Byrne v Pain & Foster
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE SIMON BROWN,LORD JUSTICE OTTON,LORD JUSTICE SCHIEMANN |
| Judgment Date | 11 December 1999 |
| Judgment citation (vLex) | [1998] EWCA Civ J1211-7 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: QBENI 98/0784/1 |
| Date | 11 December 1999 |
[1998] EWCA Civ J1211-7
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM MR JUSTICE LAWS
Royal Courts of Justice
Strand, London, WC2A 21L
Lord Justice Simon Brown
Lord Justice Otton
and
Lord Justice Schiemann
Case No: QBENI 98/0784/1
Mr P McCormick (instructed by Anderton & Co., Portsmouth for the Appellants)
Mr A Parsons (instructed by Grindeys, Stoke-on-Trent for the Respondents)
This appeal raises a short point concerning the date of accrual of the cause of action, for the purposes of the applicable six year limitation period, in relation to a claim in tort for damages for professional negligence brought by a purchaser of property against a firm of valuers. More particularly the question raised is whether the cause of action accrues when contracts are exchanged or when the purchase is completed. Laws J below held in the defendants' favour that time begins to run when contracts are exchanged so that the plaintiffs' action fell to be struck out as statute barred. The plaintiffs now appeal by leave of the single Lord Justice.
With that brief introduction let me set out the few material facts and indicate the circumstances in which the point comes before the court.
The plaintiffs proposed to purchase a residential flat in Portsmouth. Their mortgagees commissioned a valuation report from the first defendant firm. On 2nd June 1988 the second defendant, a chartered surveyor employed by the first defendants, inspected the property and prepared a written report. The plaintiffs did not seek an independent report for themselves. It is pleaded on their behalf (and for present purposes their pleaded case must be assumed factually correct) that they relied on the first defendants' report commissioned by the building society. So relying on it, they exchanged contracts to purchase the lease of the flat on 8th July 1988. Completion took place a fortnight later on 22nd July 1988. Thereafter defects in the property came to light. They were defects which the plaintiffs say should have been detected when the second defendant inspected the flat and accordingly should have been described in the report. That not having been done, the plaintiffs' case is that the defendants' valuation report was negligently made, and in purchasing the flat in reliance upon it they have suffered loss. Prominent amongst the defects which they say should have been discovered and revealed by the report were problems relating to condensation and/or water penetration. Although it is difficult to discover from the plaintiffs' pleadings precisely how they put their claim for damages, Mr McCormick tells us that the measure of damage sought is the difference between the price paid for the property (£38,500) and its value as it should have been described (which he asserts to have been some £26,000).
The plaintiffs' writ was issued on 18th July 1994, that is to say more than six years after exchange but less than six years after completion. The primary limitation period is all-important here. The plaintiffs acknowledge that they cannot take advantage of the extended period under s.14A of the 1980 Act: all the relevant facts were known to them well before 19th July 1991 (three years prior to the issue of the writ).
Having pleaded that the plaintiffs' claim is barred by s.2 of the 1980 Act, the defendants applied under RSC order 18 r.19 for the action to be struck out. On 15th January 1998 the district judge refused the application, concluding that the law was not sufficiently clear to justify striking out the claim as frivolous, vexatious or an abuse of process. On 7th April 1998 Laws J allowed the defendants' appeal. On the substantive issue he held that:
"… the plaintiffs' cause of action in this case accrued at exchange of contract. On that date the plaintiffs by their irrevocable commitment to the purchase of the flat suffered damage by virtue of the defendants' putative negligence sufficient to crystallise or complete their cause of action."
As to the procedural objection that the case is not sufficiently clear to justify striking out the action under order 18 r.19—see paragraph 18/19/11 at page 349 of the Supreme Court Practice (1999 Vol.1)—Laws J said this:
"… the argument would mean that merely because the law is doubtful or difficult I should decline to decide the point on this strike-out appeal. Were I to take that course, the case would go to trial and the trial judge would have to decide it. That cannot possibly be right. The question, from what date time runs in this case, is discrete and specific. I am clearly in as good a position to decide it as would be the trial judge, and it is in the parties' interest that I do so. As I understand it, it has never been the law that because a strike-out application may turn on a difficult legal point, that itself requires the court to refuse the application. Indeed some of the common law's seminal cases, such as Donoghue v Stevenson and Dorset Yacht, were decided on such applications or as preliminary points before trial. The right approach is for the court to proceed on the footing that all the factual allegations made by the plaintiff are true and then decide whether the plaintiffs' case is arguably sustainable. If at law it is doomed to failure, it should be struck out."
Although before this court the plaintiffs have returned to the procedural point (which, indeed, they were given express leave to argue), Mr McCormick has been content to rely upon his written argument and not to press the matter in oral submission. His essential contention is that the order 18, r.19 procedure is inappropriate to resolve a difficult and novel point of law of general public interest. For my part I would reject this contention. No doubt it is more conventional to decide such points by way of preliminary issue under order 33 r.3. Given, however, that no evidence was required, that would have brought no possible advantage. In short, I find myself in full agreement with Laws J's view upon this question. It is also, I believe, supported by what Lord Templeman said in Williams & Humbert v W & H Trade Marks [1986] AC 368 at 436. I accordingly turn to the central point at issue.
It is perhaps surprising that this point has not previously been decided. Whilst, however, both sides can point to various dicta in the authorities suggesting one conclusion rather than the other, neither can point to a case where the distinction between exchange and completion was, as it is here, decisive.
It is convenient to start by noting what Jackson and Powell on Professional Negligence (4th Edition 1997) have to say upon the issue. Paragraph 1-114 reads:
"Where a person purchases property in reliance on a survey report which fails to disclose material defects, the courts have repeatedly held that the measure of damages is the difference between the price paid and the value of the property as it ought to have been described. Quite consistently with this approach, Judge Hawser QC held in Secretary of State for the Environment v Essex Goodman & Suggitt [1986] 1 WLR 1432 that the cause of action accrued when the plaintiffs acted in reliance on the survey report (and became irrevocably committed to lease the property in question). In the case of a house purchaser, the cause of action would normally accrue when contracts are exchanged. This approach was adopted in Horbury v Craig Hall & Rutley [1991] CILL 692."
Strongly though that paragraph appears to support the defendants' argument, there are these comments to be made about it. First and most obviously, neither of the cases there referred to binds us: both were decided by official referees ( Horbury by Judge Bowsher QC). Second, it appears from consideration of the facts of those cases that in any event it probably mattered not whether time started to run at exchange or completion: the real issue in Essex Goodman was whether it started to run from some later date entirely i.e. when physical damage occurred, and in Horbury (where the proposition that time ran from exchange went by concession) the issue was whether the plaintiffs could rely on s.14A of the 1980 Act.
Those comments notwithstanding, the defendants are entitled to point to this passage in Judge Hawser's judgment at page 74:
"In my judgment, the submissions of counsel for the third defendants correctly state the law in cases where the duty is simply that of taking reasonable care to ensure that the damage is reported to the client. In my opinion, this is such a case. If the damage had not occurred at the date of the report, the third defendants would not be liable at all. If it was then in existence and reasonably discoverable, they would have been liable immediately the plaintiffs committed themselves to the lease."
Judge Hawser there was evidently accepting the defendants' central submission that the plaintiffs' cause of action accrues at the point when they become irrevocably committed to the lease.
Emmet on Title (Vol. 1, release 34, paragraph 1.065) adopts the same approach, also in reliance on Essex Goodman:
"In principle, time runs in respect of a negligent survey as from the date of reliance on the report (e.g. by exchanging contracts) not from the occurrence or discovery of damage or defects."
I next pass briefly to a small group of cases relied on by Mr McCormick for the language in which the judgments are expressed, the language of completion. Perry v Sidney Phillips & Son [1982] 1 WLR 1297 was a Court of Appeal decision affirming a line of authority to the effect that in ordinary cases involving the...
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