Sunley v Gowland White (Surveyors & Estate Agents) Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE CLARKE,LORD JUSTICE LONGMORE |
| Judgment Date | 10 February 2003 |
| Neutral Citation | [2003] EWCA Civ 240 |
| Date | 10 February 2003 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | B2/2002/1205 |
[2003] EWCA Civ 240
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LEEDS COUNTY COURT
(Mr Recorder Thorn QC)
Lord Justice Clarke and
Lord Justice Longmore
B2/2002/1205
Mr P Butler (instructed by Messrs Merritt & Co, Stockton on Tees) appeared on behalf of the Appellant Claimants.
Mr I Collett (instructed by Messrs Brokerlink, London EC3) appeared on behalf of the Respondent Defendant.
Introduction
This is an appeal, brought with the permission of Carnwath LJ, against a decision or ruling of Mr Recorder Thorn QC on the first day of the trial of this action, 27th May 2002, by which, to my mind at least, he ruled that a draft soil report issued by RPS Technology Ltd ("RPS") and dated October 1996 was not admissible in evidence. As a consequence of that ruling the claimants decided that they could no longer pursue their claims and submitted to judgment. In the result, the claim was dismissed and the claimants were ordered to pay the defendants' costs. In this appeal the claimants seek an order setting aside the ruling and the judgment and directing a new trial.
The claim
The claimants claim damages for negligence against the defendants, who are surveyors and valuers. On 9th July 1996 the defendants issued a mortgage valuation report on a petrol filling station in Stockton on Tees. The report expressed the opinion that the open market value of the property was about £162,500, which was the asking price. The claimants' case is that the defendants were negligent in expressing that opinion because they ought to have expressed the caveat or reservation that there should be a further independent survey to check for the presence or absence of underground contamination, having regard to the nature of the business carried on by the vendor. As a result, they were not alerted to the fact that there was contamination or that they would have to carry out substantial remedial works at a cost of up to £30,000. They say that if they had been so informed they would either have paid less or would not have bought the property at all and the property would have had a lower value than they paid for it.
The steps in their case (as it was put, or was to be put, at the trial) and the defendants' responses may be summarised shortly in this way:
3.1Although the defendants were engaged by TSB, who were the proposed mortgagees, they owed a duty to the claimants to exercise reasonable care and skill in carrying out the valuation. The defendants admit that they owed such a duty to the claimants, although they say that its scope was limited by the terms of their engagement by TSB.
3.2The defendants were in breach of that duty for the reason already stated, namely that they should have advised that a further independent survey be carried out which would, or might, affect the value. The defendants deny the alleged breach.
3.3The claimants relied upon the valuation of £162,500 in the report and bought the property at that price. I do not think that the defendants dispute this step in the claimants' case.
3.4If the defendants had not been in breach of duty they would have included the advice to which I have referred in their report, so that their opinion as to the value of the property would have been subject to the reservation to which I have referred. This is in dispute.
3.5If the valuation had included the reservation the TSB would have instructed an independent expert. Moreover, the TSB would have instructed RPS, as evidenced by the fact that it in fact did so, albeit after exchange of contracts on 6th September 1996 and before completion on 27th September 1996. The draft report of RPS was produced in October 1996, which was thus after completion. The defendants, I think, accept that that is what in fact happened, but not what would have happened.
3.6Contracts would not have been exchanged until RPS had reported. RPS would have reported much as they did. The report would thus have contained the following:
(i)The former owners and/or operators had caused significant contamination within the forecourt area of the site, most probably due to the spillage and/or leakage of diesel fuel.
(ii)The migration of petroleum hydrocarbon within the subsurface was likely to be relatively low.
(iii)So was the risk of contamination of ground water and/or surface water, so that, provided that the contamination was not due to an ongoing leak, the risk of Environment Agency enforcement was relatively low.
(iv)The greatest impact of the contamination was likely to be the cost of its removal to allow refurbishment or replacement of the underground fuel storage and distribution system and/or the future sale of the property.
(v)The estimated cost of the work was likely to add up to £30,000 depending on the circumstances.
(vi)RPS would have reported, as in fact they did, as follows:
"In summary, the options appear to be:
(1)Do nothing, or
(2)Resolve the problem caused by the hydrocarbon pollution to current standards whilst seeking to mitigate the costs by possible recourse to the former owners and suppliers of fuel.
RPS recommend that the second course of action be adopted …"
It is in dispute as to what, if any, report would has been commissioned or indeed made.
3.7If the valuation had been subject to a reservation such as that stated above the claimants would not have purchased the property at £162,500 but for less.
3.8I think it is, or was, the claimants' case that they would have purchased for some £30,000 less; although their claim is for £35,000, which includes £5,000 expenses of one kind and another. In this regard the claimants' case depends upon the opinion of a Mr C G Brown, who is an expert surveyor and valuer instructed by them, whose opinion is based at least in part upon the contents of the RPS report.
I should note at this point that there was thought to be something in the RPS report which supported the suggestion that there was visible leakage and contamination. The claimants conceded before the Recorder that that was not part of their case. They have conceded it again today; and if this matter goes to trial they have indicated that no such allegation will form any part of their case. I can see no conceivable basis upon which they could resile in the future from that concession.
Deployment of RPS report in the action
In the particulars of claim the claimants relied upon the RPS report in paragraph 11, which set out particulars of the alleged breach of the duty of care. In subparagraph (c) they quoted the part of the report which set out what should be done and the likely cost of £30,000. In subparagraph (d) they relied on the report "as evidence of the fact that the defendants have failed to observe and report that the property was contaminated by Volatile Organic Compounds and therefore they have not reported accurately on possible environmental issues". That paragraph they do not, as I understand it, now wish to pursue. In paragraphs 12 and 13 the claimants alleged that the property was worth less than the defendants' valuation and the price paid and relied upon the report of their expert, Mr Brown, who stated that the diminution in value was about £35,000. As can be seen, the RPS report was relied upon in a very different way in the pleadings from the way indicated in my earlier summary of the claimants' case.
In the defence the defendants denied the alleged breach of duty, although they admitted paragraph 11(b) and (c) of the particulars of claim and stated that paragraph 11(d) was "noted". On 4th September 2001 the court gave the defendants leave to amend paragraph 11 "to bring into issue the contents of the report from RPS". In the amended defence served pursuant to that order the defendants asserted that they complied with their instructions and added:
"(b)In any event, and without prejudice to the foregoing, the Claimants have not suffered any damage. The matters set out in the draft RPS report dated October 1996 … in relation to the storage tanks and distribution system do not establish a diminution in value as alleged or at all. The matters there described would not have the effect of diminishing the value of the relevant property as alleged or at all. They would properly amount to maintenance items.
(c)The matters set out in the Draft RPS Report in relation to the presence of VOCs in the soil samples analysed do not properly provide the basis for a finding/conclusion of contamination, whether properly falling within the scope of the Defendant's reporting duties on `environmental issues' or not.
(d)In any event, the Draft RPS Report provides no sound basis for the estimated cost of refurbishment there set out of £30,000."
The defendants thus pleaded to the points made by the claimants in reliance on the RPS report without suggesting that it was inadmissible or that the claimants were not entitled to rely upon it. In a request for further information the defendants asked a number of questions about the report, which the claimants answered.
The claimants instructed Mr C G Brown as their expert on the question whether the defendants were negligent. In his report dated 19th December 2000 he referred to the RPS report and in particular to the fact, first, that it concluded that there was evidence of contamination and, secondly, that it estimated the cost of removal at about £30,000. He concluded that a competent valuer...
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