Negligence — Action against local authority on the ground of negligence by an employee in authority’s surveyor’s department in reporting on a house with a view to a loan by way of mortgage to a young couple about to be married — Report stated that structural and decorative condition of house was good and valued it at £11,750 — On the basis of this report the authority offered a loan of £10,900 provided that a few minor defects were remedied — At time of inspection house was occupied by vendor and was furnished, with furniture and fitted carpets — Plaintiffs did not have an independent survey and did not see the report, but relied upon a letter from the authority representing that the property afforded security for a loan of £10,900, and proceeded to purchase the house — Shortly after moving in, plaintiffs became aware of a gap between the skirting board and floor of a front room downstairs; subsequent evidence indicated that the gap was about 20mm wide at that time — At the request of the plaintiffs, who had become worried by contemplation of the gap, a further inspection was made on behalf of the authority, probably by the person who made the original inspection and report — He reassured the plaintiffs that it was purely a matter of settlement and that there was nothing to worry about — After about five years or so the husband’s employers moved their premises and the plaintiffs, with the aid of a bridging loan, purchased another house, putting the subject property on the market at a price of about £31,000 — Unfortunately, it proved to be unsaleable and the plaintiffs had to move back into it, selling their new house — A thorough examination now showed progressive settlement of the original house — The concrete floor slab had been laid on a bed of rejects, uncompacted and of excessive depth — Plaintiffs sued the local authority, their writ being issued in June 1983, nearly eight years after the completion of the purchase — Held (1) that the local authority owed a duty of care to the plaintiffs, knowing that they would rely on the valuation made by the authority; (2) that the authority’s surveyor had been negligent in failing to examine properly the state of the ground floor, which would have shown that the house was unsuitable for mortgage; that the plaintiffs’ cause of action accrued at the completion of the purchase in July 1975; but that their cause of action was not statute-barred, as the words of reassurance by the surveyor on his second visit amounted to deliberate concealment of the facts within the meaning of section 32(1)(b) of the Limitation Act 1980; alternatively these words raised an estoppel against the defendants, preventing them from averring that the plaintiffs’ cause of action was out of time — In the event the plaintiffs were awarded damages of £5,000 (together with interest thereon from date of purchase) on the basis of the difference in price between what the plaintiffs paid in 1975 and the true market value at that time — They were also awarded general damages of £1,500 for distress and discomfort suffered
The following
cases are referred to in this report.
Kaliszewska v Clague (J) & Partners [1984] CILL 131; (1984) Const LJ
137
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
Yianni v Edwin Evans & Sons [1982] QB 438; [1981] 3 WLR 843;
[1981] 3 All ER 592; [1981] EGD 803; (1981) 259 EG 969, [1981] 2 EGLR 118
This was an
action by Mr and Mrs Westlake alleging negligence against the Bracknell
District Council in relation to the valuation for mortgage purposes of the
house, 11 Yorktown Road, Sandhurst, Berkshire, purchased by the plaintiffs.
Roy Lemon
(instructed by W Bradly Trimmer & Son, of Alton, Hampshire) appeared on
behalf of the plaintiffs; Robert Gaitskell (instructed by Barlow Lyde &
Gilbert) represented the defendant local authority.
Giving
judgment, MR P J COX QC said: This is a claim by Mr and Mrs Westlake for
damages against the Bracknell District Council by reason of the negligence of
one of its employees, a surveyor, described as a technical services officer.
There is virtually no dispute between the parties as to the history of the
case, which I find as follows.
The plaintiffs
married on August 11 1975. Mr Westlake was then aged 22. He was employed as an
electronics repair technician and, as first-time buyers, Mr and Mrs Westlake
had decided to buy a house at 11 Yorktown Road, Sandhurst in Berkshire. This
was a semi-detached house described as being at the lower end of the market and
priced at £11,500. In common with many young couples, they needed to borrow
some 95% of the purchase price on mortgage. They were inexperienced in house
purchase and were unaware of the problems of subsidence and the like. They had
found the house by May 1975 and they applied for a loan by way of mortgage to
the local authority, Bracknell District Council, some three months before their
wedding.
Before
granting the loan, in accordance with the usual practice the defendants
instructed their surveyor to inspect the house for the purpose of satisfying
themselves that it represented adequate security for the loan. As a result of
this inspection, a report dated May 13 1975 was prepared. It was signed by a Mr
Robert King who, at the material time, was employed by the council as a section
head in the surveyor’s department of the defendants. The actual inspection of
the property was carried out by a member of Mr King’s staff whose identity has
not been established in this case. The report stated that the structural and
decorative condition of the house was good and, with vacant possession, was
valued on a freehold basis at £11,750.
At the time of
this inspection the house was occupied by the plaintiffs’ vendor and was
furnished with furniture and fitted carpets. On the open market, in reasonable
structural and decorative condition, the house was worth £11,500. The
plaintiffs did not see a copy of the defendants’ surveyor’s report but, by a
letter dated June 6 1975 from the defendants to the plaintiffs, an offer of a
loan of £10,900 by way of mortgage was made to the plaintiffs. This letter
stated that the advance would be subject to the terms set out in six numbered
paragraphs contained in the letter, and para 6 required the plaintiffs to
remedy certain minor defects within one year of
clearly relied upon the report dated May 13.
The
plaintiffs, in common with the great majority of first-time buyers, did not
have survey of their own. They accepted the offer, relying upon the defendants’
representations contained in the letter that the property afforded security for
a loan of £10,900. They completed the purchase of the house some time, I think,
in July 1975 and they moved into occupation immediately after their marriage.
Within a very
short time they had become aware of the existence of a gap between the skirting
board and the floor of the front downstairs room, particularly below the
window. There is a plan, which we have called ‘P2’ (which is marked ‘RT1’),
exhibited to the affidavit of Mr R T Treadwell, which has been put in evidence
in this case. The plan gives various measurements, showing the gap between the
skirting board and the concrete floor at various points on the ground floor of
the house at a time when Mr Treadwell carried out the survey. This gap had also
been noted by Mrs Westlake’s father, Mr Pritchard, when he visited the property
before the plaintiffs moved in. Mr Pritchard told me in evidence that when he
saw the gap he commented upon it and he thought it appeared to be, at that
time, between three-quarters and one inch wide. I am satisfied upon the
evidence in this case that this gap was 20mm wide below the window in May and
in August 1975. The plaintiffs had not noticed the gap when they viewed the
house to begin with, prior to purchase, probably because of the fact that a
settee was concealing the skirting board beneath the front window; but it is
quite clear that three or four weeks after the wedding they had become somewhat
worried because of the presence of this gap. It was not only under the window
but it was visible in the hall and also down the side walls of the front room,
narrowing towards the back of the house.
Being worried
in this way, they telephoned the defendants’ surveying office and asked for a
surveyor to visit the house for the purpose of inspecting this problem. In
response to this, a man, described by the plaintiffs as being fairly short with
grey hair and in his 50s, visited the house and looked at the gap, told the
plaintiffs that it was purely settlement and assured them that there was
nothing to worry about. He was there for about five minutes only and then he
left. This reassured the plaintiffs. Some time before Christmas, Mr Westlake
filled the gaps with some type of plaster or cement filler, primarily to stop
the draught and, I suppose, also to improve the appearance of the decoration.
He told me that he had also had to construct some sort of small ramp from the
front door into the hall because of the dropping of the hall floor.
Mr King, the
surveyor who was called by the defendants and who had been a section head in
the defendants’ surveying department in 1975 (the material time), told me that
he considered it likely that the man described by the plaintiffs was the same
person who had done the original survey for the defendants. In the absence of
any evidence to the contrary I am satisfied on balance of probability that this
was so.
The plaintiffs
lived at 11 Yorktown Road until late 1980 or early 1981, when Mr Westlake’s employers
moved their premises to Basingstoke. The plaintiff was encouraged to move house
by the offer of a free bridging loan from his employers. The house was then put
in the hands of agents for sale at a price of about £31,000, which reflects the
rise in house prices between 1975 and 1981, and the plaintiffs purchased a
house at Four Marks in Hampshire. They were happy at this house as it was
better than their first, being described by Mrs Westlake as a country place
with a huge garden and where she could enjoy her hobby, I think, of keeping and
showing dogs.
Despite the
efforts of the agent, 11 Yorktown Road remained unsold. After about a year, Mr
Westlake’s employers, not unnaturally, became restive about the continuing
burden of the bridging loan and they commissioned a firm of estate agents,
surveyors and valuers, Messrs Poulters (the firm in which Mr Treadwell, the
surveyor witness for the plaintiffs, is a partner), to report upon the
property. The report is dated December 7 1981. I quote from that report under
the paragraph ‘General Condition’. The inspection revealed:
Evidence of
significant downward deflection within the ground floor concrete slab which may
be attributed to either settlement of the hard core base or, alternatively,
subsidence due to adverse ground conditions. In our opinion this movement has
been progressive over a number of years as gaps between the floor surfaces and
fitted skirtings have been filled with plaster or similar material. We very
much doubt whether any building society would be prepared to grant a mortgage
on the property in its existing state and we therefore strongly advise that
your company obtains professional advice as regards the structural condition of
the floor in order that any necessary remedial works may be undertaken prior to
sale.
This report
was shown to Mr and Mrs Westlake in early 1982 and it came as a considerable
shock to them: this was the first time they had become aware of the structural
problem. Despite some further effort to persuade local builders to buy — and
this would have to be, of course, at a reduced price — there was no success as
the property proved unmortgageable. As a consequence of this the plaintiffs
were obliged to sell their house at Four Marks and to move back into 11
Yorktown Road. They consulted their present solicitors in February 1982 and the
writ in this action was issued on June 1 1983.
In March 1982
Mr Treadwell, who is a chartered surveyor and, as I have said, a partner in the
firm of Poulters, carried out a careful examination of the floor slab. In the
course of this he made trial holes through the floor in the hall and also in
the front garden to determine the underlying strata. His findings are set out
in an affidavit (exhibit P4) to which were exhibited two drawings, numbered RT1
(that is exhibit P2 to which I have already referred) and RT2, now exhibited as
P7, respectively. Mr Treadwell impressed me as a careful and knowledgeable
witness and I have no hesitation in accepting his evidence both as to his
findings and his opinions.
The trial hole
through the hall floor revealed that the concrete floor slab had been laid upon
a bed of rejects — this being the description of the layer of large stones 1
1/2 in sieve size found beneath the concrete. Exhibit P7 (which is a drawing of
the trial holes) shows more precisely what Mr Treadwell found. He said that
these rejects should have been firmly compacted at the time of construction and
their depth should not have exceeded 600mm, being the maximum recommended by
the National Housebuilding Council’s guidelines. The depth found by Mr
Treadwell of these rejects was 760mm and the stones were found to be loose
under the concrete. He explained, in the course of his evidence, the difficulty
of assessing the state of the rejects throughout the subfloor — because, of
course, the very act of using an auger to bore into the rejects would of
necessity disturb them and loosen them.
At the time of
this examination in March 1982 the maximum downward movement of the floor was
28mm and plan exhibit P2 shows the depth of this movement at various points on
the plan. The plaster or cement filling done by Mr Westlake in 1975 was also
clearly seen by Mr Treadwell and measured a maximum of 20mm, thus confirming Mr
Westlake’s evidence and also the evidence of Mr Pritchard as to the approximate
size of the gap in 1975. It is clear, therefore, that the floor slab had moved
down 20mm by 1975 when the Westlakes purchased. I am satisfied that a movement
of this magnitude should have been noticed by a reasonably competent surveyor
and it was an indication of faulty construction and certainly required further
investigation.
This was not
only Mr Treadwell’s view but was confirmed by Mr King who, in his evidence,
said that he would have been concerned about a gap of 20mm and would have
expected it to have been found by a surveyor despite the presence of fitted
carpets. This was also the view of Mr Elliott, the independent chartered
surveyor called by the defendants. I am also satisfied, in the light of the
evidence I have heard in this case, that, having found evidence of downward
movement of this magnitude in 1975, a reasonably competent surveyor should have
advised that the property was unsuitable for mortgage purposes by reason of the
substantial cost involved in putting the property into a reasonably saleable
condition.
Perhaps I
should pause here to state that, on the evidence, the increase in subsidence
from 20mm in 1975 to 28mm in 1982 when Mr Treadwell made his inspection was
probably due, certainly in part, to the fact that in 1975 and 1976 there had
been two very dry summers. This had caused a drying out of the subsoil which,
in this particular part of the country, caused contraction of a special kind;
it was a contraction which was irreversible. In the light of my findings in
this case, the fact that this additional cause of subsidence existed in 1975
and 1976 does not materially affect the judgment I have reached.
There was some
difference of opinion between Mr Treadwell and Mr R F Elliott (the independent
surveyor called on behalf of the defendants) as to the proper method of
remedying this defective floor in 1975. Mr Treadwell said that the only
satisfactory solution at that time would have been to grout the rejects and
that would have involved pumping a cement slurry into the reject layer, which
would then solidify and prevent further movement. This work would mean that the
house would remain uninhabitable for some three months
contractor who would execute the repairs and then put the house back on to the
market. This would involve, of course, expenses of solicitors, estate agents
and the expense of interest on capital and would also, perhaps, include a
measure of profit. Mr Treadwell’s estimate was that the cost of all this in
1975 would have been £5,000. Mr Elliott agreed that this figure was about right
for the work that Mr Treadwell contemplated. However, Mr Elliott said that he
did not think that such work was necessary in this type of house being, as it
was, at the bottom end of the market. Mr Elliott thought that the problem could
be adequately overcome simply by rescreeding the surface of the concrete slab
at a cost of about £1,250.
I am satisfied
upon the evidence that this would not have been an adequate way of correcting
the defect. Mr Treadwell accepted that such a solution would have been adequate
and permissible had the movement simply been up to about 10mm. With a 20mm
settlement, he said that he would expect that there had been cracking of the
underlying concrete slab and to rescreed in such circumstances would simply
have been covering up the fault and inviting later problems. I am satisfied,
therefore, that in 1975 the total expense of reparation of the floor would have
been £5,000 including the incidental expenses — fees, interest and the like.
I now turn to
the question as to what duty was owed by the defendants to the plaintiffs in
this case. As to this the evidence seems to me to be quite clear. These
plaintiffs were inexperienced first-time buyers of a property pretty well at
the bottom of the market. They were in need of a 95% mortgage as their means
were very limited. In 1975 such purchasers rarely, if ever, instructed their
own surveyors and instead relied upon the valuation made by those who were
advancing the money. In this case the defendants made a charge against the
plaintiffs for the cost of the valuation and I would refer to condition 3 of
the mortgage offer letter. Furthermore, the defendants did not seek to exclude
their responsibility in this regard and did not invite the plaintiffs to have
their own survey. The offer letter, by requiring certain minor matters to be rectified,
carried the implication that the house was structurally sound. Mr King, in his
evidence, very frankly accepted this position. He said:
In 1975 it
was the case that purchasers did not usually have their own surveyors. It was
common that purchasers relied upon the mortgage offer as indicating no major
structural problems.
Thus, this
case bears many similarities to the case of Yianni v Edwin Evans
& Sons [1981] 3 All ER 592, to which I have been referred. I am
satisfied that the defendants owed a duty of care to the plaintiffs knowing
that the latter would rely upon the accuracy of the valuation for mortgage
purposes. I am further satisfied that the defendants’ surveyor who examined and
reported upon the house in the terms of the report signed by Mr King was
negligent in that he failed properly to examine the state of the ground floor
of this house. Had he done so he would, as a reasonably competent surveyor,
have noticed the 20mm gap and the other lesser gaps and ought to have been put
on further inquiry as to the structural stability of this floor. It was
negligent of him to report that the house was structurally sound and to value
it at £11,750. No mention is made in the report of the fact that the ground
floor was of concrete and this, in itself, points to a very superficial
examination of this property.
It is clear
that the plaintiffs have suffered damage by reason of this negligence because
they have bought a house which has proved to be unsaleable by reason of the
defective floor. This state of affairs came into existence as soon as they
completed their purchase in July 1975, which is the date at which I find that
the cause of action accrued.
The defendants
say that the plaintiffs’ claim for damages is barred by statute. The writ was
not issued until June 1983 — some eight years later — and thus by reason of the
provisions of section 2 of the Limitation Act 1980 it is said that this action,
being founded on tort, was started too late.
The plaintiffs
seek to answer this plea by praying in aid the provisions of section 32(1)(b)
of the Act. This reads as follows:
Subject to
subsection (3) below [which is not relevant to this case], where in the case of
any action for which a period of limitation is prescribed by this Act . . . (b)
any fact relevant to the plaintiff’s right of action has been deliberately
concealed from him by the defendant . . . the period of limitation shall not
begin to run until the plaintiff has discovered the concealment . . . or could
with reasonable diligence have discovered it. References in this subsection to
the defendant include references to the defendant’s agent . . .
I also read
from subsection (2) of section 32:
For the
purposes of subsection (1) above, deliberate commission of a breach of duty in
circumstances in which it is unlikely to be discovered for some time amounts to
deliberate concealment of the facts involved in that breach of duty.
It is the
plaintiffs’ case that there was a deliberate concealment of facts, within the
meaning of that expression, by the defendants when their surveyor (as I find)
revisited the house at the plaintiffs’ request some four weeks after they moved
into occupation and who, on being shown the 20mm gap, simply said: ‘It is
purely settlement, nothing to worry about.’
Coming as this did from a surveyor who ought to have known better, I can
only construe it as reckless in the extreme unless it was done deliberately. I
have to bear in mind that (as I find) this surveyor had already negligently
reported to his employers that the house was sound when it was not, as a
consequence of which a loan of £10,500 had been advanced. Thus, when he saw the
20mm gap, probably for the first time, he hoped that there would be no adverse
consequences.
My attention
has been drawn to the commentary in relation to section 32 in the 1980 volume
of Current Law Statutes. The words ‘deliberate concealment’ in the 1980
Act replaced the words ‘fraudulent concealment’ in section 26 of the Limitation
Act 1939 which it superseded. It is not necessary that I should enter into an
analysis of the meaning of this expression in the light of the decided cases,
but it is reasonably clear that the words ‘deliberate concealment’ involved
something more than mere neglect of duty. Conduct involving recklessness or
turning a blind eye or unconscionable conduct would all seem to fall within the
ambit of the words ‘deliberate concealment’.
Whatever
phrase is used, I have come to the conclusion that the conduct of the
defendants’ surveyor on this short five-minute visit amounted to a deliberate
concealment of facts relevant to the plaintiffs’ right of action. Thus, the
period of limitation did not begin to run until early 1982 when the plaintiffs
first learned of the reason why the house would not sell.
If I am wrong
about this, then I consider that the words and conduct of the defendants’
surveyor on the short visit clearly led the plaintiffs into thinking that the
gap was nothing to worry about. This raises an estoppel against the defendants
from averring that the plaintiffs’ cause of action accrued more than six years
before the commencement of these proceedings. In this connection, I have found
the reasoning of His Honour Judge White in the case of Kaliszewska v J
Clague & Partners (1984) (vol 5 of Construction Law Reports at p
62) helpful. I am very much indebted to Mr Gaitskell for searching out that
case in the course of his researches. It was not particularly helpful to his
case, but it was plainly his duty to bring it to the attention of this court.
The plaintiffs
are, therefore, entitled to damages. Upon the authority of the Court of Appeal
decision in Perry v Sidney Phillips & Son [1982] 1 WLR 1297 I
conclude that the proper measure of damage in this case is the difference in
price between what the plaintiffs paid for the property in 1975 and its true
market value at that time. Accepting, as I do, Mr Treadwell’s evidence as to
this, I assess damages under this head at £5,000, together with interest
thereon from the date of purchase.
There is also
a claim for damages for the distress and discomfort suffered by these
plaintiffs as a consequence of this negligence. The authorities suggest that
sums awarded under this head should be modest. One has only to consider the
history of this matter to realise that the plaintiffs, once they became aware
of the problem in early 1982, have suffered much inconvenience and heartache by
having to move back into a poorer house in a less desirable locality together
with the attendant upheaval of an unwanted move. Doing the best I can, I award
general damages in respect of that part of the claim at £1,500.
I note, on
rereading the amended defence in this case, that there was, in fact, an
allegation of contributory negligence on the part of the plaintiffs, but no
argument has been addressed to me under this head and I do not think that calls
for any further comment.
