| Date | 11 June 2008 |
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| Judgment | Charlton & Anor v Northern Structural Services Limited [2008] EWHC 66 (TCC) |
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| The Issue | Whether damages based on a diminuation in value can be assessed at a date later than the date of the breach. |
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| Implication | There is nothing inherently wrong in principle in assessing a diminuation in value loss at a later date than the date of the breach, subject to certain well defined criteria. |
print| In a recent decision in the Technology and Construction Court, criteria were given for the calculation of damages based on a diminuation in value; albeit that these criteria were specific to the circumstances of the case. The damages in question arose from a claim for professional negligence against a structural engineer and concerned structural cracking to a residential property. In 2000, Mr and Mrs Charlton (“the Claimants”) considered buying a terraced house in Cheshire. In granting the Claimants a mortgage, their Building Society imposed a condition that a structural engineer be employed to provide a report which addressed patent structural cracking as well as the proximity of trees to the property. Northern Structural Services Limited (“the Defendant”) was engaged to provide such a report. In the absence of a detailed survey or soil analysis, the Defendant reported that the cracking was due to corroded wall ties and that these should be replaced. In addition, it recommended that all trees within four metres of the building be removed. The Claimant followed these recommendations. During the next two years, the cracking became more pronounced. The Claimant obtained a second opinion on the underlying reason for the cracks which concluded that structural movement had resulted from clay heave following the removal of the trees. The Claimant contended that the Defendant was negligent by: (a) failing to identify the nature of the subsoil (b) wrongly advising that all mature trees be removed (c) failing to identify the cause of cracking when inspecting open trenches subsequent to the production of his Report. Judge Thornton decided that the Defendant was indeed negligent on all three fronts. In regard to the first failing, he found that the Defendant ought to have determined the nature of the subsoil by having trial pits or holes dug. Instead, the Defendant relied upon his experience of properties in the area in deciding that the subsoil was non-shrinkable. In regard to the second failing, the Judge said that the Defendant gave no thought to the inherent contradiction of concluding that the subsoil was non-shrinkable yet the removal of tall trees was desirable, even though he knew that cracking was not caused by trees or tree roots. Finally, in regard to the third failing, Judge Thornton said that the Defendant ignored clear evidence of substrata hydration in his inspections during 2001. Consequently, he concluded that the Claimant had suffered damages in consequence of the Defendant’s wrong advice. When it came to the assessment of damages, the Judge noted that the structural cracking had stabilised within four years of the trees being cut down. Other than cosmetic repairs, the Claimants were advised that no major repair work should be undertaken, given the potential for differential settlement with adjoining properties. Notwithstanding, the Claimants had to live in a property which, because of its well known recent history, suffered from the stigma of being susceptible to structural damage from clay shrinkage and swelling. Their claim against the Defendant was therefore based upon the diminuation in value of their property. The Claimants contended that they were entitled to base their calculation of the diminuation in value using a 2007 valuation for the property (when the action was raised against the Defendant) rather than in 2001 when the breaches occurred. Normally damages are assessed at the date of the breach but, on this occasion, Judge Thornton said that there was “nothing inherently wrong in principle in valuing a diminuation in value loss at a later date than the date of the breach”. In reaching his decision, the Judge said that “the date of the valuation has to be: (a) reasonable (b) a date that gave rise to a loss which is directly linked to the breach (c) a date that resulted from no break in the chain of causation and (d) a date that was not attributable to any failure on the part of the Claimant to mitigate its losses”. Judge Thornton said that the unusual approach taken by him in this case was based on the fact that the delay in getting to trial was caused in large part by the long period of time taken to monitor cracking. He further reasoned that had damages been calculated using property values at a date earlier than 2007, then the Claimant would have been entitled to claim interest on the damages so calculated.
CJ-0823
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