Conveyance — Enquiry — Negligent representation — Property subject to subsidence — Purchaser selling as development land to mitigate loss — Whether damages off-set by profit on resale — Whether resale part of transaction — Appeal by purchaser succeeds
When in 1984 the defendants sold their bungalow in Farnham, Surrey, to the plaintiffs, the plaintiffs’ solicitor sought an answer to the following enquiry: “Please confirm to the Vendor’s knowledge that the property has not been subject to the following matters:- … subsidence”. The defendant’s solicitor answered: “Confirmed”. The sale was completed at a price of £53,250. Shortly afterwards, the plaintiffs discovered that the building was subject to severe subsidence. Rather than carry out remedial works, the plaintiffs obtained planning permission for the site and sold it in 1986 for development for £76,094.47 net of expenses. In the Brighton County Court the plaintiffs claimed damages from the defendants based on the difference between the price paid of £53,250 and the actual market value of the property at the date of the completion, namely £36,250. His Honour Judge MacManus held that the defendants by their solicitor had given a negligent answer in confirming that the property was not subject to subsidence but that the mitigation achieved by the plaintiffs in selling for a development value wiped out the plaintiffs’ loss attributable to the defendants. The plaintiffs appealed.
Held The appeal was allowed.
Despite the decided authorities on the question of the effect and consequences of mitigation of a loss, and the benefits and profits that accrue through mitigation, in disputes about damages it is ultimately an issue of fact. The issue is whether the negligence which caused the damage also caused the profit, if profit there was. In this case the plaintiffs unlocked the development value of their land for their own benefit and not as part of a continuous transaction of which the purchase of land and the bungalow was the inception. The proper measure of damages is the difference between the contract price and the market value of the property in its unsound condition.
Winston Roddick QC and David Fisher (instructed by Stoneham Langton & Passmore) appeared for the appellants; and Michael Burton QC and Timothy Higginson (instructed by Griffith Smith Dodd & Riley, of Brighton) appeared for the defendant.
