| Date | 28 April 1999 |
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| Judgment | Witts and Others -v- Montgomery Watson Ltd, TCC 3 March 1999 |
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| The Issue | Assessment of damages in negligence and betterment. |
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| Implication |
General discussion upon the measure of damages in contract and tort. |
printIn the 1988 case of Richard Robert Holdings -v- Douglas Smith Stimson Partnership, His Honour Judge Newey QC attempted to summarise the law relating to betterment. He stated "If the only practical method of overcoming the consequences of a defendant's breach of contract is to build to a higher standard than the contract had required, the plaintiff may recover the cost of building to that higher standard. If, however, a plaintiff, needing to carry out works because of a defendant's breach of contract, chooses to build to a higher standard than is strictly necessary, the courts will, unless the new works are so different as to break the chain of causation, award him the cost of the works less a credit to the defendant in respect of betterment." Judge Newey had taken precisely the same line in a case the previous year between the Board of Governors of the Hospital for Sick Children -v- McLoughlin and Harvey. He had summarised the position that "when a plaintiff, faced with a need to carry out works of amelioration because of a defendant's breach of duty, has deliberately chosen to rebuild to higher standard the courts have in justice to both parties dealt with the position by awarding the plaintiff the cost of the works, less a credit to the defendant in respect of betterment". The concept of betterment is very closely related to the question of necessary additional works where a building or facility has had to be reconstructed as a consequence of a defendant's breach. An example is found in the Commonwealth case of Auburn Municipal Council -v- ARC Engineering Pty Ltd. In this case the building was constructed on the advice of architects on slab foundations instead of piling. Failure occurred soon after completion, and the building had to be reconstructed using piled foundations. The architect had attempted to explain his position by stating that he had felt that the extra cost for piling was not justified and that it had been a reasonable 'gamble' to place the slab on the ground. The Judge concluded that it was a gamble which the client, had it been informed, would have been unlikely to have taken. Accordingly the Judge assessed damages as the cost of the rebuilding work necessary to restore the buildings to prevent further settlement of the floors, but gave a credit of $30,000 for the specific additional cost of the piling which would have had to have been expended in the first place to avoid the risk of failure. These cases all concern breach of contract. In the recent case of Witts and Others -v- Montgomery Watson similar issues arose in a case which was brought in breach of contract and in the alternative in the tort of negligence. Witts and their co-plaintiffs were owners of properties on the seashore at Putsborough Sands, near Braunton in Devon. The Sands are at the south end of a bay which faces due west out across the Atlantic Ocean. In 1990 a series of storms and high tides caused severe erosion of the sand dunes. As a result Witts engaged Montgomery Watson to prepare an appraisal report setting out its recommendations for the construction of sea defences to protect the properties. Following the appraisal report Montgomery Watson was instructed to prepare detailed designs in accordance with which coastal defences were constructed by April 1991. In February 1994 the new defences suffered damage and were repaired. In March 1995 the defences were again severely damaged. In due course Witts commenced proceedings for the cost of reinstatement works. Liability in the action was settled by agreement between the parties and it fell to the court to decide quantum. Expert witnesses instructed by each party came to an agreement at a figure in excess of £500,000 for the works. Counsel for Montgomery Watson argued however that credit should be given against this figure in respect of the difference between what was paid for in the initial scheme, and what would have had to have been paid to obtain the strictly necessary degree of sea defences now realised. Judge Newman noted that the starting point was that the liability in this case was in negligence and not breach of contract. In contract the measure of damages is based in restitution, that is, in a case involving a completely useless building the measure of damages will be fixed by such an amount as would put the owner of the building back into the position in which he was prior to embarking upon the enterprise. The extent of liability in the tort of negligence, however, is based on the test of reasonable foreseeability. The Judge considered that what is foreseeable if one is negligent in the preparation of an appraisal report and design for coastal defence works, is that the works will fail to a greater or lesser degree and the measure of damage will be the cost of making good the works. Judge Newman acknowledged that in the Scheme now proposed, the only practical method of overcoming the consequences of Montgomery Watson's negligence would have cost a great deal more than the original contract price. Nevertheless in this case the measure of damages was what was reasonably foreseeable that Witts would have to do to remedy the damage arising from Montgomery Watson's admitted negligence. Witts were therefore entitled to the sum for reconstruction works agreed between the experts, without credit for any difference in value against the original scheme.
CJ-9917
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