Negligence — Claim against surveyor for negligence and breach of duty — Whether plaintiff’s statement of claim or particulars therein should be struck out under Ord 18, r 19 — District registrar refused application to strike out, but judge on appeal struck out some particulars in the pleading relating to damage — Present appeal by plaintiff sought to restore the particulars — Plaintiff, present appellant, instructed defendant, in practice as an auctioneer, estate agent and valuer, to carry out a survey of a mixed residential and commercial property which the appellant was contemplating purchasing — Defendant (respondent) valued the property at £53-56,000, on the ground that ‘it is always difficult to put an exact figure on a mixed village residential/commercial property of this nature’ — Appellant claimed that in reliance on the report he purchased the property for £60,000; that as a result of defects not disclosed in the report the true value was not more than £52,500; and that accordingly he had suffered damage to the extent of £7,500 — These were the particulars struck out by the judge below — He considered that the appellant’s damages could not exceed £500 (£53,000 less
appellant’s case on the present appeal was based on the principle of Perry v Sidney Phillips
& Son that the correct measure of damages was the difference between what
the appellant had paid for the property and its value at the date when he
obtained it (£60,000 less £52,500) — Respondent argued that this measure did
not apply where, as here, the claimant had paid a price greater than the
surveyor’s valuation — On the basis of that valuation the damages should not
exceed £500 (£53,000 less £52,500) — Respondent was unwilling to accept that
there could be a claim for £3,500 — Held that, although there was considerable
force in the respondent’s submission, it was at least arguable that there could
be a claim for £3,500 (£56,000 less £52,500) — There must in any event be a
trial of that claim and the judge was wrong to strike out the particulars on
the ground that they disclosed no reasonable cause of action — Appeal allowed
and particulars ordered to be reinstated
The following
cases are referred to in this report.
Ford v White & Co [1964] 1 WLR 885; [1964] 2 All ER 755;
[1964] EGD 283; 190 EG 595
Perry v Sidney Phillips & Son [1982] 1 WLR 1297; [1982] 3 All
ER 705; [1982] EGD 412; (1982) 263 EG 888, [1982] 2 EGLR 135, CA
Philips v Ward [1956] 1 WLR 471; [1956] 1 All ER 874, CA
This was an
appeal by the plaintiff, Robert Alan Lucas, from a decision of Judge Moylan,
sitting as a judge of the High Court, striking out certain particulars in a
paragraph of the plaintiff’s statement of claim in an action for negligence and
breach of duty against M K Ogden ARICS, trading as Kirk Ogden, 23 High Street,
March, Cambridgeshire. The premises concerned were known as ‘The Post Office’,
Norfolk Street, Wimblington, March, Cambridgeshire.
Mark Raeside
(instructed by Birkbeck Montagu’s, agents for Daynes Hill & Perks, of
Norwich) appeared on behalf of the appellant; Michael Yelton (instructed by
Ollard & Bentley, of March, Cambridgeshire) represented the respondent.
Giving the
first judgment at the invitation of Nourse LJ, MANN LJ said: There is before
the court an appeal against a decision of His Honour Judge Moylan, sitting as a
judge of the High Court, at Norwich on December 18 1987. On that day he allowed
an appeal against a decision of Mr District Registrar Barker of May 28 1987. On
that day the learned district registrar refused the defendant’s application to
strike out the statement of claim on the grounds that it disclosed no
reasonable cause of action.
The
application to strike out was made under Ord 18, r19.
A curiosity of
the case is that on the same day as the learned district registrar declined to
strike out the statement of claim there was served a defence in which it was
said that on the basis of the plaintiff’s pleading the true measure of damage
does not exceed £500.
I have said
that the learned judge below allowed the appeal. Strictly, he did, but he did
not strike out the statement of claim: instead, he struck out some particulars
given under para 12 of the pleading.
The plaintiff,
that is to say, the present appellant, is owner of premises known as ‘The Post
Office’, Norfolk Street, Wimblington, March in Cambridgeshire.
The defendant
is an associate of the Royal Institution of Chartered Surveyors and is in
practice as an auctioneer, estate agent and valuer. In January 1985 he carried
out a survey for the plaintiff, who was at that time contemplating the purchase
of the Post Office. The defendant’s report contained, apparently, a number of
statements of fact as to the condition of the Post Office, and it also
contained a valuation which, as pleaded, is recited as follows:
Valuation: £53-56,000.
It is always difficult to put an exact figure on a mixed village
residential/commercial property of this nature.
The plaintiff
asserts that, in reliance on the report, he purchased the Post Office for
£74,500. That, however, as to £14,500, was attributable to goodwill, fixtures
and fittings. Thus for the freehold he paid £60,000. It is asserted that in
fact the Post Office was defective to a degree not revealed in the defendant’s
report, and it is further asserted that the value with the extant defects is
£52,500 and no more.
The claim is
put against the defendant in negligence and breach of contract and is
particularised. Para 12 of the statement of claim reads as follows:
12. In
consequence of the aforesaid the plaintiff has incurred loss and damage and has
been put to inconvenience.
PARTICULARS
(i) the price actually paid for the Post Office
was £60,000
(ii) the true market value of the Post Office at
the date of purchase was £52,500.00
(iii) the difference between (i) and (ii) above is
£7,500.00
It is those
three particulars which were struck out by the learned judge below.
There is a
transcript of a shorthand note of the judge’s judgment which reads as follows:
I simply do
not believe that the Court of Appeal meant to apply the principles they stated
in the cases to which I have been referred with such facts as they appear in
this case, with the result in damages suggested by the plaintiff. However, it
seems to me that at the end of the day even though I am substantially in favour
of the defendant’s argument, there is left the possibility that the plaintiff
will be entitled to damages, not, as far as I can see at the moment, exceeding
£500 in amount, and I think it is probably right that the case should not go
before whichever tribunal [which] eventually has to decide it on the apparent
basis that the plaintiff has a claim which may be as much as £7,500 where on
the view I take it cannot exceed £500 or some figure falling within the bracket
of £53,000 to £56,000.
The figure of
£500 is derivable by subtracting £52,000, the asserted actual value, from the
lower of the two valuation figures put forward by the defendant. But, to me
somewhat curiously, the judge seems to contemplate the possibility that one may
be able to deduct the £52,500 from the £56,000, that being the higher figure,
in which case there would be a recovery of £3,500.
The
plaintiff’s case is, however, at present at least, deployed on the basis of the
difference between price paid and actual market value. In that regard reliance
is placed upon Perry v Sidney Phillips & Son [1982] 1 WLR
1297, a case which the learned editor of McGregor on Damages, 15th ed,
para 1213, says makes the law crystal clear. We were referred to various
passages in the judgments in this court. Lord Denning MR, at p 1302, said:
So you have
to take the difference in valuation. You have to take the difference between
what a man would pay for the house in the condition in which it was reported to
be and what he would pay if the report had been properly made showing the
defects as they were. In other words, how much more did he pay for the house by
reason of the negligent report than he would have paid had it been a good
report?
At p 1303
Oliver LJ said:
The first is
the question whether the appropriate measure of damage on the basis of what the
deputy judge described as ‘differential in valuation’ is, as Mr Hicks submits,
the difference between the price paid by the plaintiff and the value at the date
of its acquisition — the property which he actually got — or whether it is, as
Mr Latham suggests, the difference between the value of the house at the date
of the trial in its defective condition and the value which it would then have
had if it had been in the condition in which on the basis of the surveyor’s
report it should have been. Speaking for myself, I have no doubt whatever that
the basis suggested by Mr Hicks is the right one.
At p 1304
Oliver LJ continued:
I therefore
am of the same view as Lord Denning MR that the right measure of damage is the
measure suggested in both Philips v Ward [1956] 1 WLR 471 and Ford
v White & Co [1964] 1 WLR 885, which is simply the difference
between what the plaintiff paid for the property and its value at the date when
he obtained it.
(See also Kerr
LJ at p 1306.)
Mr Yelton
points out that the passages which I have read occur in a context where the
plaintiff paid the price which he did on the basis of the surveyor’s having
said that that price was a proper value for the property and indicates that
here the valuation as pleaded was less than the price actually paid. He accepts
that there may be a claim for £500 but was reluctant to accept that there could
be a claim for £3,500. For present purposes it suffices to say that there may
be an argument that the maximum claim is £3,500. It also appears to me to be at
least arguable that the principle in Perry is not dependent upon the
plaintiff’s paying what the surveyor advised was a proper price. We were not
told of any case equivalent to this where the plaintiff
have to be argued. But, as there are arguments on both the hypotheses which I
put forward, I do not think that the learned judge was right to strike out
these particulars on the basis that they disclosed no reasonable cause of
action.
Accordingly, I
would allow this appeal.
Agreeing,
NOURSE LJ said: Mr Yelton, in his interesting argument, has submitted that the
decision of this court in Perry v Sidney Phillips & Son
[1982] 1 WLR 1297, to the effect that the measure of damages in cases of this
kind is the difference between what the plaintiff paid for the property and its
market value as it should have been described at the time of the purchase,
cannot apply to a case where the plaintiff has paid more than the amount, or
the maximum amount, which the defendant has advised him to pay. For myself, I
see very great force in that submission, which appears, as Mr Yelton submits,
to do no more than implement the general rule that a successful plaintiff in an
action for negligence is unable to recover damages in excess of the loss which
is attributable to the act or omission of the defendant. If the plaintiff were
not led by the defendant above £56,000, he could only have been misled to the
same extent.
However, in
the light of the fact that the rule has now been stated by this court in
general terms which may be capable of applying to this case, I cannot go so far
as Judge Moylan and say that the contrary view is unarguable. Furthermore, for
the reasons given by Mann LJ, the plaintiff clearly has an arguable claim for
the difference between £52,500 and £56,000. There must in any event be a trial
of that claim and I do not think that the defendant will be severely prejudiced
by also having to face a claim for the higher amount in accordance with the
plaintiff’s preferred alternative.
For these
reasons I, too, would allow this appeal, the effect of which will be to
reinstate the particulars under para 12 of the statement of claim.
The appeal
was allowed with costs in the Court of Appeal and below; legal aid taxation of
the plaintiff’s costs was ordered.