspected might be the case.
There were two
bulges on this wall, one over the bay window on the left and the other below
the right-hand bedroom window. The bulge on the right is less prominent than
the bulge on the left. There was some debate as to whether the ordinary
competent surveyor could be
to look along the face of the wall to check that it was vertical and even. It
was difficult to do this from the north because at the north end there was a
downpipe from the gutter obscuring vision. But from the south it was perfectly
possible to get a good view of the frontage and to check the straightness of
the surface aided by the straight edge of the downpipe. It was also possible to
make other checks from the bedroom windows. But quite apart from what could be
expected of an ordinary competent surveyor, the fact is that Mr Stanton did see
a bulge and noted it in his notes. In oral evidence he said that as far as he
knew he did not see the bulge above the bay window but he did see a bulge at
the opposite end of the wall. He said: ‘The bulge I referred to was in the
context of render which I did not see to be of any consequence’. That appears
to be his reason for not referring to it in the report.
Bulges in the
wall below the bedroom windows might have been due to lack of adhesion in the
render, which would not be very important, or due to bulges in the brickwork,
which would be another matter. In view of the tendency in the locality for
brickwork below bedroom windows to be defective, and in view of other
observable defects in this property, it was particularly important to establish
whether there were any bulges below the windows and as far as possible to
establish their cause.
I am by no
means satisfied that the bulge which Mr Stanton admits seeing was on the right
rather than on the left, there being no help to be derived from his notes on
the precise position. Since he regarded the bulge as of no significance, it is
the less likely that he will have remembered its position independently of any
record. But since Mr Stanton did see a bulge he should have looked to see
whether there were any other bulges and tried to establish their cause or
causes. If he had tapped the bulge he saw, he would have discovered that it was
not hollow for the most part. If he had then looked inside, he would have
discovered, if he was looking for it (though perhaps not if he was not
specifically looking for it), under the right hand window a corresponding bulge
outwards in the inside of the wall, 40mm in depth (which Mr Manning saw),
indicating a bulge in the totality of the brick skin. If he had found the bulge
on the left side and then found that the render was not hollow and then
examined the inside wall, he would have discovered, as Mr Hall did, that there
was no corresponding bulge on the inside and that there was ground for
suspecting that the inside skin of the wall had separated from the outside
wall. As the vendors were still in occupation, Mr Stanton might well not have
been given permission by them to take off a skirting board to follow up this
suspicion, but he did not ask for permission. If he had been refused permission
to make this further examination, he should have mentioned his suspicion in his
report and recommended further investigation. Further investigation would have
revealed, as it did to Mr Hall, very serious defects in the wall. Mr Stanton’s
cross-examination again suggests a lack of suspicion due to an assumption that
good practice will have been followed in construction. When it was put to him
that the bulge in the wall could be due to the inner and outer leaves of the
9-in wall separating, he replied that that could be so, but it is normal
practice to build a 9-in wall so that the two leaves are interlocking.
In the body of
the report Mr Stanton wrote of the south gable of the main building:
7.06 The south gable end wall to the main property
is constructed in 225mm (9in) brickwork. The ground to first floor level of
brickwork is much older than that from first floor to roof level. The lower
level of brickwork shows signs of distortion and past movement, however, none
of the movement appears to be current or progressive and the wall would appear
to be structurally sound. Creeper is growing along the east corner and along
the top of the verges making it impossible to visually inspect these areas of
brickwork. Some isolated areas of repointing will be required.
Objection was
taken on behalf of the plaintiffs to the description of this wall as ‘structurally
sound’ in view of the other comments, but otherwise this paragraph, taken on
its own, is not criticised. Objection is made that the defendants failed to
take the state of this wall into account with all the other defects and assess
the property as a whole to consider in particular what was happening to the
main building.
Mr Hall in his
second report dated May 16 1990, based upon his original inspection and also on
a further inspection in April 1990, expressed the following conclusions:
It is my
opinion based on my discussions with Mr Heatley concerning the then condition
of the property that had I inspected it on or about the 18 August 1988 my
conclusions would have been very much the same as set out in that report.
In my opinion
Mr Stanton should have been aware of the severe deformation in the north, west
and southern elevations of the main house and in particular the southern
elevation of the rear wing and if this had been the case the only advice that
he could have given would have been to advise strongly against proceeding with
the purchase.
The
recommendations with regard to ‘maintenance inspection’ of the roof structure
in my opinion were unsound in that they did not give a sense of urgency about
the matter or indeed require interior inspection prior to purchase nor was the
description of what must then have been a structurally deformed main roof
correct.
In my opinion
the property as it stands at the present time and almost certainly as it stood
on the 22 August 1988 is in considerable danger of collapse until adequately
shored up and that collapse if it once occurs could well be progressive
particularly with regard to the northern gable of the main house and roof
structure and certainly with regard to the two storey section of the rear wing.
I consider as
previously set out in this report that other items were not adequately covered
but the foregoing items are of major importance and go to the root of the
report. I cannot see that under any circumstances I would have recommended a
purchase of this property to a client.
Mr Hall did
have the advantage over Mr Stanton that he was inspecting a property which
belonged to his client, and he was able to make more detailed investigation,
and he was investigating a property known by him to be suspect. All of that was
extensively considered during the trial and I am satisfied that Mr Hall has
properly made allowances for those considerations. The evidence which I have
heard supports Mr Hall’s conclusions and bears out the facts on which they are
based.
Mr York expressed
himself in even stronger terms, save that he concluded that the defendants
should either have recommended further investigation by a structural
engineer or have advised against purchase, depending on the purchase price. In
the light of Mr Hall’s evidence, I find it difficult to accept that Mr Stanton
ought to have recommended further investigation by a structural engineer. But
Mr Stanton certainly ought to have advised at the very least that the purchase
should not go ahead unless further investigations were made of the structure
either by himself as a building surveyor or by a structural engineer.
I have to add
that the case brought by the plaintiffs was substantially strengthened by
admissions made by Mr Stanton in cross-examination and also by some of the
evidence quite properly given by Mr Auckland, who was called as an expert on
behalf of the defendants.
On the whole
of the evidence, I find, regretfully but without any doubt, that the defendants
by the delivery of the report dated August 22 1988 were negligently in breach
of contract and that the plaintiffs in reliance on a negligent report bought a
property which they should have been warned against and suffered damage. The
defendants were also in breach of contract by their conduct in and about the
second inspection on September 30 1988 and delivery of the letter of October 5
1988. At that point the defendants had access to the roof voids and the
principal restriction on their previous inspection was removed. Having the
benefit of being able to reconsider all their previous advice, and having the
further advantage of being able to reconsider that advice in the light of their
examination of the roof voids, the defendants ought then to have advised the
plaintiffs that their previous advice was wrong, that the property was worth
nothing like what the plaintiffs had paid for it, and that the plaintiffs would
be in some danger if they continued living in the property, particularly if
they continued to use the dormer extension. By not giving that advice, and by
advising repairs in the letter of October 5 1988, the defendants were in breach
of their continuing duty under the original contract and were in breach of the
fresh contract made in September 1988. By reason of those breaches, the
plaintiffs were encouraged to stay in the property and to spend more money on
it and their damages were increased.
I turn to
assess that damage.
The principal
head of damages should be assessed as what is generally known as the
‘difference in value’. How that difference should be computed is not agreed.
In Watts v
Morrow (CA) unreported July 30 1991*, it was taken as common ground that
the diminution in value rule is more accurately expressed as the difference
between the price paid and the value in its true description at least where no
point is taken that the plaintiff
WLR 471, Denning LJ at p 473 said:
The proper
measure of damages is therefore the difference between the value in its assumed
good condition and the value in the bad condition which should have been
reported to the client.
*Editor’s
note: Reported at [1991] 2 EGLR 152.
In the present
case, the property should not be taken in any ‘assumed good condition’ because
no good condition was assumed: the defendants did report the property as having
defects valued by the defendants, as a guide, at £8,500. The defendants have in
this action sought to rely on para 4(ix) of that part of their conditions
headed ‘Purpose and scope of report’ to suggest that that guide figure should
be ignored for all practical purposes if not substantiated by competitive
estimates or quotations. But I do not think it right to construe that paragraph
in that way either in favour of the defendants on liability or against them on
assessment of damages. The figures amounting to £8,500 were put forward to be
relied on as a guide and were relied on as a guide, though obviously not as a
guarantee of what would be quoted. There was a contractual requirement that the
figures should have a reasonable degree of accuracy in the right area. As a
matter of caution, the plaintiffs added 10% to the guide figures before acting
on them for budget purposes. It should not be forgotten that variation from
guide figures might in the event be expected to be up or down.
In the
circumstances of this case, it would be more appropriate to adopt the measure
approved by Morris LJ in Philips v Ward at p 475, namely the
difference between the value of the property as it was described in the
defendants’ report and its value as it should have been described.
The value of
the property as it was described in the defendants’ report was established by
the plaintiffs’ bargaining with the vendors in reliance on the report and
obtaining the reduced purchase price, namely £82,500, although Mr Smith valued
the property as described at £85,000. The value of the property as described in
the report is therefore in this case, but not in all cases, the same as the
price paid. The main head of damage is therefore the difference between £82,500
and the true value of the property.
I accept the
opinion of both Mr Hall and Mr David Smith [FRICS], of Colleys, a local valuer,
that the true value of the property is its site value. In their Further and
Better Particulars of Statement of Claim served on March 1 1991, the plaintiffs
put the site value at £35,000 less the costs of clearance £5,000, making a net
site value of £30,000. In his evidence, Mr Smith said that the site value in
1988 was £32,500 less £2,500 for clearing the site, making again a net site
value of £30,000. Mr Auckland did not quarrel with the pleaded site value of
£35,000 but put the cost of demolition at £3,000, though he qualified this by saying
that, in view of the desirability of the site in relation to the town centre,
it is more than likely that a purchaser would be likely to pay the £35,000 in
full without deduction for costs of clearance. In resolving that conflict, I
think it right that I should take the plaintiffs’ pleaded site value £35,000. I
think that Mr Auckland was optimistic in thinking that a purchaser would not
make any deduction for site clearance, and for that element I deduct the
smallest figure given, £2,500, being the figure given by Mr Hall. The net site
value is therefore £32,500.
The diminution
in value is therefore £82,500 less £32,500, amounting to £50,000.
The defendants
have denied that the site should be valued on the basis that the building on it
is worthless, but if one assesses the diminution in value by reference to the
cost of repairing the existing house, one would reach a much larger figure for
damages.
The plaintiffs
also claim damages for distress and inconvenience. In Watts v Morrow
at p 35 of the transcript it was held that ‘in the case of the ordinary
surveyor’s contract, damages are only recoverable for distress caused by
physical consequences of the breach of contract’ and any award should be
moderate.
The plaintiffs
complain that the physical consequences of the defendants’ breach of contract
were that the plaintiffs lived with their young children from September 1988
until September 1990 in premises which became in September 1989 wholly
unsuitable for family living because of restrictions imposed as a result of
warnings of danger. The reason for not moving out before September 1990 was
because of the difficulty of facing up to paying both mortgage repayments and
rent. In September 1989 the plaintiffs were warned not to use the dormer
extension because of the danger of collapse. The only hot water, bath and
lavatory were in the single-storey extension, which could only be approached
under cover through the dormer extension. The plaintiffs were thus in the
position of having in effect only an outside bath and lavatory. The ordinary
inconveniences arising out of this physical circumstance were increased when
the children were ill and not fit to be taken outside to the bath or lavatory.
The plaintiffs bought bathroom fittings to convert a bedroom into a bathroom
but were told not to do this in view of apprehended danger from unstable
structure above that bedroom. Instead, the plaintiffs bought a portaloo, which
was placed in the inner hall. During winter months, the children were strip
washed in the lounge using hot water from kettles. The lack of proper toilet
facilities was a source of acute embarrassment when there were visitors. The
health of the second plaintiff suffered and she consulted her doctor concerning
nausea and head pains which largely subsided when the family moved into a flat.
The relationships between members of the family became strained. With the
winter of 1990 approaching, the second plaintiff insisted that they must move
out before winter, and the first plaintiff’s brother insisted that they should
now accept financial help to pay the rent on top of the mortgage. In the flat
the three children share one bedroom and there is no garden.
This distress
and inconvenience began a year after the original breaches of contract. It was
foreseeable that, no warnings of danger having been given, the plaintiffs would
buy the property, settle down in it, and then be subjected to great strain and
inconvenience when they found themselves financially trapped in a property in
which it was difficult to use essential amenities because of danger of which
they were warned by others.
On a very
moderate assessment of the damage to the plaintiffs, I assess the damages for
the first plaintiff at £1,500 and for the second plaintiff at £3,000.
Other damages
also are claimed, being legal and moving expenses, cost of repairs, cost of
investigating the premises and cost of alternative accommodation.
There has been
some discussion of the recoverability of some of these heads of damage. In Philips
v Ward at p 478, Romer LJ said:
It may well
be that if, on learning of the real condition of the house, he had decided to
leave and resell, he would have been entitled to recover from the defendant, in
addition to the £4,000, his costs and expenses of moving out and of the resale.
As, however, he elected to stay, after all the facts had become known to him,
this point does not arise.
In Watts v
Morrow at p 22, Ralph Gibson LJ said:
In the
absence of any point on mitigation, the buyer will recover the diminution in
value together with costs and expenses thrown away in moving in and out and of
resale: see Romer LJ in Philips. I will not here try to state the nature
or extent of any additional recoverable items of damage.
At p 29 Ralph
Gibson LJ also said:
It is, I
think, clear law that where a claimant is caused to enter into a transaction in
consequence of negligent advice, as in the case of a surveyor employed under
the ordinary contract, the claimant may be entitled to all the losses incurred
as a result of entering into the transaction where he would not have entered
into the transaction if properly advised and the losses are caused by entry
into the transaction and by extrication from it.
At p 24, Ralph
Gibson LJ added:
We do not
have to decide whether, if the plaintiff has to rent other accommodation during
the carrying out of repairs, such costs 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.
At p 41,
Bingham LJ said:
I would be
willing to accept, as Romer LJ did in Philips v Ward that if, on
learning of the true state of the house, the plaintiffs had at once moved out
and sold, they might well have been able to recover the costs thrown away in
addition to the diminution in value.
Bingham LJ’s
use of the words ‘at once’ in that citation must be read in the light of the
considerable financial resources of the plaintiffs in Watts v Morrow,
which are to be contrasted with the financial circumstances of the plaintiffs
in the present case. The first plaintiff is a laboratory technician training to
be a factory inspector. The second plaintiff works as a nurse when her family
commitments allow her to do so.
It has not
been argued that the plaintiffs are not entitled to compensation for the damage
suffered during the extensive period during which the plaintiffs have been the
reluctant owners of this house since September 1989, first in terms of damages
for inconvenience and distress while they were in the property and then for rent
of alternative accommodation. Both forms of damage are the natural and probable
result of the plaintiffs’ buying the property
up to September 1989 when the plaintiffs were suffering some lesser
inconvenience while doing repairs to the property which they expected to
undertake in the light of the defendants’ report. The claim for rent for
alternative accommodation includes a claim for six months after judgment. No
evidence was given that that was a reasonable time to take in finding and
buying alternative accommodation. I therefore approach the matter on the basis
of my experience. Six months seems to me to be excessive and I substitute a
period of two months.
In the
circumstances of this case, the plaintiffs are entitled to damages for moving
into and extricating themselves from 72 High Causeway and the contrary was not
argued. It must be borne in mind that the plaintiffs were intending to move
from their former house in any event, so that if they had not bought 72 High
Causeway, they would, in any event, have incurred legal costs of sale of their
old house and of the purchase of the new house and would also have incurred
moving costs to the new house. The legal fees on purchase of 72 High Causeway
were proved in the sum of £1,070.75: it was suggested that that sum included
the legal fees on sale of the old house, but the first plaintiff said that was
not so and I accept that. No figure was proved as the legal cost of sale of 72 High
Causeway so far as I can find, but if in fact it can be shown that a figure
does appear in the evidence before me, that sum would be recoverable. The
plaintiffs incurred no removal costs in moving into 72 High Causeway. A figure
has been given for the cost of removal into the plaintiffs’ next home, but they
would have been involved in one removal in any event, so I do not find that
expense recoverable.
Building works
were undertaken at 72 High Causeway partly in reliance on the report of August
22 1988, partly in reliance on the letter of October 5 1988, and partly to make
the front wall safe in response to the requirements of the local authority. In
addition, the plaintiffs bought some materials and tools for work to be done by
the first plaintiff and his friends. These costs were not in general
challenged, but it was suggested on behalf of the defendants and accepted on
behalf of the plaintiffs that there is some residual value in some of the
tools, and also in the bathroom which are still on the premises unused: in this
regard I was invited to make a broad assessment without any evidence, which I
shall do.
A claim was
made for damages for the cost of investigating the premises in the sum of
£557.35 for the first report of Snow & Astill (Mr Hall) in August 1989. For
the defendants it was submitted that the cost of the report should be treated
as part of the costs of the action. It appears that Mr Hall was instructed
direct by the first plaintiff and not by his solicitors, but there was no
enquiry as to whether that instruction was in fact given on the advice of the
solicitor and for the purpose of obtaining legal advice for the purpose of
contemplated legal proceedings. The matter can best be tested by reference to
the plaintiffs’ list of documents served on April 2 1991. In that list, no
report of Snow & Astill appears in Schedule 1 Part 1, and it must therefore
be included among the documents for which privilege is claimed by a formula set
out in Schedule 1 Part 2. I therefore hold that the cost of that report should
be included in the costs of the action and not be the subject of a claim for
damages.
The special
damages are therefore as follows:
|
(a) Costs of moving into 72 High Causeway Legal |
£1,070.75 |
|
Furniture |
nil |
|
(b) Building |
1,676.64 |
|
Hire |
1,000.00 |
|
Loss |
250.00 |
|
(c) Cost of alternative accommodation (flat in |
|
|
Removal |
86.25 |
|
Rent |
3,575.00 |
|
Continuing |
550.00 |
|
(d) Miscellaneous agreed expenses Travel, |
428.00 |
|
Total of (a), (b), (c) and |
£8,636.74 |
Subject to any correction on points of detail, I
therefore propose to give judgment as follows:
|
For both plaintiffs jointly: |
|
|
£50,000 |
£58,636.74 |
|
For the first plaintiff |
£1,500.00 |
|
For the second plaintiff |
£3,000.00 |
To those
figures should be added interest. For the defendants it is argued that the
appropriate rate should be the special account rate: the rates are now set out
on p 40 of the Supreme Court Practice 1991. That does not seem to me to
be right. The largest part of the damages relates to the plaintiffs’ investment
in a commercial market, the housing market, and interest should be more nearly
equated to a commercial rate rather than to any supposed comparison to damages
in personal injury actions. I award interest at the judgment rate, which for
most of the period was 15% from September 16 1988 to the date of judgment on
£50,000. In considering interest on the figure of £8,636.64 it is necessary,
first, to deduct £550 for liability for rent which has not yet been incurred,
leaving £8,086.64. That balance was paid out in varying amounts between late
1988 and October 1991. It would do broad justice if interest were calculated at
15% on the sum of £8,086 from October 28 1990 to judgment.
Interest on
the damages for distress and inconvenience should be paid at the rate of 2%
from October 28 1990.
Judgment for
the plaintiffs.