Prudential Assurance Company Ltd v McBains Cooper (A Firm) and Others
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BROOKE,LORD JUSTICE ROBERT WALKER,LORD JUSTICE PETER GIBSON |
| Judgment Date | 23 May 2000 |
| Judgment citation (vLex) | [2000] EWCA Civ J0523-12 |
| Docket Number | Case No: QBENI 99/1234/A2 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 May 2000 |
[2000] EWCA Civ J0523-12
Lord Justice Peter Gibson
Lord Justice Brooke and
Lord Justice Robert Walker
Case No: QBENI 99/1234/A2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM TECHNOLOGY AND
CONSTRUCTION COURT
(HH Judge Havery QC)
Royal Courts of Justice
Strand,
London, WC2A 2LL
David Holland (instructed by Hammond Suddards for the Appellants)
Duncan McCall (instructed by Lovells for the Respondents)
This is an appeal by the defendants, which is supported by the claimants, against a ruling by Judge Havery QC sitting in the Technology and Construction Court on 5th November 1999 to the effect that he would hand down his written judgment in this action notwithstanding the fact that the parties had compromised their dispute shortly before he was originally due to hand down his judgment on 18th October 1999.
This is a surveyors' negligence action arising out of a survey carried out for the claimants by Mr Ney, the sixth defendant, who is a partner in the firm of McBains Cooper, the first defendants. The action was tried by the judge on five days between 22nd and 29th June 1999. The judge completed his written judgment in draft on 14th September. He signed and dated it, and then sent copies of it to the parties' lawyers on a confidential basis in accordance with the procedure prescribed by the Practice Statement (Supreme Court: Judgments) [1998] 1 WLR 825. The day for handing down the judgment in open court was fixed for Monday 18th October 1999. The judge imposed an embargo on the notification of the terms of the judgment to the parties until 4pm on Friday 15th October 1999.
Just before the judge was due to hand down his judgment on 18th October he was asked by the parties to adjourn that hearing with a view to his making a Tomlin order on a paper application they would be making to him in due course, and he agreed to do so. In his judgment under appeal the judge said that counsel asked for an adjournment, rather than any other disposal of the hearing, on the ground that there was a possibility, expressed to be a small one, that the settlement would unravel. In the event a Tomlin order was signed by the representatives of both parties and lodged on 19th October.
Following these events it seemed to the judge on reflection that there were grounds which would justify handing down his judgment formally in open court. He therefore fixed a hearing, which took place on 5th November, in order to give counsel the opportunity to make submissions to him on this issue. At that hearing both counsel invited him not to hand down the judgment in open court for substantially the same reasons. Before describing the judge's conclusions I will first say something about the underlying proceedings.
The action related to a structural survey of a commercial property in Guildford. In April 1995 the claimants had offered to buy the building from the vendors of the property for £6.9 million subject, among other things, to a structural survey. This offer was accepted on 3rd May, and the defendants were instructed by the claimants to carry out the survey as soon as possible. Mr Ney inspected the building within seven days, and prepared an executive summary report in accordance with his instructions, which he sent to the claimants on 24th May. The executive summary was, in accordance with the agreement made between the claimants and the defendants, to be an overview of the recommendations and conclusions in the eventual report, and had to include major defects. Contracts were exchanged between the vendors and the claimants on 12th June, and the sale was completed on 23rd June, the day when Mr Ney's condition survey report reached the claimants. In these circumstances the latter report played no part in the proceedings.
The claimants' complaint which was at the centre of this litigation was that the defendants had been negligent in failing to warn them of the true condition of the roof, which had numerous defects, so that major remedial works had to be carried out. These were completed in December 1996 at a total cost of £174,684.77.
On pages 4–13 of his judgment the judge considered the issues of negligence that arose in the case, and made adverse findings against the defendants. On pages 13–15 he found that if the defendants' survey had put the claimants on notice about the condition of the roof, they would not have proceeded to purchase the property for £6.9 million. They would have tried to negotiate a reduction in price to reflect the perceived cost of remedying the defects, and the sale would not have gone ahead if they had not succeeded in negotiating a reduction to their satisfaction.
Much the greater part of the judgment was concerned with matters relating to the amount of damages the judge should award. It was common ground that the appropriate measure of damage was the diminution in value of the property. On pages 16–25 the judge considered the expert evidence on this issue. He preferred the evidence given on behalf of the claimants to the effect that the diminution in value was £250,000. This evidence not only took into account the roof defects which had to be repaired but also what was described as the stigma attached to defective properties, arising not only out of the suspicion that they had been poorly constructed in the first place but also out of the large risk factor remaining with the purchaser that the structural survey might have uncovered only half the problem.
Up to this point, the judge was concerned only with resolving issues of fact against a common background of law. He then turned to resolve some disputed questions of law.
The first (pages 25–28) was concerned with an argument by the defendants to the effect that the stigma was removed once the repairs had been carried out, and that to award the claimants £250,000 in these circumstances would be to give them an award for loss which they had not in fact suffered. After considering the effect of two leading cases the judge held that the damages were not to be reduced by reason of the carrying out of the repairs, having regard to the logic behind the prima facie rule that the measure of damage was the diminution value.
The second question of law which the judge had to resolve (pages 28–34) arose out of the defendants' argument that the claimants ought to have mitigated their damage by charging the cost of the repairs to the tenants as part of their service charges, given that the tenants' leases contained repairing covenants. The judge considered the effect of five authorities before reaching his conclusion that the claimants' non-recovery of this cost, or part of it, from the tenants did not constitute an unreasonable failure to mitigate their damage.
Finally, the judge considered an argument by the defendants to the effect that the damages ought to have been reduced by £40,000, being the amount the claimants recovered from the original builders pursuant to a warranty whose benefit had been assigned to them, and that because this settlement of the warranty claim was unreasonably low, a larger sum should be allowed in mitigation of damages under this head.
The judge considered two authorities quite briefly (pages 34–35) before concluding that the recovery of £40,000 represented a collateral benefit under a wholly independent contract which did not have to be taken into account. He then went on to consider the evidence about the level of the settlement, and concluded that the settlement of £40,000 was reasonable.
It will therefore be seen that the judgment was concerned partly with the resolution of issues of fact which had no real interest to anybody other than the parties, and partly with the resolution of three disputed issues of law which could be of wider interest and application.
After hearing counsel on 5th November, the judge gave a short ruling in which he concluded that there were strong public interest grounds for formally delivering his judgment in open court. He immediately granted permission to appeal, and the effect of his ruling has been stayed until the conclusion of this appeal. He accepted that judgment was not given within the meaning of CPR 40.7(1) when it was sent to the parties' lawyers on 14th September, and he also accepted that it was open to parties to settle their case at any time, whether before or after judgment was handed down. He observed that a judgment for damages only has no effect unless it is incorporated in an order of the court, which must be sealed by the court ( CPR 40.2(2)(b)). It was not the practice to seal written judgments, whether formally handed down in open court or not, and oral judgments could not of course be sealed. It was always open to the parties, after hearing or reading a reasoned judgment, to invite the court to make a consent order in some other terms at any time before an order of the court was perfected in pursuance of the judgment.
After considering the arguments addressed to him by counsel the judge concluded:
"The general point in favour of not handing down the judgment is that to do so could lead to further costly litigation. In my judgment, I have a discretion whether to hand down the judgment. The risk of further costly litigation is certainly a weighty matter to hold in the balance. Nevertheless, I think that in general, where a judgment has been finalised and notified to the parties and they enter into a settlement in the light of that judgment, there are overriding public interest...
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