Wednesday Law Report: Measure of damages for negligent survey

Click to follow
18 November 1998

Patel and anor v Hooper & Jackson

Court of Appeal (Lord Justice Nourse, Lord Justice Ward and Lord Justice Mantell) 10 November 1998

A PLAINTIFF who claimed against a surveyor for negligent overvaluation of a property was entitled to damages compensating him for the cost of alternative accommodation until he was able to resell the property.

The Court of Appeal allowed in part the defendant's appeal against damages awarded to the plaintiffs in their negligence claim against the defendants.

The plaintiffs offered pounds 95,000 for the purchase of a house. The building society from whom they had obtained the offer of a loan instructed the defendant firm of estate agents and surveyors to make a "House Buyer's Report and Valuation" on its own and the plaintiffs' behalf. The defendants described the house as having been neglected in the past and requiring extensive repairs and renovations, and valued it at pounds 90,000.

In September 1988, having completed the purchase for pounds 95,000, the plaintiffs formed the view that the house was uninhabitable. They did not move in, and instructed new surveyors to prepare a full structural survey. The new surveyors found that unless works costing in the region of pounds 25,000 were carried out, the property was uninhabitable.

The plaintiffs decided that they could not move into the house and, being unable to contemplate the necessary expenditure to make it habitable, decided to remain in temporary accommodation and offer the house for sale. They did not sell the house.

The plaintiffs commenced proceedings against the defendants, alleging that the property had been negligently overvalued, its true value being pounds 65,000, and that they had been unable to resell it. The judge awarded the plaintiffs pounds 25,250 in respect of the diminution in the property's value, pounds 2,000 each as general damages to compensate them for their years of living in relative discomfort, and further damages equivalent to an indemnity for past and future mortgage interest, endowment policy premiums and household insurance premiums.

The defendants appealed, accepting that they were liable to the plaintiffs for damages equivalent to the diminution in value, but contending that the award for mortgage interest and insurance premiums was contrary to principle and ought to be discharged.

Andrew Marsden (Bankes Ashton, Bury St Edmunds) for the plaintiffs; Daniel Worsley (Lloyd Cooper) for the defendants.

Lord Justice Nourse said that the powers of the court in a case such as the present were confined to making a once and for all award of damages, and that the judge's award must accordingly be discharged and an award of damages made in conventional form.

The question as to the correct measure of damages then arose. The prima facie rule applicable to the measure of damages in respect of negligent surveys of houses for private purchasers was the diminution in value of the property.

However, each case depended on its own facts, and in the present case there were said to be special features which entitled the plaintiffs to additional damages. Applying the dicta of Romer J in Philips v Ward [1956] 1 All ER 874, a purchaser was entitled to damages for the reasonable costs of extricating himself from the purchase.

In the present case, the house having been uninhabitable except at a cost which the plaintiffs were unable to contemplate, there was no reason in principle why they should not be able to recover the costs of their alternative accommodation until such time as they were able to sell the house and acquire another in its place.

The plaintiffs had, in all the circumstances, acted reasonably in not putting the house up for sale by auction at any time before the end of June 1993, and were accordingly entitled to recover the cost of their alternative accommodation between September 1988 and September 1993. Further, the award of pounds 2,000 general damages to each of the plaintiffs had been entirely justified and would be affirmed.