Structural movement — Assessment of damages — Defendant valuer negligently failing to advise claimant buyers that long investigation required before further movement could be ruled out — Later investigation ruling out further movement — Retrospective value much higher than value defendant should have reported — Defendant arguing for retrospective valuation
In June 1999, the claimants bought a house in Hornchurch for £185,000. They relied upon a valuation made by the defendant in April 1999. This reported that although the property had been affected by minor structural movement in the past, such movement appeared to be long-standing and was unlikely to be progressive. The claimants were later advised that the risk of further movement was far greater than had been reported earlier, and they brought an action in negligence. On the basis of certain admissions made in the defence, judgment was entered for the claimants in April 2002, with damages to be assessed. A hearing to determine the amount of damages recoverable was directed to proceed on the basis that the following matters were not in dispute: (i) in April 1999, a competent surveyor would have advised the claimants that the possibility of further movement could not be ruled out without an investigation involving a period of monitoring; (ii) pending such investigation, the house would be unmortgageable and its value would be no more than £90,000 (the immediate valuation); and (iii) the possibility of further movement (since April 1999) had eventually been ruled out by an expert jointly appointed by the parties, thus allowing for a retrospective valuation of £148,000.
The claimants contended that the damages should reflect the difference between the purchase price and the immediate valuation. The defendant claimed that the difference should be based upon the retrospective valuation.
Held: Judgment was given for the defendant.
As submitted by the claimants, the proper measure of damages was generally the difference between the value of the property in its assumed good condition (as it was described) and its value in the bad condition that should have been reported to the client: see the formulations of Denning and Morris LJJ in Philips v Ward [1956] 1 WLR 471 at pp473 and 476. However, that was only a prima facie rule, which had to be applied in the light of the overriding principle requiring the injured party to be put in the same position as he would have been in had he not sustained the wrong in question: see Lord Blackburn in Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at p39. Applying that principle, it was plain that the claimants, having obtained and retained a property now known to be worth £148,000 at June 1999 values, would be overcompensated if they were paid £93,000 in damages. That the court not only might, but also must, admit hindsight evidence was a general principle of assessment: see Bwllfa and Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks Co [1903] AC 426, as applied, for example, in Kennedy v KB Van Emden & Co [1997] 2 EGLR 137, Charles v Hugh James Jones & Jenkins [2000] 1 WLR 1278 and Morgan v Perry (1973) 229 EG 1737. The claimants derived no assistance from Daisley v BS Hall & Co (1972) 225 EG 1553, which was in any event criticised by the Court of Appeal in Gardner v Marsh & Parsons [1997] 1 EGLR 111.
Neil Mendoza (instructed by Lewis Silkin) appeared for the claimants; Justin Althaus (instructed by Prettys, of Ipswich) appeared for the defendant.
Alan Cooklin, barrister
