Philips v Ward

JurisdictionEngland & Wales
CourtCourt of Appeal
JudgeLORD JUSTICE DENNING,LORD JUSTICE MORRIS
Judgment Date21 Mar 1956
Judgment citation (vLex)[1956] EWCA Civ J0321-1

[1956] EWCA Civ J0321-1

In The Supreme Court of Judicature

Court of Appeal

Before:-

Lord Justice Denning

Lord Justice Morris and

Lord Justice Romer (not present)

Between:-
Philips
Appellant
-and-
Ward
Respondent

Mr LEONARD LEWIS (instructed by Messrs B.A. Woolf & Co.) appeared on behalf of the Appellant.

VISCOUNT HAILSHAM, Q.C. and Mr OWEN STABLE (instructed by Messrs Oswald Hickson, Collier & Co.) appeared on behalf of the Respondent.

LORD JUSTICE DENNING
1

In 1952 Mr Philips wanted to buy a house and farm. He saw Holm Hurst Manor Farm, Bur wash common, in Sussex, which attracted him, and he employed Mr Ward, a surveyor, to survey it and advise him on the structural and general condition of the building. It is a manor house built in 1610, probably by one of the Iron Masters of this area, with a stone base, mellow brick above, and stone mullioned windows. There were in addition two cottages, oasthouses and so forth and in addition 137 acres of land. Mr Ward went over it and made a report dated the 4th February, 1952, in which he said that the house was of very substantial construction with the beet materials and workmanship lavished on it, but that there were minor defects which he set out in the report. He put the value of the property at something between £25,000 and £27,000. On the faith of the report, Mr Philips in June 1952 bought the place for £25,000. Unfortunately, Mr Ward had been negligent. He did not notice that the timbers of the house were badly affected by death-watch beetle and by worm. They were in fact so rotten that the only thing to do is to take off the roof and make it afresh with good timber, to re-build the timbers in the cellars, to put in new wall plates and so forth. This work will cost £7,000 at 1952 prices. Mr Philips claims that this expense is due to Mr Ward's negligence and that he should recover it, or nearly all of it, as damages. But the Official Referee has found that although it will coot £7,000 to repair, nevertheless the value of the house and farm is not to be found by deducting £7,000 from the price of £25,000. Even if a purchaser knew of the bad condition of the house, a fair price would be £21,000. Only £4,000 would be deducted on account of its condition, not £7,000. The reason is because many other factors come into play in fixing the price. The coat of repairing defects is only one of them. The Official Referee has held that in these circumstances theproper measure of damage is not the cost of repair, £7,000, hut "the difference between the value of the house and farm in the condition described in the report and their value as they should have been described". He fixed this difference at £4,000 and gave judgment accordingly. Mr Philips appeals, saying that it should be more.

2

I take it to be clear law that the proper measure of damage is the amount of money which will put Mr Philips into as good a position as if the surveying contract had been properly fulfilled: see the British Westinghouse case, 1912 Appeal oases, at page 689, per Lord Haldane, Lord chancellor. Now if Mr Ward had carried out his contract, he would have reported the bad state of the timbers. On receiving that report, Mr Philips would either have refused to have anything to do with the house - in which case he would have suffered no damage - or he would have bought it for a sum which represented its fair value in its bad condition - in which case he would pay so much less on that account. The proper measure of damages is therefore the difference between the value in its assumed good condition and the value in the bad condition which should have been reported to the client.

3

We were referred to the cases where a house is damaged or destroyed by the fault of a tortfeasor. These cases are, I think, different. If the injured person reasonably goes to the expense of repairing the house, the tortfeasor may well be bound to pay the cost of repair, less an allowance because new work takes the place of old: see Lukin v. Godsell, Peake's Additional Cases, 15; Hide v. Thornborough (1846) 2 Carrington & Kirwan, 250. In other oases, the tortfeasor may only have to pay the value of the house: see Moss v. Christchurch Rural District council, 1925 2 King's Bench, 270. It all depends on the circumstances of the case: see Murphy v. The County Council of Wexford, 1921 2 Irish Reports, 230. The general rule is that the injuredperson is to be fairly compensated for the damage he has sustained, neither more nor less.

4

Lie were also referred to the cases where a house is left out of repair by a tenant in breach of his covenant. These cases, too, are different, because a surveyor does not enter into a covenant to repair and he gives no warranty as to the condition of the premises. If those cases were relevant, however, they go to show that the cost of repair is not nowadays the proper measure. We had a case not long ago where a purchaser bought a Georgian house and 25 acres for £6,250 and then sought to recover from the tenant £7,333 for dilapidations, because that was the cost of repair. That would mean that he got the place for nothing and £1,083 in pocket as well. The Official Referee awarded £7,333, but this Court reversed him. I there said that the cost of repair "is not the proper test in the case of a considerable estate, in such a case the purchase price is often not much affected by the want of repair, because a purchaser can turn it to his advantage in that, when he puts it into repair, he can get considerable tax relief. Further, when extensive land is included in the sale in addition to the house, the want of repair of the house does not influence the price so greatly as it otherwise would. So many factors come into play that the cost of repairs is not the test. The proper criterion is to take the difference in value between the premises as they ought to have been, delivered up in repair, and the value of the premises as they are, delivered up out of repair. The difference is the measure of damages to which the landlord is entitled": see Morris v. Sands (unreported) on the 15th July, 1955. So also in this action, if Mr Philips were to recover from the surveyor the sum of £7,000, it would mean that Mr Philips would get for £18,000 (£25,000 paid less £7,000 received) a house and land which were worth £21,000. That cannot be right. The proper amount for him to recover is £4,000.

5

Another point arose about the time at which the damages should be assessed. The cost of repair has risen considerably since the house was bought, and it will cost Mr Philips a good deal more than £7,000 now to put his house right. The £7,000 is based on 1952 costs, not 1956 costs. The £4,000 is derived from that figure: and represents the difference in value at 1952 prices, not those ruling to-day. I think that it is right to assess the damages as at 1952 prices. The general principle of English law is that damages must be assessed as at the date when the damage occurs, which is usually the sane day as the cause of action arises, but may be later: see Cumings v. London Bullion Co., 1952 1 King's Bench, 327. A fall thereafter in the value of money does not in law affect the figure, for the simple reason that sterling is taken to be constant in value: see Di Ferdinando v. Smits, 1920 3 King's Bench, at page 414, per Lord Justice scrutton; The Volturno, 1921 1 Appeal Cases, at page 563, per Lord wren bury; Bishop v. Cunard Line, 195O 2 All England Reports, at page 25, Mr Justice Hodson. In the case of continuing...

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