Property law reports

Negligent valuation: Damages

Structural movement - assessment of damages - valuer negligently failing to advise buyer that long investigation required before further movement could be ruled out - later investigation ruling out further movement - retrospective value much higher than value that defendant should have reported - defendant arguing for retrospective valuation

McKinnon and another v e.surv Ltd (formerly known as GA Valuation & Survey Ltd): ChD (Jonathan Gaunt QC, sitting as a deputy judge of the division): 14 January 2003

In June 1999, the claimants bought a house in Hornchurch for 185,000.

They relied on a valuation made by the defendant in April 1999.

This reported that although the property had been affected by minor structural movement in the past, such movement appeared to be long-standing and was unlikely to be progressive.

The claimants were later advised that the risk of further movement was far greater than had been reported earlier, and they brought an action in negligence.

On the basis of certain admissions made in the defence, judgment was entered for the claimants on 15 April 2002, with damages to be assessed.

A hearing to determine the amount of damages recoverable was directed to proceed on the basis that the following matters were not in dispute.

In April 1999, a competent surveyor would have advised the claimants that the possibility of further movement could not be ruled out without an investigation involving a period of monitoring.

Pending such investigation, the house would be unmortgageable and its value would be no more than 90,000 (the immediate valuation).

The possibility of further movement (since April 1999) had eventually been ruled out [a conclusion reached by an expert jointly appointed by the parties] thus allowing for a retrospective valuation of 148,000.

The claimants contended that the damages should reflect the difference between the purchase price and the immediate valuation.

The defendant claimed that the difference should be based on the retrospective valuation.

Neil Mendoza (instructed by Lewis Silkin) for the claimants; Justin Althaus (instructed by Prettys, Ipswich) for the defendant.

Held, judgment was given for the defendant.

As submitted by the claimants, the proper measure of damages was generally the difference between the value of the property in its assumed good condition (as it was described) and its value in the bad condition that should have been reported to the client: see the formulations of Lords Justice Denning and Morris in Philips v Ward [1956] 1 WLR 471, at pp473 and 476.

However, that was only a prima facie rule, which had to be applied in the light of the overriding principle requiring the injured party to be put in the same position as he would have been in if he had not sustained the wrong in question: see Lord Blackburn in Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at p39.

Applying that principle, it was plain that the claimants, having obtained and retained a property now known to be worth 148,000 at June 1999 values, would be overcompensated if they were paid 95,000 in damages.

That the court not only might, but also must, admit hindsight evidence was a general principle of assessment: see Bwllfa and Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks Co [1903] AC 426, as applied, for example, in Kennedy v KB Van Emden & Co [1997] 2 EGLR 137, Charles v Hugh James Jones & Jenkins [2000] 1 WLR 1278, and Morgan v Perry (1973) 229 EG 1737.

The claimants derived no assistance from Daisley v BS Hall & Co (1972) 225 EG 1553, which was criticised by the Court of Appeal in Gardner v Marsh & Parsons [1997] 1 EGLR 111.

Landlord and tenant: Possession order

Suspended possession order - breach - subsequent payment of arrears - order ceasing to be enforceable once arrears paid off - whether appellant's secure tenancy thereafter revived - judge finding no secure tenancy - appeal allowed

Swindon Borough Council v Aston: Court of Appeal (Lords Justice Schiemann and Jonathan Parker and Mr Justice Pumfrey): 19 December 2002

The appellant was originally a secure tenant of the respondent council's predecessors in title, but, in late 1991, a possession order was made against him on the ground of unpaid rent arrears.

The order was suspended on the condition that the appellant pay a weekly amount off the arrears in addition to the rent, and that 'the judgment shall cease to be enforceable when the...

arrears of rent and...

costs...

are satisfied'.

In January 1994, a warrant was made for the appellant's eviction, but this was suspended on similar terms.

The appellant breached the terms of the suspended orders, but, in January 1996, he paid off all arrears and his rent account went into credit following a one-off payment of housing benefit.

In 1997, the respondents purported to provide the appellant with a new tenancy agreement.

They later complained to him about alleged breaches of this agreement.

In November 2000, the respondents served the appellant with a notice to quit and a 'without prejudice' possession notice under section 83 of the Housing Act 1985.

The former would be applicable if the appellant were not a secure tenant.

If he were such a tenant, the section 83 notice would be a prerequisite for proceedings to terminate his tenancy.

On the trial of a preliminary issue, the district judge held that the tenant did not hold a secure tenancy, since his tenancy had determined on the breach of the 1991 order, and had not thereafter been revived.

The appellant appealed.

Robert Latham (instructed by Wood Awdry & Ford, Chippenham) for the appellant; William Okoya (instructed by the solicitor to Swindon Borough Council) for the respondents.

Held, the appeal was allowed.

Following the determination of the appellant's original tenancy on breach of the 1991 order, he had remained in possession, with the landlords' permission, as a 'tolerated trespasser'.

It had not been agreed to waive the breaches and so revive the tenancy.

There had been only a possibility, to which the payment of rent was referable, of either the landlords or the appellant applying to the court to have the tenancy revived under section 85 of the 1985 Act.

On the true construction of the 1991 order, it had ceased to be enforceable by warrant of possession when the appellant paid off the arrears and costs, but, because of his earlier breach of the order, he had not thereby ceased to be a trespasser.

However, from that time onwards, his continued payment of rent was no longer referable to the possibility of a section 85 application.

Section 85(4) was not applicable because the appellant had not complied with the conditions on which the order had been suspended, and an application to postpone the date for possession under section 85(2) was not possible because the order had ceased to be enforceable: Marshall v Bradford Metropolitan District Council [2001] EWCA Civ 594; (2002) HLR 22 applied.

The conduct of the appellant (in remaining in occupation and paying the increased rent) and of the respondents (in relying on the terms of the new agreement) was sensibly referable only to the grant of a new tenancy, although each case would depend on its own facts.

It was not possible to view the relationship between the parties, after the 1991 order became unenforceable, as being other than that of landlord and tenant.

Accordingly, the appellant held a secure tenancy: Burrows v Brent London Borough Council [1996] 1 EGLR 32 and Greenwich London Borough Council v Regan (1996) 28 HLR 469 considered.