Claimants instructing surveyor and purchasing property – Discovery of defects in property requiring repairs and remedial works – Claimants seeking costs of repairs and remedial works – Whether proper measure of damages was costs of repairs or difference between price paid and actual value of property – Judge striking out claim – Appeal dismissed
The claimants instructed the defendant firm of surveyors to inspect and report upon a property that they subsequently purchased for £325,000. The claimants later issued proceedings, alleging that the defendant had acted negligently or in breach of contract in failing to report upon certain repairs and remedial works that the property required. The claimants sought the costs of the repairs and remedial works and the costs of seeking alternative accommodation and storage.
A surveyor was appointed by the Royal Institution of Chartered Surveyors to report upon the condition of the property. He found that: (i) the value of the property in its structural condition at the time of purchase, was £340,000; (ii) the value of the property in the condition described in the report of the defendant was £340,000; and (iii) in the condition alleged in the statement of claim the value of the property was £325,000.
The defendant applied for summary judgment. It was claimed that, in line with the authorities, from Philips v Ward [1956] 1 WLR 471, through to Watts v Morrow [1991] 2 EGLR 152, it was plain that even if the claimants could establish liability they were not entitled to damages. This was because damages in negligence claims were to be assessed by reference to the difference between the price paid and the actual value of the property. The expert’s report showed that there was no such difference. The claimants contended that, in the circumstances, it was appropriate to assess the damages by reference to the costs-of-repairs basis.
The judge dismissed the claim, holding that: (i) the costs-of-repairs basis for loss could not succeed; and (ii) the proper approach to damages was on the basis of the difference between the price paid and the actual value of the property, and that since the property was worth what the claimant had paid for it, no loss had been incurred. The claimants appealed, contending that it was at least arguable that the costs-of-repairs basis was appropriate, as the defendant had been retained only to advise upon the question of repairs.
Held: The appeal was dismissed.
In awarding damages, the court had to put the claimants in the position they would have been in had there been no breach of contract by the defendant. A claimant was not to be put in a better position by an award of damages. In the instant case, the claimants’ position would be elevated by an award of damages if the costs-of-repairs measure of damages was used, since the property was worth what the claimants had paid for it, even with the defects that the defendant had allegedly failed to report . An award of damages on the costs-of-repairs basis could not be reconciled with the restitutional or compensatory principles underlying the award of damages. Accordingly, the costs-of-repairs basis would be an inappropriate measure of damages.
Jacques Algazy (instructed by Biebuyck, of Chelmsford) appeared for the claimants; Simon Henderson (instructed by Beale & Co) appeared for the defendant.
Thomas Elliott, barrister
