Summary

Damages awarded to plaintiffs for surveyor's negligence held to be unaffected by the fact that the structural defects which the surveyor had failed to report on were subsequently rectified at no cost to the plaintiffs.

Facts

Surveyors' appeal against judgment for damages of #29k in negligence in respect of a full structural survey which the 2nd defendant had carried out on a maisonette on the 3rd and 4th floors of No.8 Royal Crescent, London W11 in 1985 where the defect which the defendant had failed to find was rectified 5 years later at no cost to the plaintiffs.

Held

Peter Gibson LJ dissenting as to the second ground of appeal which he would have allowed: The points taken on appeal were: (1) that the trial judge erred in accepting the valuation approach by the plaintiff's expert, it being inconceivable that any properly advised vendor would have sold the premises in 1985 for #85k and (2) the judge erred in not finding that the loss incurred by the plaintiffs in purchasing a property for a price in excess of its true value by reason of the unreported structural defect was avoided by the remedying of the defect by the freeholder and its structural engineers at the instigation of the plaintiffs. (1) This ground of appeal proceeded on a mistaken appreciation of the valuation exercise. The judge assessed the measure of damages as the difference between the value of the property without the defects and its value with the defects at the date of the purchase. This mode of assessment was based on Philips v Ward (1956) 1 WLR 471 followed by Simple Simon Catering Ltd v Binstock Miller & Co (1973) 117 SJ 528 and in the court's view was correct. (2) The plaintiffs acting upon the negligent advice of the defendants in 1985 purchased a property for #114K when its true value, had the structural defect been known, was #85K. The structural defect became known in 1988 in consequence of two abortive attempts by the plaintiffs to sell the property. The plaintiffs were then instrumental in procuring the remedying in 1990 of the structural defect by the freeholder by threatening proceedings under the Defective Premises Act 1972 as a result of which the freeholder's structural engineer paid for remedying the defect. Accordingly at the time the present action was commenced in 1991 the defect, the existence of which had caused the property to be worth #29K less in 1985 than it would have been if the defect had been remedied before the sale to the plaintiffs, had been remedied at no cost to the plaintiffs and the plaintiffs then had the structurally sound property without incurring any extra cost. In British Westinghouse Electric Ltd v Underground Electric Railways Ltd (1912) AC 673, turbines were supplied which were not in accordance with the contract. Four years after taking delivery of the first turbine the railway co. purchased replacement turbines of greater efficiency and power from another supplier which caused the railway co to make a profit. The House of Lords held that even though the replacement turbines were superior to those which should have been supplied in accordance with the contract the profit should have been taken into account in assessing the damages. This case was relied on by the appellants but in the court's judgment it was distinguishable in that having regard to the intervening events and the long interval of time, the repairs executed in 1990 were not part of a continuous transaction of which the purchase of the lease as a result of the 2nd defendant's negligence was the inception. These repairs were res inter alios acta and therefore collateral to the 2nd defendant's negligence. In the light of the decisions in Phillips v Ward supra and Perry v Sidney Phillips & Son (1982) 1 WLR 1297, prima facie the proper measure of damages was the difference between the price paid by the plaintiff and the market value at time of purchase of the property. Had the plaintiffs found it necessary to sell the property, with defect, for the best price they could obtain in 1988, there is no doubt they could have obtained damages upon this basis. Had there been such a dramatic improvement in the property market that they could have sold the property at a substantial profit even with the defect, they would not ordinarily have had to set off that profit against the Philips v Ward loss. Only if the tortfeasor himself had rectified the defect before completion in 1985 would it have been difficult to sustain a Philips v Ward claim. Whether the claim could be sustained depends on the actual sequence of events and the facts found. In the event the tortfeasor seeks to take advantage of action taken under a contractual obligation in a contract to which he is not a party. Had the sale to the plaintiff been of the freehold no such contractual obligation would have arisen and the sequence of events must have been different. The facts relied on by the defendants as affecting the measure of damages are too remote to be taken into consideration and the judge was entitled to find for the plaintiffs as he did.

Appeal dismissed.