Watts v Morrow
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE RALPH GIBSON,LORD JUSTICE BINGHAM,THE PRESIDENT |
| Judgment Date | 30 July 1991 |
| Judgment citation (vLex) | [1991] EWCA Civ J0730-6 |
| Docket Number | 91/0803 |
| Court | Court of Appeal (Civil Division) |
| Date | 30 July 1991 |
[1991] EWCA Civ J0730-6
The President
(Sir Stephen Brown)
Lord Justice Ralph Gibson
Lord Justice Bingham
91/0803
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
OFFICIAL REFEREES BUSINESS
(HIS HONOUR JUDGE BOWSHER, Q.C.)
Royal Courts of Justice
MR RUPERT JACKSON, Q.C., and MR IAIN HUGHES, instructed by Messrs Pinsent & Co., appeared for the Appellant (Defendant).
MR PHILIP NAUGHTON, Q.C., and MR JONATHAN ACTON DAVIS, instructed by Messrs Goodman Derrick & Co., appeared for the Respondents (Plaintiffs).
This is an appeal by the defendant, Mr Ralph Morrow, FRICS, a building surveyor, against the judgment obtained by the plaintiffs, Mr & Mrs Watts, on 9th November 1990, after trial of the action by His Honour Judge Bowsher, Q.C.. The action arose out of a negligent survey report by the defendant made in August 1986 upon Nutford Farm House, Blandford in Dorset which the plaintiffs were proposing to buy and thereafter bought. The judgment awarded £33,961.35 for the cost of certain repairs to the house, with £12,839.87 for interest; and £8,000 (£4,000 for each plaintiff) for "distress and inconvenience" with interest of £477.81. At the trial liability was in issue but the defendant's appeal is on damages only. He contends, firstly, that the judge was wrong in law to award damages based upon the cost of repairs and that the award should have been, on the basis of diminution in value or excess purchase price paid, in the sum of £15,000; secondly, that any award for distress and inconvenience was wrong in law, alternatively that the award of £8,000 was excessive; and, thirdly, that the award of interest was based upon an excessive rate.
The case raises questions of general importance both for surveyors of houses and for those who buy houses in reliance upon survey reports. The defendant contends that the learned judge has disregarded the rule which, since 1956 at least, has been generally held to apply to such cases as this. The plaintiffs assert that there is no such rule or, if there is, that it is wrong to apply it in this case. It is necessary to set out the facts in some detail.
Summary of the facts
(i) Mr Watts is a stockbroker employed by Barclays de Zoete Wedd U.K. Equities Ltd. Mrs Watts, a solicitor, is a director of Kleinwort Benson Ltd, merchant bankers. In 1986 they were married and living in a house in Cloudesly Road, Islington. They decided to look for a country house for use at weekends and holidays.
(ii) Their case at trial was that they both wanted a house which would be, so far as possible, trouble free and into which they could move without the need for any substantial works of repair. It was to be a second home for use at weekends and holidays. Each had a substantial income but considered that, although they could buy a new house within a budget of £170,000, they could not afford to buy a house which required the carrrying out of any expensive repairs. Further, they did not have the time or energy to get involved in doing up a house which required extensive repairs or improvements.
(iii) Mr Watts found and "fell in love with" the house. It was a larger house than Mrs Watts had expected to buy but, as she said, "it was very beautiful, a house with a heart and difficult to resist", built in the 18th and 19th century. The house is substantial with three quarters of an acre of garden and three acres of paddock. It is near the river Stour and the vendor was willing to let the purchaser have some fishing rights.
(iv) The asking price of the house was £175,000. There was another prospective purchaser. The plaintiffs decided to offer £177,500. That was acceptable to the vendor. Before entering into a contract to buy, the plaintiffs decided to get a full and detailed survey to ensure that there were going to be no unexpected costs.
(v) Mr Watts instructed the defendant in August 1986. The defendant was asked to provide a full structural survey of the house. Mr Watts told Mrs Morrow, who received the instructions, that he wanted to be sure that the £177,500 offered was the right price in the current market.
(vi) On 26th August the defendant sent to Mr Watts his structural report on the property. The fee charged was £400 plus disbursements and VAT. The report was detailed and long. It mentioned many defects and made recommendations for repairs, but the plaintiffs found it reassuring. The general criticism made of the report, which the learned judge held to have been made out, was that, as a recurring theme, the defendant pointed out a defect in the house and then gave a reassurance that the defect could be dealt with as a part of ordinary ongoing maintenance and repair. The "conclusion", which summarised the tone of the report although not all its detail, was as follows:
"Despite earlier minor settlement I found the overall dwelling house to be sound, stable and in good condition. Attention is particularly required to the sometime eradication of wood borer in roofing timbers, and to minor works of eradicating continued dampness in ground floor walls. Ideally some insulation would be introduced to upper ceiling areas, but in general, the defects referred to within this report can normally be identified as being associated with regular maintenance required with a building of this age and type.
The foul drainage arrangements, while apparently adequate, and not ideal, and some further rationalisation and improvement of this may be required in the sometime future, but with attention given to the various aspects referred to within this report, which could well be attended to on an ongoing basis, I am satisfied that a comfortable and largely troublefree dwelling of considerable charm can be attained."
Nothing was said in the report about the value of the house.
(vii) On receiving the report the plaintiffs read it with care and, as the judge held, reasonably concluded that there was nothing to suggest that any major repairs would be required in the foreseeable future and that nothing was required which could not wait until between them they had funds to spare for such work. Mr Watts by telephone asked the defendant whether the price of £177,500 was fair and whether the repairs which the defendant had recommended would result in substantial expenditure. The defendant replied that the valuation was fair and that no repairs would be substantial in terms of cost. That reply was not relied upon as constituting a warranty, whether express or implied.
(viii) In reliance upon the report the plaintiffs decided to buy the house. The contract was made on 15th October 1986 at the price of £177,500. It was agreed that completion would be deferred and it took place on 10th April 1987 with the assistance of a mortgage loan from Kleinwort Benson to the plaintiffs on ordinary commercial terms.
(ix) Defects were discovered in the house beyond those of which warning was given in the defendant's report. After taking possession in 1987 Mr Watts asked Mr White, a builder, for a quotation for work which included the remedying of certain defects identified by the defendant, namely the roof flashing and defective windows. On examining the house for those purposes, Mr White informed Mr Watts of other defects and Mr Wadey, FRICS, was then instructed to carry out a full structural survey. His report, dated 3rd August 1987, included the following: (a) that the roof was due for renewal with felting, re-battening and retiling; (b) the chimneys and main walls required repointing in places; (c) lead flashings needed to be installed; (d) window casements and frames generally needed to be upgraded and replaced; (e) the first floor timbers needed specialist woodworm treatment and refixing of firring pieces with extensive renewal of floor boarding. He reported other defects as well which were not relied upon against the defendant at the trial.
(x) If Mrs Watts had known of the defects described in Mr Wadey's report she would not have gone ahead with the purchase. If Mr Watts had known of those defects he would either not have agreed to buy the house or would have agreed to buy only if he had been able to negotiate a substantial reduction in the price based on quotations for the work recommended to roof, to floors and to windows.
(xi) Upon receipt of Mr Wadey's report it was obvious to Mr Watts that building costs running into many thousands of pounds would have to be done urgently. He obtained advice as to his right to claim redress in law for the failure of the defendant to describe the condition of the roof accurately. A formal letter before action was sent. Liability was denied.
(xii) Mr Watts then asked the builder to prepare an estimate for the repairs described in Mr Wadey's report. In September and October Mr White carried out the work to the roof and on 3rd November 1987 he was paid £11,212.50 for that work.
(xiii) On 11th November 1987 the writ was issued and in March 1988 the statement of claim was served. The main allegation was that the defendant had negligently failed to observe and advise the plaintiffs that the house was in a defective condition. The loss and damage alleged were, firstly, the difference between the price paid and the value of the house, and, in addition, the cost of repairs, of alternative accommodation, of furniture removal and storage, for loss of use of the property and for the cost in investigation of the defects. There was no allegation of negligent valuation.
(xiv) Between April and October 1988, for a period of six months, the other works, in respect of which...
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