Sale of development land — Expert soil report obtained by vendor indicating suitability of land for residential development — Landslip in course of development — Assignment of vendor’s contractual cause of action in respect of report — Whether substantial damages recoverable by respondent assignee — Appeal dismissed
The owner of a site had obtained a specialised soil report from the appellant geotechnical firm in order to fulfil a condition in a planning permission for first-phase residential development. The report indicated that the site was suitable for the development of a number of two-storey houses. The respondent subsequently purchased the site with the benefit of the planning permission and proceeded with the development. It obtained planning permission for a second phase of development and again relied upon the appellant’s report to fulfil a condition of the permission.
During the course of the development works, a landslip occurred, causing damage to properties uphill from the site. The owners of the properties brought proceedings against the respondent, contending that the landslip had been caused by excavations carried out by its contractor. The landslip also necessitated extensive stabilisation works for the purposes of the respondent’s development.
The respondent reached an agreement with the former owner of the site for an assignment of the benefit of the appellant’s report, including the right to sue in respect of breaches of the appellant’s duties and obligations. It then brought Part 20 proceedings against the appellant, relying upon the assignment as the basis for a contractual claim for damages: see Offer-Hoar v Larkstore Ltd [2005] EWHC 2742 (TCC); [2005] 50 EG 90 (CS).
On the Part 20 claim, preliminary issues were tried as to whether, inter alia: (i) the respondent was able to recover any part of its losses from the appellant by virtue of the assignment; and (ii) the appellant owed a duty of care to the respondent. The judge answered the first question in the affirmative. As to the second, he held that the appellant owed a duty of care to the respondent to ensure that the development of the site would not cause physical damage to adjoining property, but that there was insufficient proximity to justify a duty in relation to the respondent’s economic loss. He held that the cost of the remedial stabilisation works was economic loss and therefore not recoverable. The appellant appealed on the first issue, and both parties sought permission to appeal on the second.
Held: The appeal was dismissed; the applications to appeal on the second issue were refused.
The cause of action under the assignment was the right to sue the appellant for breach of contract in respect of the preparation of the soil report. That cause of action had been complete when the appellant produced the report for the former site owner. Although the damages recoverable by the owner at that time would have been nominal, the loss recoverable by the respondent was not limited by the amount of loss actually suffered by the former owner. The assignment was of the cause of action, not of a “loss”, and the remedy in damages for breach of contract was not, in principle, limited to the loss that had been suffered as at the date of accrual of the cause of action. The principle that an assignee could not recover more than the assignor did not assist the appellant. That principle was intended to protect the contract-breaker from having to pay damages to the assignee that it would not have had to pay to the assignor had the assignment not taken place. It did not enable the appellant to rely upon the fact of the assignment to escape all legal liability for breach of contract: Linden Gardens Trust Ltd v Lenesta Sludge Disposal Ltd [1994] 1 AC 85 applied; Dawson v Great Northern & City Railways Co [1905] 1 KB 260 distinguished. Had the former owner not sold the site, it could have claimed substantial damages for the subsequent landslip. The assignment had been made to enable the respondent to step fully into the shoes of the former owner following its purchase of the site.
David Friedman QC (instructed by Squire & Co) appeared for the appellant; Christopher Thomas QC and Gaynor Chambers (instructed by Warners, of Sevenoaks) appeared for the respondent.
Sally Dobson, barrister
