Patel and Another v Hooper & Jackson (A Firm)

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLORD JUSTICE NOURSE,LORD JUSTICE WARD,LORD JUSTICE MANTELL
Judgment Date10 November 1998
Judgment citation (vLex)[1998] EWCA Civ J1110-6
Date10 November 1998
Docket NumberQBENF 97/0193/1

[1998] EWCA Civ J1110-6

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

OFFICIAL REFEREE'S BUSINESS

(Mr Recorder Colin Reese QC)

Royal Courts of Justice

Strand, London WC2

Before:

Lord Justice Nourse

Lord Justice Ward and

Lord Justice Mantell

QBENF 97/0193/1

Umang Jashbai Patel and Susan Patel
Plaintiffs/Respondents
and
Hooper & Jackson
Defendants/Appellants

MR D WORSLEY (instructed by Messrs Lloyd Cooper, London W1) appeared on behalf of the Appellant Defendants.

MR A MARSDEN (instructed by Messrs Bankes Ashton, Bury St Edmunds) appeared on behalf of the Respondent Plaintiffs.

1

Tuesday, 10th November 1998

LORD JUSTICE NOURSE
2

This is a dispute about the amount of damages to be awarded against surveyors who made a negligent overvaluation of a house for mortgage purposes on which the purchasers also relied. The surveyors expressed the opinion that the value of the house was in the region of £90,000, whereas its actual value was £65,000. The purchasers say that the house was uninhabitable and, further, that they were unable to resell it. They never moved in and they retain it to this day. The surveyors now accept that they are liable to the purchasers for damages equivalent to the diminution in value plus stamp duty (a total of £25,250). Their principal complaint is that the judge in the court below, Mr Recorder Colin Reese QC, has awarded the purchasers further damages equivalent to an indemnity for past and future mortgage interest, endowment policy premiums and household insurance premiums. They say that that part of his award was contrary to principle and ought to be discharged.

3

The recorder gave a full and careful judgment, of which the transcript runs to some 67 pages. Because the issues have narrowed in this court the facts can be stated more briefly than they were stated by him. Many of them can be stated in his own words. The purchasers were the plaintiffs, Dr Umang Jashbai Patel and his wife, Mrs Susan Patel. In the spring and early summer of 1988 they were potential first-time purchasers house-hunting in South London. Mrs Patel was then expecting their first child, who was born on 9th November 1988. At that time the domestic property market was still active and house prices were increasing.

4

In due course the plaintiffs found 35 Selkirk Road, Tooting, London SW17, which was being offered for sale at a price of £95,500 for the freehold. They thought it was a house of the right type, in what was for them the right area and one which they could afford to purchase. They put in an offer of £95,000, subject to contract, and by a letter dated 4th June 1988 the vendor's agents confirmed acceptance of that offer. The plaintiffs were offered a loan of £83,000 by the Britannia Building Society ("the society"), their intention being to pay the balance of £12,000 plus expenses out of their savings. They wished to have the house surveyed before committing themselves to the purchase. Their intention appears to have been to obtain a full structural survey, but the mortgage application was completed in such a way that what was requested was a report known as a "House Buyer's Report and Valuation" (HBRV).

5

On 8th June 1988 the defendants, Hooper & Jackson, a firm of estate agents and chartered surveyors, were instructed by the society to make an HBRV of the house. The plaintiffs had no direct contact with the defendants, but the latter realised that they were providing professional services to the society and to the plaintiffs and that a mortgage advance of £83,000 was being requested in respect of a dwelling house where £95,000 had been offered for the freehold interest. Their fee of £230 was paid by the plaintiffs. The house was inspected by Mr P A Jackson ARICS of the defendants on 14th June and the HBRV was dated 17th June 1988. Contracts for the purchase were exchanged on the same day.

6

The recorder found that the defendants' contractual (and concurrent tortious) duty to the plaintiffs was to exercise proper professional skill and care in reporting on the state of repair and condition of the house (taking into account certain limitations and assumptions stated in the conditions of engagement) and in reporting on its value. He found that the defendants were not in the position of advising either the plaintiffs or the society as to what course of action they should take; instead they were providing information for the purpose of enabling the plaintiffs and the society to decide whether or not they wished to go ahead with the proposed transaction. He held that a surveyor and valuer in the position of the defendants must be taken to have known, first, that the plaintiffs would rely on what he reported as to the state of repair and condition in deciding whether it was a property they would wish to acquire (on the assumption that the advised value appeared satisfactory in relation to the purchase price); secondly, that both the plaintiffs and the society would rely upon the advised value when assessing the commercial aspects of the proposed transaction.

7

The HBRV was prepared on a standard form issued by the Royal Institution of Chartered Surveyors with printed conditions of engagement. Towards the end and against the side heading "Summary and Recommendations" the following entry was made:

"The property has been constructed from traditional materials and has been neglected in the past with extensive repairs and renovations required. Internally the accommodation would benefit from upgrading and modernisation. In respect of the repairs items referred to within our report it is important that you obtain competitive quotes prior to exchange of contracts in order that you are fully aware of your liabilities at this stage. We would advise that the repair items referred to are not uncommon with a property of this age and construction."

8

Against the side heading "Valuation" the defendants stated their opinion that the present freehold open market valuation of the house with full vacant possession in its present condition was in the region of £90,000.

9

The recorder found that the plaintiffs read and relied on the HBRV in purchasing the house. He also found, first, that the HBRV did not accurately describe the state of repair and condition of the house as it should have been appreciated by a reasonably competent building surveyor and that it ought to have been described as a property which had been so neglected as to fall into the severely dilapidated category; secondly, that, although the advised value in the region of £90,000 would have been appropriate for the house in the condition described by the HBRV, the value which would have been put upon it by a reasonably competent building surveyor and valuer in June 1988, taking into account its actual and observable state of repair and condition, was £65,000.

10

The recorder's decisions of fact and law as stated above are either now accepted by the defendants or (particularly in the case of the actual value of £65,000) have been forced upon them by this court's refusal, on 5th February 1997, to grant leave to appeal on certain questions of fact. In order that the questions on damages may be fully understood, it is necessary for events subsequent to the completion of the purchase to be described in some detail.

11

After completion on 30th September 1988, the plaintiffs visited the now empty house with a number of others and formed the view that it was uninhabitable. They did not move into it and immediately instructed new surveyors, Carter Hope Associates (Southern) Ltd ("Carter Hope"), to inspect and report on its structural condition. Mr D J Whitehouse ARICS of Carter Hope inspected the house on 9th October 1988 and shortly thereafter prepared a full structural survey. The recorder found that the main matters to which Mr Whitehouse drew attention should all have been noted by Mr Jackson and reported upon in the HBRV. Mr Whitehouse's report was supplemented by letters of 31st October and 17th November 1988. In the first of these he said that the cost of the essential repair works required was most likely going to be in the region of £25,000 exclusive of VAT and professional fees. In the second he said:

"I would confirm that in my opinion the extent of the defects that were found at the property when I carried out my Survey on the 9th October 1988, does really mean that the property is uninhabitable, certainly until the structural defects and damp problems are attended to."

12

Having formed the view that the house was uninhabitable, the plaintiffs decided that they could not and would not move in and live there before or after their first child was born. Once that view had been confirmed by Mr Whitehouse, and being unable to contemplate anything like an expenditure of £25,000 plus VAT and professional fees, the plaintiffs decided to remain in temporary accommodation and to offer the house for sale.

13

Offers in the region of £100,000 having been invited, in January 1989 an offer, subject to contract and survey, was made to purchase the house for £93,000. The plaintiffs accepted it. The proposed purchaser was a builder and the recorder suspected that he first instructed a building surveyor to carry out an inspection and that the building surveyor then recommended obtaining a consulting engineer's report. In any event, the property was inspected by a member of a firm of consulting engineers, who, on 23rd March 1989, reported to the proposed purchaser that the property was in an extremely poor condition and was clearly in need of refurbishment throughout. In particular he advised that the main back wall must be rebuilt. The result was that the...

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8 cases
  • Emmet Thomas Scullion v Bank of Scotland Plc
    • United Kingdom
    • Chancery Division
    • October 8, 2010
    ...overvaluation by a valuer: see e.g. Watts v. Morrow [1991] 1 WLR 1421 and the affirmation of that principle in light of SAAMCO in Patel v. Hooper & Jackson [1999] 1 WLR 1792 at 1800H-1801C. 21 In my judgment, the SAAMCO principles mean Mr. Scullion cannot recover compensation for any fall i......
  • The “Asia Star”
    • Singapore
    • Court of Three Judges (Singapore)
    • March 19, 2010
    ...(folld) OCBC Securities Pte Ltd v Phang Yul Cher Yeow [1997] 3 SLR (R) 906; [1998] 1 SLR 826 (refd) Patel v Hooper & Jackson (a firm) [1999] 1 WLR 1792 (refd) Rudd v Lascelles [1900] 1 Ch 815 (refd) Sivand, The [1998] 2 Lloyd's Rep 97 (refd) Smailes and Son v Hans Dessen and Co (1906) 94 LT......
  • Great Future International Ltd and Others v Sealand Housing Corporation ((in Liquidation)) and Others
    • United Kingdom
    • Chancery Division
    • December 3, 2002
    ...to make the original purchase, but the authorities show that the circumstances may justify this conclusion: see e.g. Patel v. Hooper [1999] 1 WLR 1792. The facts in that case were exceptional. As the passages which I have cited in the judgment of Chadwick J and Toulson J make clear, the pa......
  • Bennett v Smith (t/a L. Smith & Associates)
    • Jamaica
    • Supreme Court (Jamaica)
    • February 26, 2016
    ...it was acknowledged that but for the defendant's negligence they would not have had to pay any of it. 54 The case of Patel and another v. Hooper and Jackson (a firm) [1999] 1 All E.R. 992 also bears relevance. In this case the plaintiffs obtained an offer of a loan from a building society i......
  • Request a trial to view additional results
1 books & journal articles
  • CONTRACT DAMAGES AND THE PROMISEE'S ROLE IN ITS OWN LOSS.
    • Australia
    • Melbourne University Law Review Vol. 42 No. 2, April 2019
    • January 1, 2019
    ...JJ), 218-19 (Dawson J). (246) See, eg, Criss (n 51) 595-6 (Street CJ); The Stork (n 114) 77-8 (Devlin J); Patel v Hooper & Jackson [1999] 1 WLR 1792, 1805-6 (Nourse LJ, Ward LJ agreeing at 1806, Mantell LJ agreeing at 1806). See below nn 249-52 for additional cases. See also Peel (n 128......

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