Mr Justice Fraser:
- This judgment concerns a claim for professional negligence brought by the three claimants, all members of the same family, against the defendant E.A.R. Sheppard Consulting Civil and Structural Engineers Ltd which, as the name suggests, is a practice of civil and structural engineers ("Sheppard Ltd"). The claim arises out of the structural condition of a property at 27 Fearon Road, Hastings, East Sussex, ("the Property") which was inspected and reported upon by Sheppard Ltd in June 2011 prior to its purchase by the claimants in October 2011.
- In very brief terms, after the purchase was completed certain construction works were commenced on behalf of the claimants, which were then stopped by Building Control from the Local Authority, Hastings Borough Council, due to the Property's existing structural condition. The claimants thereafter took further structural engineering advice and, in circumstances which I will describe further below, were informed that the Property's structural stability was such that it ought to be demolished. The demolition in fact took place in July 2013. A replacement house was thereafter constructed on the same plot.
- These circumstances have led to a claim in negligence being brought against Sheppard Ltd by the claimants on the basis that the inspection and report in June 2011, prior to their purchase of the Property, was negligent and in breach of the duty of care owed by Sheppard Ltd to the claimants. The claimants' case is that had Sheppard Ltd provided the professional services without negligence, the claimants would not have bought the Property at all and would have avoided all the loss associated with that. Sheppard Ltd denies negligence but also maintains a plea of contributory negligence against the claimants. Quantum is not fully agreed, but the majority of it is agreed.
B: Factual background and chronology
- The background facts and chronology are also largely not in dispute. Dr David Scott is the father of Christopher Scott, who was a Major in the British Army when proceedings commenced. He retired from the Army in September 2015 and at the time of the trial worked for Barclays plc. Christopher Scott is married to Elizabeth Scott. I shall refer to them as Dr Scott, Mr Scott and Mrs Scott respectively. The events relevant to the trial occurred in 2011 and 2012, although the Property was built in 1890 and had been underpinned at some time in the 1980s.
- Dr Scott and his wife, who is not a claimant, live at 15 Laton Road, Hastings. The gardens of Laton Road back onto the gardens of Fearon Road. Dr Scott is a Consultant Paediatrician. In 2011, Mr and Mrs Scott were living in Wellington in New Zealand. At that stage, Mr Scott was a Captain in the Army and they had moved to New Zealand in August 2009 when he was posted there, serving at the British Embassy. Mr and Mrs Scott were aware, however, that they would be returning to the United Kingdom in due course, and so in the early part of 2011 they considered purchasing a house in Hastings. This was because they knew that Mr Scott's military career would continue to involve him in prolonged absences from home, and with a small child, proximity of Mrs Scott to Mr Scott's parents was an important consideration. Mrs Scott also intended to train as a teacher when she returned to the United Kingdom. Mr Scott knew that he was to return to his Regiment, which was the 4th Battalion Royal Artillery, in July 2011, and he was to be deployed with the Regiment to Afghanistan on operations in September 2012. The Regiment's home in the United Kingdom was Catterick in North Yorkshire.
- Accordingly, sometime in early 2011 they made an offer to purchase a house in Baldslow Road in Hastings. However, in May 2011, Dr Scott informed them that the Property had come on to the market. Dr Scott already knew the owner of the Property as he and his wife had previously purchased a small strip of land from the owner, that small strip having formed part of the garden of the Property. This purchase had been made by Dr Scott and his wife in October 2010 for £6,000 from Mr Shenton, the elderly gentleman in his eighties who then lived in the Property and had done for many years. In fact, the transaction had been handled on Mr Shenton's behalf by his daughter, Mrs Nelson. During the discussions at that time, Mrs Nelson had told Dr Scott that at some point in the next couple of years the Property itself may become available for purchase. Mr Shenton moved into a nursing home in 2011 and so this came to pass at about the same time as Mr and Mrs Scott were contemplating a purchase in Hastings.
- The discussions that then took place between Dr Scott on the one hand, and Mr and Mrs Scott on the other, were not entirely usual in that the latter were at that point still in New Zealand. They were therefore conducted either by Skype or telephone. Effectively, Mr and Mrs Scott asked Dr Scott to put the various arrangements in hand in order, to use the phrase of Mr Scott, "to get things going". Dr Scott then did so, including engaging Sheppard Ltd in the circumstances I explain further below, which included a structural survey being performed by Mr Edward Sheppard of Sheppard Ltd. After receiving and considering the views of Mr Sheppard, the Property was purchased for £247,000 (against an initial asking price of £310,000) by the three claimants, partly by means of a mortgage taken out by Mr and Mrs Scott, together with Dr Scott and his wife contributing a cash sum of £109,000 from their own resources. It was because of this arrangement that a series of issues in this litigation arose, sensibly conceded at the trial by Mr Goldstone for the defendant, concerning whether Sheppard Ltd owed a duty to either of Mr and Mrs Scott, and/or whether they were undisclosed principals, in addition to the duty owed to Dr Scott. At the trial, it was conceded that such a duty was indeed owed to all three claimants.
- There is one particular feature of this case that merits mention at this early stage in this judgment, and that is the suspicion that appears to have been present from 2013 onwards, on the part of those representing Sheppard Ltd, towards the three claimants and the claim generally. I address this further in the section dealing with witnesses (both factual and expert). There is no doubt that the particular personal circumstances of the three claimants are not entirely usual; Mr and Mrs Scott were literally on the other side of the world during the formation of the retainer with Sheppard Ltd, for example, which meant that Sheppard Ltd was engaged by Dr Scott and not them. Also, following discovery of the state of the property in 2012, Mr and Mrs Scott were advised to have the property demolished by more than one structural engineer, and did indeed choose to follow that advice, and the property was (but only after a period of time) demolished. It is correct to state that from time to time some people make unfounded claims on insurers, and it is of course not only understandable but entirely right that insurance claims are subjected to appropriate scrutiny. However, in this case an air of suspicion appears to have seeped into most parts of the case, with the notable exception of quantum. As a practice of professional engineers, I assume Sheppard Ltd are insured, but whether they are or not does not affect any of my findings. I do not know whether it was the unusual circumstances of this case that led to this air of suspicion, or something else. Certainly it seemed to have been a central plank of the defence, at least for the first day of the trial, that the claimants collectively were highly interested in the plot but not the house, had always intended to demolish this house, and build a replacement.
- In my judgment there is nothing in the evidence before the Court to justify the degree (or indeed any) suspicion of the kind demonstrated by some of the points relied upon in the course of proceedings on behalf of Sheppard Ltd. I will deal with the different points in more detail when I come to the witnesses. However, the notion that Mrs Scott, with a young child (who was 3 years old in 2011) and about to train for and then embark upon a new career, with a husband who was to be not only away from home, but serving in the Army on operations in Afghanistan with all the well-known risks this entailed, would also voluntarily embark upon a course of action that involved having her house demolished and a replacement one constructed in its stead, needs only to be expressed to be seen, in my judgment, as wholly fanciful.
- Also, the sums at stake, although considerable for the individuals involved, are not large in the context of a contested four-day High Court trial. Mr Sheppard, a highly respected structural engineer of fifty years' experience, also faced having his professional judgement criticised in a judgment as being negligent. A case of this nature, in my judgment, cries out for resolution by mediation. If it is the degree of suspicion to which I have referred, or unreasonable behaviour on either side, which has contributed to failures in the mediation process, that is highly regrettable for all involved.
C: The Issues for determination
- The issues are agreed by the parties to be as follows. The essence of the case against Sheppard Ltd is that Mr Sheppard failed to exercise reasonable skill and care in both his inspection and report by failing to advise that the Property ought to be demolished when he inspected it in 2011. The italicised phrases below also appear in the agreed list.
1. Did D owe a common-law duty to C2/C3 in respect of its report?
(Answer: 'yes', conceded by D)
2. Are C2/C3 entitled, as undisclosed principals on the contract of retainer between D and C1, to sue D?
(No longer relevant in light of the concession at issue #1)
3. As at 30 June 2011 did the Building need to be demolished either by reason of:
a. The extent to which the external walls of the Property were tilting?
b. The extent to which the floors within the Property were sloping?
c. The condition of the roof?
d. Any combination of those factors?
4. If the answer to any of (a)-(d) is 'yes' was D negligent in not advising that the Property needed to be demolished?
5. What is the relevance (if any) of the inspections of the Property carried out by, and the conclusions drawn by:
a. Mr Farrow of the local Council
d. Mr Best of BdR.
6. What is the relevance (if any) of the facts that, after D inspected the Property and before the BdR and Tribrach reports were made:
a. A flood occurred owing to the failure of a water tank in the roof space; and
b. The Property had been stripped out.
7. Did Cs rely on D's report in deciding to purchase the Property at a price of £247,000?
(It is accepted that each of the Cs had read D's report prior to purchasing the Property)
8. Would Cs have decided to purchase the Property (and if so at what price) had D advised that it needed to be demolished?
(It is conceded that the Cs would not have purchased the property had D advised that it needed to be demolished)
9. What sum should be awarded to Cs in relation to their claim for overpayment in respect of the acquisition of the Property: Schedule of Loss paragraph 1: is the proper sum:
i. £177,000 (Cs' case)
ii. £115,000 (D's case) or
iii. some other sum, and if so what sum.
10. What sum, if any, ought to be awarded in relation to the claim for miscellaneous expenditure (Schedule of Loss paragraph 2)?
11. What sum, if any, ought to be awarded in relation to the claim for accommodation and storage costs (Schedule of Loss paragraph 3)?
12. Were Cs contributorily negligent in failing to inform D of their plans to carry out works to the Property including a roof conversion?
13. If so, what discount should be made to any judgment sum?
14. In the event that Cs recover damages, what award of interest should be made under sect.35A Senior Courts Act 1981.
- Although there were a large number of disputes of fact at the commencement of the evidence, particularly concerning the physical state of the building when Mr Sheppard inspected it in 2011, by the time closing submissions came to be made many of these had been resolved.
D: The Witnesses
- Each of the claimants gave evidence, together with Mr Shaun Best, a civil and structural engineer who is a Director of BdR Civil and Structural Engineering Consultants ("BdR"). Mr Best had inspected the property in 2012 and produced a report dated 6 March 2012 after Hastings Borough Council had put a stop to the conversion works. For the defendant, Mr Sheppard gave evidence. The evidence of Ms Mickie Sutcliffe, who at the time was the receptionist at Sheppard Ltd and had taken the instructions from Dr Scott by telephone, was agreed.
- Expert evidence was given on structural engineering by two structural engineers, Mr Taylor for the claimants and Mr Cockayne for the defendants. The only expert witness concerning quantum was from Mr Harrap of Knight Frank, a Chartered Surveyor. The defendant did not call any expert evidence concerning quantum.
- So far as the witnesses of fact are concerned, I found all five of them completely honest. In particular Mr Sheppard, whose professional views were being challenged as negligent, was refreshingly frank about his opinions concerning movement in buildings.
- There was a stark difference between the expert structural engineers which I consider in detail, and make findings on, below. Dealing with the witnesses in the order in which they were called, my view of them was as follows.
- Mrs Scott had to deal in her cross examination with something of a Victorian approach to the role of women in modern society, namely that she had no particular input into any of the decisions concerning the purchase of the Property and was at the time entirely guided by the male claimants, in particular her father-in-law who, it was said, was paying for everything. It was expressly put to her that everything was "up to her father-in-law". She dealt with these suggestions with a great deal more politeness than they merited. She did however roundly dismiss them, and I have no doubt that Mrs Scott was a fully involved and entirely independently minded decision-maker in what was obviously a joint decision by her and her husband concerning purchase of the Property and the future of their family.
- She and Mr Scott had made an offer on 11 Baldslow Road in April 2011 when they were back in the United Kingdom from New Zealand for a short holiday. When they realised that the Property was available, they were very interested in purchasing it. They knew that it needed "a fair amount of renovation and refurbishment", but so did Baldslow Road. They proceeded with the possible purchase of the Property. Dr Scott obtained what is called a RICS Home Buyer Report, which followed an inspection by Mr Ramsden of the RICS for Meridian Surveyors following an inspection of 10 June 2011 ("the Home Buyer Report"). RICS stands for the Royal Institution of Chartered Surveyors, and this is an independent professional body originally established in the United Kingdom by Royal Charter. This is referred to in the Agreed Issues as the Meridian Report. I deal with the reports in the next section of this judgment.
- There were advantages in purchasing a property close to Dr Scott and his wife, but as Mrs Scott explained, although this made the Property convenient it was not the sole reason for the purchase. Mrs Scott intended to start teacher training in Brighton in September 2012 and so Hastings was convenient for that purpose too, not simply its proximity to family for help with childcare. She explained that although she and her husband had plans to renovate the Property, there were no plans in this respect at the time that the survey was performed, although they knew some remedial works were required. Plans were drawn up by a company called Elevations for a loft conversion – this involved removing some walls, installing new staircases and effectively remodelling the interior of the house. This was in August 2011, after the time when the further structural engineer's report recommended in the Home Buyer Report had been provided by Sheppard Ltd. A quotation was obtained from a company called Whirligig to perform these. The Sheppard Report stated that the remedial works necessary to deal with the structural issues identified in the Home Buyer Report would cost in the region of £25,000 excluding VAT; this gave Mrs Scott sufficient comfort that she and Mr Scott went ahead with the purchase.
- Mrs Scott discovered the true condition of the Property in the following circumstances. A practice of engineers, BdR, provided the architect engaged for the loft conversion works with a quotation dated 6 January 2012 for a desk top study and loading analysis of the structural loads for the proposed loft conversion. That study and analysis was carried out by BdR in February 2012. Once the post-purchase conversion works started, and further consideration had to be given to the structural condition of the Property, BdR was called to the Property for an inspection in late February 2012. Mrs Scott was told the conclusion of that inspection over the telephone by Mr Darryl Turk of Whirligig on 28 February 2012. He told her that BdR recommended that the Property should be demolished. Her evidence, which I fully accept, was that she was very shocked when she learned of this. She then informed Mr Scott and Dr Scott. The views of BdR were then put in a report ("the BdR Report") dated 6 March 2012.
- Because of the seriousness of the situation, Mrs Scott explained that the claimants decided to seek a further opinion, this time from another firm of consulting civil and structural engineers called Tribrach Associates. That report was available at the trial, although nobody from Tribrach Associates was called as a witness. That Report is dated 22 March 2012 and was signed by Mr Turner, also a qualified structural engineer. It too recommended demolition. Accordingly, a decision was taken to demolish the Property. An initial letter of claim was sent by Mr and Mrs Scott's solicitors dated 7 August 2012 to Sheppard Ltd giving the background and explaining demolition was advised and intended. Sheppard Ltd was urged to have a survey carried out forthwith for obvious reasons. A firm of loss adjusters were instructed for Sheppard Ltd called Walsh PI and correspondence ensued. In fact, the demolition took place but a year later in July 2013. Although Mr Payne, who was an engineer from Walsh PI, did inspect the Property prior to demolition, he did not appear before me to give evidence and was not a witness called on behalf of Sheppard Ltd.
- Mrs Scott eloquently expressed her view when it was put to her that the Property was in a "dream location" and she "might have gone for it" even had she known that it needed demolishing, given that the end result was a new house of a design and size to suit her and her husband. She firmly said "Absolutely not" – she did not need a building project. In my judgment, it might be thought by some that Mrs Scott's life from the telephone call in February 2012 for at least the next two and a half years was anything but dreamlike. She moved into temporary accommodation in that she had to live with her parents-in-law from August 2012 to July 2014 when the replacement house was finished. Mr and Mrs Scott's furniture was put into storage.
- Dr Scott was obviously doing his best to help his son and daughter-in-law during 2011 and was very involved in the proposed purchase of the Property; it did not come on the market in the usual way, and he actually knocked on the door in April 2011 to follow up his earlier conversation with Mrs Nelson about whether the Property might be available. The small strip had been purchased in order to keep chickens, and not as part of any long term plan to acquire the Property and join up the gardens. He instructed both the Home Buyer Report and the Sheppard Ltd, and he and his wife contributed funds from their own resources for the purchase. He explained that some of the funds came from secured borrowings on the house which he and his wife co-own. He roundly dismissed the suggestion made to him that he had specifically bought the strip of land from Mr Shelton to connect his garden with the Property, so that he could have his son and daughter-in-law at the end of the garden – this was part of the "dream location" line of defence relevant to causation.
- Dr Scott said that he had not queried the conclusions Mr Sheppard had drawn in the Sheppard Report because he was content with his conclusions. He knew that it might not be possible to relevel the floors completely because a builder – called "Luggsy" – had told him that. He said the figure of £25,000 for remedial works given by Mr Sheppard was a "welcome surprise". He said that there were no plans to convert the loft, or plans for the subsequent extent of renovation, at the time that he had instructed Sheppard Ltd through the phone call to Ms Sutcliffe in June 2011. His personal finances were explored in a degree of detail which gave me a comprehensive picture of the way in which both he and his wife chose to support their son and daughter-in-law which, given what occurred with the demolition and rebuild, is a highly fortunate situation for all concerned, not least Mr and Mrs Scott and their young daughter. Absent this degree of financial support available, the purchasers of the Property might be left with no house at all at 27 Fearon Road pending the outcome of the litigation.
- Mr Scott's evidence was similar to that of his father and wife. He explained that it was not intended to have all the proposed works completed before August 2012, and that neither he nor his wife had instructed any engineering consideration of their loft conversion plans (which was carried out by BdR) until two months after they had purchased the Property. He denied that his "heart had been set on 27 Fearon Road", but accepted that it was convenient. It was put to him that he had hoped since 2010 to buy the Property (that date being when his father had purchased the small strip of land for £6,000) and he denied this. He denied that there were any firm plans for a loft conversion when Sheppard Ltd was instructed; I found this evidence particularly compelling, for one very obvious reason. Had there been such a plan in June 2011, there would have been no earthly reason at the time for the claimants not to have told Sheppard Ltd of this.
- Mr Scott explained, very firmly and clearly, that with hindsight (which is what he was asked to apply) far from the demolition/rebuild story leading to a preferable outcome, they would have rather purchased Baldslow Road. Given what is involved with the demolition of a house and a construction project to provide a replacement, this is entirely sensible evidence which fully accords with common sense.
- Following the conclusion of Mr Scott's evidence, each of the claimants had given evidence of fact that was clear, understandable in terms of human motive, and which I fully accept. This is that the Property was in a convenient location; they knew there were some problems with it, which they used to negotiate a discount; and that those problems required remedial works. They planned some renovation as well, and doubtless some of the works could be considered cosmetic. The story is probably remarkably similar to a great number of people with a young family who are looking for somewhere to purchase to make a family home. With the assistance of Mr Scott's parents in terms of funding, they identified somewhere and had the relevant Home Buyer Report done. That Report recommended further advice from a structural engineer, which they took, in this instance from Sheppard Ltd. I have no doubt that had any of the three claimants at any time prior to purchase had even the remotest inkling that the Property had the structural issues that it turned out to have, still less that it would require demolition, they would not have gone near it with the proverbial barge pole.
- Mr Best is the director of BdR who provided structural loadings for the proposed loft conversion as a desk top analysis. When the builder commenced those works and the Council stopped the works, he inspected the Property and came unhesitatingly to the conclusion expressed in the BdR Report, namely that demolition was required. He was very clear about this in that Report, and he was very clear on the same subject in the witness box. He had been qualified as a structural engineer for 20 years when he inspected the Property in 2012. He dealt with Mr Goldstone's questions courteously and professionally, and explained that where there is no historical importance to a property there is not necessarily any need to consider the feasibility of alternatives to demolition, which is often more convenient. I do not, however, consider that in this case he was recommending demolition purely as a matter of convenience. He also said the Property did not suffer from what he called "typical subsidence", a view which I share given the photographs which show the house almost having rotated forward as a whole. He was prepared to come to court and be cross-examined about what he saw at the time, and to give me his professional view. I find his evidence to support that of Mr Taylor in terms both of the condition of the Property, and also the professional view of an engineering nature that demolition was required.
- Mr Sheppard qualified in 1958 and started his own practice in 1962. At the time of these instructions from the claimants he was working part-time, winding down his involvement and considering himself semi-retired. He is now fully retired. He had also originally served in the Army, doing his National Service in the Royal Engineers and serving abroad in Germany. He is a Chartered Engineer, a retired member of the Institution of Civil Engineers and was at one time a Fellow of the Chartered Institute of Arbitrators. He has also in the past been the Chairman of the South East branch of the Institution of Civil Engineers.
- As he said, he has over the years conducted literally thousands of engineering inspections, sometimes for the same clients, time and again as they have moved into different properties over the years. All of them have been satisfied with the service that his practice has provided, which is demonstrated by the repeat instructions. At one time Sheppard Ltd had offices both in Hastings and Eastbourne but now operates solely out of the Eastbourne office. He has also acted as an expert witness in actions against surveyors, builders and engineers. He had his own particular views of movement in buildings, and tilt of walls in particular, which I deal with further below. I found his evidence open and very helpful in terms of resolving the issues in the case.
- The evidence from the two engineering expert witnesses is addressed below. There was also expert evidence from Mr Harrap for the claimants, which I deal with in the section of the judgment dealing with quantum.
- The claimants have pointed out that, absent Mr Sheppard himself, no evidence has been called on behalf of the defendant from any engineer who actually saw the Property. Two particular engineers, it is said, did in fact inspect and were not called as witnesses. These are Mr Bunney, another engineer from Sheppard Ltd who visited the Property in 2012, and Mr Payne of Walsh PI, the loss adjusters. The claimants invite me to draw adverse inferences from their absence, the inference being to the effect that this engineering evidence would support that given on behalf of the claimants.
- The principles that apply in this situation are as follows. The court is entitled in some circumstances to draw adverse inferences when witnesses might have given evidence: Wisniewski v Central Manchester Health Authority  PIQR 324. That case concerned the failure of a health authority, in a clinical negligence case brought on behalf of a plaintiff who had suffered irreversible brain damage at birth, to call the relevant doctor as a witness. Brooke LJ considered all the relevant authorities and set out the following:
"From this line of authority I derive the following principles in the context of the present case:
(1) In certain circumstances a court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in the action.
(2) If a court is willing to draw such inferences, they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably be expected to call the witness.
(3) There must, however, have been some evidence, however weak, adduced by the former on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue.
(4) If the reason for the witness's absence or silence satisfies the court, then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified."
- Although those principles have been applied in other cases since, it is not necessary to recite them as Wisniewski clearly sets them out. Applying those principles to the facts of this case:
(1) Both the individuals in question, Mr Bunney and Mr Payne, are qualified engineers and inspected the Property prior to its demolition. Given one of the main issues is what could be seen from a limited visual inspection in 2011, their attendance at the Property in 2012 might be expected to provide the court with material evidence to give on this issue.
(2) If I were willing to draw an inference, this would go both to strengthen the evidence adduced on that issue by the claimants and also to weaken the evidence from Mr Cockayne adduced by Sheppard Ltd, the party who might reasonably be expected to call the witness. In fact, such evidence would be the only direct evidence on the part of the defendant (other than that of Mr Sheppard himself) from any engineer who had seen the Property prior to its demolition.
(3) There is already some evidence, which could not be described as weak, adduced by the claimants on the matter in question. This evidence comprises that of Mr Best (and to a lesser extent the contents of the Tribrach Report whose author was not called), and that of Mr Taylor. There is clearly a case to answer on that issue.
(4) I come, therefore, to the explanation for the absence of these witnesses. Mr Bunney is referred to in Mr Cockayne's report, because Mr Cockayne had a discussion with him and included reference to this in his report. There is no note or statement of what Mr Bunney said, but the passage in Mr Cockayne's report at paragraph 5.4.40 states that Mr Bunney attended site to quote for the structural engineering aspects of temporary works for the replacement building. Mr Sheppard, when asked about Mr Bunney, said he was overseeing a visit by a demolition contractor. There is no explanation for his absence. Turning to Mr Payne, Mr Sheppard's evidence was that the firm of loss adjusters was dismissed two years into the claim.
- The explanation concerning Mr Payne satisfies me; that dismissal could be for any number of reasons, and there is no reason to speculate. Accordingly, no adverse inference may be drawn in respect of the absence of Mr Payne from the loss adjuster. However, the defendant did effectively seek to put Mr Bunney's view of the building before me in rather an oblique way (or rather, Mr Cockayne's account of that, which was "….it is apparent that the outward appearance of the building did not suggest that it was dangerous") without actually calling him. Given that Mr Sheppard told me that Mr Bunney oversaw a visit by a demolition contractor, his view of the condition of the structure when he was present for this purpose would have been relevant. In the absence of any explanation at all for his absence, in my judgment I am entitled to draw an adverse inference from his absence. However, as Mr Goldstone pointed out, there is no absence of evidence in this case from the defendant because I have the evidence of Mr Sheppard on the condition of the building at the time. As he submitted, a party should not have to call a multiplicity of evidence on the same point in order to avoid an adverse inference being drawn. I accept that submission. Although there is no explanation at all about the absence of Mr Bunney, I do not consider that I should draw an adverse inference from his absence either.
E: The Reports
- The Home Buyer Report, dated 10 June 2011, gives a market value as at that date but did not provide structural engineering evidence. The Home Buyer Report made it clear that the surveyor only carried out a visual inspection but did not open up the fabric. There is no complaint in these proceedings about the contents of the Home Buyer Report. It was also referred to in the Agreed List of Issues as the Meridian Report as that is the name of the practice that prepared it.
- The Report notes in the "Overall opinion and summary of the condition ratings" section that the agreed purchase price of £310,000:
"…is in our opinion too high and you may wish to renegotiate it on the basis of the cost of the necessary repairs and extensive previous structural movement noted within the property".
The same section included a summary of the different elements and uses conditions ratings, which is to ascribe a number to different elements. The number "3" is for "defects that are serious and/or need to be repaired, replaced or investigated urgently". That is the highest condition rating, the others being 2, 1 and Nil. Accordingly, those elements of the building that were most notable in terms of repair, replacement, or investigation, would all be given the rating of 3. In this Report, the following elements were given the highest rating of 3: roof coverings; main walls; walls and partitions; floors; electricity; and drainage. In terms of the building structure (rather than, say, chimney stacks or windows) the only element given a score of 2 was the roof structure. No elements inside or outside the building were given a score of 1.
- The Report also expressly stated that the following works were advised:
"…relevelling floors, straightening internal partitions/door openings and external repairs to misaligned windows and door openings. You should be aware that due to the extent and nature of the previous movement there is likely that additional repairs to the underlying structure will be required once exposed."
The Report continues:
"In our opinion the condition of the property and extent of the previous structural movement may have an impact upon mortgageability and insurability. Full details in respect of the previous structural repairs will be required and in the absence of this documentation it is possible that a further structural engineers report will be needed in order to satisfy in this respect".
- The Home Buyer Report therefore recommended a further structural engineering report, and this is what the claimants obtained from Sheppard Ltd. This occurred in the following circumstances. Dr Scott telephoned Sheppard Ltd and almost certainly spoke to Ms Sutcliffe. She was the only receptionist employed there, and was used to explaining to potential clients exactly what a "Full Structural Survey" involved, as opposed to a Limited Visual Inspection or LVI. She did this so often that she had an aide memoire next to her phone with the difference explained in clear terms. Ms Sutcliffe explained in her agreed witness statement that Dr Scott:
"…wanted to know if there was any ongoing subsidence at the Property, and what structural repairs were required. Dr Scott said he'd had a Home Buyer Survey done which had shown there were some problems with the Property."
Dr Scott agreed that the file note produced by her on 28 June 2011 at 12.10 hrs was accurate. In this she instructs an LVI with the reason for that being explained in the following terms:
"Reason for LVI: Property was subject to extensive repairs in 1980s. Is there any ongoing subsidence? What structural repairs are required? Dr D has had Home Buyer Survey and is aware that works/updating required generally."
- This led to Mr Sheppard inspecting the Property and producing a Report ("the Sheppard Report") which was dated 30 June 2011.
- The parties are agreed that "limited inspection" should be read as meaning "limited visual inspection" or LVI. I reproduce the Report here:
"Thank you for your instructions to make a limited inspection of the above house and to report with regard to subsidence.
I understand that in the 1980s part of the building was underpinned. There are sings [sic] of the making good of past cracks in the superstructure, some of which have slightly re-opened but all that is required is to properly strengthen the cracks by the installation of deformed stainless steel rods, or similar.
Mrs Nelson was unable to provide any details of the works but she advised that the work was supervised by Malcolm Tree of Rye as an insurance claim.
I presume that your solicitors will be able to obtain the details from Hastings Borough Council Building Control but if not, it may be necessary to ask Mr Tree.
Some steel beams were also installed in the cellar to support the ground floor.
The claim was made upon Saga Insurance and it may be necessary for you to continue insuring with them because of the earlier damage,
What causes me concern is the out of level floors at ground and first floor and I am a little surprised that these were not dealt with at the same time and as part of the claim. Whether or not Saga would be prepared to re-open the claim should be tested.
There is a lot of damp timber in the cellar area which needs to be replaced, treated or overhauled. I am told that you are aware that the cellar has on occasion flooded and, in my opinion, it would be prudent first to have a CCTV survey carried out on the below ground drainage and second, to obtain a quotation for tanking the floor and walls. The latter would, of course, be betterment of the structure, where as accidental damage to the house could be a matter for insurers.
I think that most, if not all of, the internal walls are formed of timber studding. There is minor cracking which will require proper repair in normal maintenance and redecoration. Door linings and window frames are out of square and these need to be reformed. Both ground and first floors need to be levelled, not so much because they are unsafe, but should you wish to sell the house in future.
This entails the provision of either firring pieces to the existing joists and/or beams bolted to the existing to provide a level base. The skirtings would also need to be adjusted.
You will appreciate that the house needs a thorough upgrade throughout. It also needs to be overhauled and redecorated externally.
I lifted two inspection chamber covers and the soil drain appears to be satisfactory, although on e [sic] chamber needs re-rendering. In the chamber nearest No 27, there is a pvc backdrop which indicates some fairly recent works, probably part of those in the 1980s. Your solicitors will need to ascertain if you would have responsibility for any pipework outside the boundary fence.
The roof covering is of slate and the timber structure has twisted slightly with the movement of the subsidence and the removal of the rear chimney stack.
Repairs have been carried out to the flat roof section.
There is no felt lining to the underside of the slates but provided the slates remain sound, this should not be a problem. Indeed, it helps the ventilation of the roof space, which should have been provided when the insulation was upgraded.
Again, you will be aware that the electrics need modernising.
The glazing to the doors is not of toughened glass.
The philadelphus shrub in the front garden should be reduced to at least 1.5m in height and kept at that level so that it does not affect the soil at depth.
Excluding any modernisation I estimate the cost of remedial works to be £25000.00 exclusive of VAT if carried out by a builder of repute.
I have not inspected woodwork or other parts of the structure, which are covered, unexposed or inaccessible and am therefore unable to report that any such part of the property is free from defect.
I trust that this letter of report is sufficient for your immediate requirements, but should you have any queries, or if I can be of further assistance, do not hesitate to contact me."
- As can be seen from the full terms of the Report, Mr Sheppard did not recommend demolition. Indeed, he did not even mention the tilting walls. He opined that the necessary repairs could be effected for £25,000 excluding VAT. That, say the claimants, was negligent. The claimants, as can be seen from issues 3 and 4, maintain that either or any of the following factors was sufficient to lead to the conclusion that demolition was required. The factors are the tilting of the Property's external walls; the sloping of the floors within the Property; the condition of the roof; or any combination of these.
- The other matters that should be noted are that, after the loft conversion works were started, Mr Farrow of Hastings Borough Council attended the Property. His views were recorded in an email from a colleague, Malcolm Clark, Building Control Surveyor, dated 30 January 2014. In that he stated that Mr Farrow:
"…advised the builders that owing to extreme historic settlement in all directions and internal walls being timber stud and not masonry, that no work should proceed with loft conversion prior to these matter [sic] being addressed…..At no point have Building Control said this was a dangerous structure or it required demolition."
- In my judgment his views are not relevant to the engineering issues, because Mr Farrow was not qualified. However, Mr Farrow's involvement does demonstrate that even to the lay observer there were immediate concerns about the Property. Mr Farrow's failure to express any view on danger, existing stability, or demolition, is not directly relevant.
- The Home Buyer and Tribrach Reports also need to be considered. The former shows that to a professional surveyor (who was not a structural engineer) there were immediate and obvious signs that the structural condition of the Property was a concern. The Tribrach Report described a "severe outward lean", "serious distortion" to window openings and that the whole of the rear elevation "leaned significantly towards the front". It demonstrates that the professional view of a structural engineer who inspected the Property was expressly to the effect that the stability of the building was compromised and it should be demolished.
- There is one other matter which I record and that is whether the loft conversion works, which commenced in January 2012, had any effect upon the structural condition of the Property when it was inspected in 2012. Mr Taylor and Mr Best were clear that it had not; I find as a fact that these works, which were preparatory in nature, had not affected the structural integrity of the Property. Accordingly, it was no worse in 2012 than it had been when Mr Sheppard inspected it in 2011, although the basement had been opened up and more was visible.
F: Legal Principles
- The legal test for professional negligence is that set out in Bolam v Friern Hospital Management Committee  1 WLR 582. This means that members of a profession must exercise reasonable skill and care. This is the standard of skill which is usual in their profession. Simply because, for example, one structural engineer may recommend demolition does not mean that another, who does not, is necessarily negligent. The advice given must be outside the range which could be given by members of that profession exercising reasonable skill and care for it to be negligent.
- Counsel for the defendant, in his Opening Submissions, described the claimants' case that the only advice that could have been given non-negligently was demolition as "an ambitious allegation". At first sight, this is accurate in this sense; demolition is an extreme option. Mr Howarth for the claimants put to Mr Cockayne, the defendant's engineering expert, the point that a reasonable engineer would not recommend demolition lightly after carrying out a visual inspection. Mr Cockayne agreed, and said demolition was an extreme option. The claimants have not however resiled from this position, which is a prima facie bold stance. They maintain that such a bold stance is justified, because this Property did indeed need demolishing and that Mr Sheppard was negligent in failing to advise to this effect.
- The essence of this case distils into two areas of analysis. The first is to determine the condition of the building, so far as it is possible to do this, as at the date Mr Sheppard inspected it. The second is to consider which of the engineering expert opinions is more persuasive, and why. Of course there is overlap between these two areas of analysis, not least because Mr Taylor for the claimants in fact saw the building, thus he can assist with both, whereas Mr Cockayne for the defendant did not. Mr Taylor is the only engineer who saw this building at any stage who took particular measurements, which he recorded. Those measurements are criticised by the defendant for a variety of reasons. However, Mr Cockayne conceded they were likely to be accurate with a 10% margin of error either way.
The visible condition of the building in 2011
- The Home Buyer Report makes it clear that many elements of the building, in particular for these purposes the main walls and the floors, were of condition rating 3 which meant that they were "serious" defects and/or needed "to be repaired, replaced or investigated urgently". The writer of that report was not a structural engineer, and had only performed a visual survey. It must therefore be the case, in my judgment, that the condition at the time in 2011 was sufficient to alert a property professional – in this case a surveyor – to the risk of structural instability. The rating of 3 means that they were of the most serious of the type that could be present.
- Dr Scott gave evidence that the walls were tilting "visibly" and although he was pressed very hard on this in cross-examination, he maintained that evidence. The degree to which the challenge to this part of his evidence was sensible (or rather, was not sensible) was made obvious when Mr Sheppard himself readily accepted that the walls were leaning when he inspected the Property. Dr Scott was also not a qualified structural engineer.
- With the exception of Mr Sheppard himself, turning to all the other structural engineers who had seen the building – which did not include Mr Cockayne – all three of them agreed upon a visual inspection that it had to be demolished. This strongly suggests to me a building that in 2011 was visibly not as one would expect it to be, nor as it should be. This is made clear by one of the photographs which were taken prior to demolition. Its trial bundle reference is 3/664 and it has a useful guide to verticality within the photograph itself, namely the houses on either side of the Property and a lamppost. If those separate structures are each vertical, then it can be seen that the whole house, that is the Property, has rotated forwards.
- It is agreed that a flood which occurred post-purchase by the claimants did not affect the structural condition of the building. Neither did the loft conversion works, which did not reach a very advanced stage, affect it either. Accordingly, I find that the condition of the building in 2011 in terms of the three factors relied upon by the claimants – namely tilting external walls, sloping floors and the roof – were the same in 2011 as when it was inspected by Mr Taylor on 24 August 2012.
- Mr Taylor measured the degree of tilt and recorded them on a sketch plan (which is at 2/436). They show angle of tilt of the Property as follows:
1. Across the front wall (from right to left) of 1/32; 1/24; 1/24; 1/34 (of the windowsill); 1/27.
2. Along the left flank wall (bottom to top) of 1/27; 1/40; 1/30; 1/19.
3. Across the rear wall (from right to left) of 1/80; 1/24; 1/19.
4. Along the right flank wall (bottom to top) of 1/32; 1/34; 1/34; 1/80.
- Given that the contractor Whirligig had already performed some preparatory works to the Property prior to the Council stopping the works, Mr Best and Mr Taylor were both viewing the Property with the foundations exposed in the basement. Mr Sheppard did not have the benefit of this. It is therefore necessary to be careful to assess Mr Sheppard's report in the light of what was visible to him at the time of his inspection in June 2011. For this reason, in my judgment, the most suitable element of the building for this exercise that would undoubtedly have been available for inspection in 2011 is the external walls, and the most suitable characteristic of the walls for the purposes of the issues in this case is their degree of tilt. Although Mr Sheppard could see, and did comment upon, the sloping floors in the Property, these were not, in my judgment, as important as the tilting walls, which were far more indicative of the structural stability of the Property.
- Although there was a flood which occurred owing to the failure of a water tank in the roof space after the claimants purchased the Property, the experts agreed that this did not have any effect upon the tilting walls, which could be seen in 2011. The findings in this judgment make allowance for the fact that Mr Sheppard could not have seen this, as at the time of his visit the Property had not been stripped out to reveal more of what could be observed in the basement.
G: Mr Taylor's measurements and the Engineering Expert Evidence
- These measurements came under sustained attack from Mr Goldstone for the defendant. However, Mr Cockayne conceded that they were within a margin of error of 10%, and once that concession was made any dispute about their broad accuracy falls away. There was an irrelevant red herring about how Mr Taylor recorded these, and whether he took any notes, but I find he did record them accurately on the sketch plan. In any event, and absent the 10% margin of error concession, in my judgment they are broadly accurate and can be safely adopted as representing the condition of the building when Mr Taylor inspected it, which means given my other findings they represent the condition of the building when Mr Sheppard did so in 2011. In any event, the criticisms made of the measurements were misplaced. Mr Taylor was taken to task for using a spirit level. It was said that BRE Digest 475 "Tilt of low-rise buildings" states at page 6 that a plumb bob and ruler or optical instrument can be used. This is correct, but overlooks that BRE Digest 343 and 344 supplement of September 1995 "simple measuring and monitoring of movement in low-rise buildings" – which is also in the trial bundle at 2/621 – provides spirit levels in the list of specifications of equipment. The fact that there are other methods available does not mean that a spirit level does not give accurate, or broadly accurate, measurements. I find that in this case it was appropriate to measure the building in the way that Mr Taylor did.
- The Engineering Expert Evidence in this case was notable for a number of reasons. Firstly, the Joint Experts' Statement contained precious little, if any, agreement. Mr Taylor explained that this was because he had seen the building and Mr Cockayne had not. Secondly, the evidence of the defendant's expert Mr Cockayne in Closing Submissions came under sustained attack from the claimants, not least because Mr Howarth described him as "a most unsatisfactory expert witness". Even the defendant's own Counsel Mr Goldstone, correctly in my judgment, accepted that Mr Cockayne's approach to giving evidence was "rather unfortunate".
- Each of Mr Taylor and Mr Cockayne were adequately qualified to give the court expert engineering evidence. I prefer the evidence of Mr Taylor in all respects in which the two engineering experts differ for the following seven reasons.
- Firstly, Mr Taylor personally inspected the Property. Mr Cockayne has never had that opportunity. For whatever reason, notwithstanding the ample notice that the defendant had both of the claim, the situation, the intended demolition, and the express invitation if not encouragement to inspect, Mr Cockayne was only instructed after the demolition had taken place.
- Secondly, Mr Cockayne was remarkably quick to dismiss evidence that did not fit his overall thesis, from which he appeared reluctant to move. For example, it is rare for an expert to comment upon what appears to be a perfectly straightforward photograph and comment that "it might be distorted". There was no reason to suggest that photographs were distorted, other than the fact that what those photographs showed did not suit Mr Cockayne. I found the photographs to be very useful. I found Mr Cockayne's response to these useful photographs to be highly illustrative to his approach in general when giving expert evidence on the issues in this case.
- Thirdly, he made an allegation of serious unprofessional conduct on the part of two professional engineers, namely the authors of the BdR and Tribrach Reports, and expressly stated in the Joint Experts' Statement that their views may have been influenced by the prospect of further fee income involved in being instructed for the demolition works. This allegation is unfounded for two reasons. It would be an obvious breach of professional conduct on the part of the engineers in question. Further, there would be higher fees available in any event for an unscrupulous engineer if alternative remedial schemes (short of demolition) were to be pursued. This theory of Mr Cockayne was described by Mr Goldstone as his "conspiracy theory", for rather obviously it would require both of BdR and Tribrach to be guided by the same disreputable motives. I find there is no basis for such a suggestion and it is wholly without foundation in both cases. The fact that it was raised is not to Mr Cockayne's credit. He raised this in an entirely unsatisfactory way, saying: "I suggested it might be but I don't think it was a firm affirmation that they definitely were". He also said:
"It would be very easy to infer they were of a mind to get more work out of further involvement with the building."
This, in my judgment, is simply mud-slinging on his part. To be entirely fair to Mr Sheppard, he quite rightly and promptly dismissed this suggestion when it was put to him, and he at no point wished to associate himself with Mr Cockayne's conspiracy theory.
- Fourthly, Mr Cockayne's approach to BRE Guidance on tilting walls in buildings was, in my judgment, verging on the cavalier at times. BRE Digest 475 "Tilt of low-rise buildings" carefully explains the considerations of tilt in existing buildings. Table 2 "indicative values for tilting of low-rise housing" sets out different classifications, and the most extreme is "Ultimate limit" at 1/50 (or more severe). This states:
"If tilt reaches this level, the building may be regarded as in a dangerous condition, and remedial action either to re-level or to demolish the building will be required urgently."
Mr Cockayne insisted, in my judgment in an attempt to detract attention from Mr Taylor's measurements, on the need for further investigation and possible remedial action other than demolition. He also stated, "It might be possible to restore the building to some verticality" and that he would only be in favour of demolition if a feasibility study was first done on any one of a number of alternative schemes. He constantly confused or failed to differentiate between the advice that should have been given at the time, with what could have been done to remedy the problems with the building. Given Mr Sheppard had not identified extensive remedial action to remedy the serious problems with the titling walls – well beyond the ultimate limit of 1/50 given by the BRE – this was unhelpful. Buildings can, and sometimes are, saved from very significant tilt; one example discussed in submissions was the Leaning Tower of Pisa. Feasibility of wildly different remedial schemes, and their cost, is a different issue to breach of duty. The issue is: what should Sheppard Ltd have advised at the time? The fact that expensive investigations and design of alternative schemes could have been performed, instead of demolishing the Property, is rather off the point because Mr Sheppard advised neither. He simply did not mention the tilting walls at all.
- Fifthly, Mr Cockayne was also applying the wrong standard of proof as he said that the BdR and Tribrach Reports did not "prove beyond doubt" the Property was subject to plain and obvious tilt. He agreed when the point was put to him again that he had wanted to assure himself that these engineers were right "beyond reasonable doubt". That is not the standard of proof in civil litigation.
- Sixthly, he was asked whether a prudent purchaser, if considering a building with tilting walls, would want to know if the property in question were "even close to the ultimate limit category". His answer was, "If that was the brief." This is a mealy-mouthed response to a very basic point concerning structural stability. It cannot seriously be suggested that a competent engineer exercising reasonable care and skill would only be obliged to tell a purchaser that the walls were tilting close to the "ultimate limit" of 1/50 if that was the brief given to them.
- Finally, his attitude to answering questions was rather evasive. On occasion, even the most simplistic questions were simply avoided. Mr Howarth often had to put the same question two or even three times.
- All of these points taken collectively lead me to conclude that the expert engineering evidence of Mr Cockayne was of extraordinarily limited evidential value at all, if any. I found him, as an expert witness, highly unsatisfactory in almost all respects.
- Mr Taylor's evidence was far more measured, took into account all the relevant material, and came to a careful conclusion that the tilt of the walls, which he had measured, fell well within the BRE "ultimate limit" category. It should be remembered that, with the exception of one measurement at the rear right corner of 1/80, all of the measurements taken by Mr Taylor fell into a range more severe than 1/50, the BRE ultimate limit. The building therefore merited being considered "in a dangerous condition", with demolition the obvious result. Although the BRE digest states that urgent remedial action either by demolition or re-levelling would be required, this must be seen as a statement of general application to tilting buildings generally. Given the particular circumstances of this case, with the claimants being prospective purchasers rather than existing owners, by giving the advice that Mr Sheppard did – failing to mention the tilting walls at all, and stating that the remedial works would cost an estimation of £25,000 – he gave the claimants specific structural engineering advice that was outside the range of what should have been given with the exercise of reasonable care and skill common to that profession.
- Mr Sheppard agreed that if Mr Taylor's measurements were correct, then the walls should have been mentioned in his report. He did say that there was no significant movement in the building that would warrant any thought that the building would collapse. He said there was no recent movement in the building that would warrant demolition. It was clear to me that his main concern was whether there was continuing movement – which is undoubtedly an important consideration in structures that have subsided or which are subsiding – and he did say that "lots of buildings lean or tilt….. They can easily be strengthened so that they stay there for years". In his view, the relevant factor was how recent any movement was. He said that lots of houses in Hastings have lean or tilt, but they are still standing. He was asked if the wall had tilted 1/19, which is quite a long way beyond what the BRE says is the limit of stability: "Isn't it taking a risk not to recommend that the building be demolished?" His answer was an unequivocal "no".
- This evidence shows that Mr Sheppard approaches degree of tilt in a very different way to how the BRE approach it and how I find it ought to be approached by an engineer exercising reasonable care and skill. Mr Sheppard was not concerned about tilt in the slightest. This was, based on his evidence, because he had considerable experience of houses in Hastings that did tilt, but which had not fallen down. His main concern was whether the Property was moving, not the degree to which the walls were already tilting. This means he ignored the degree of tilt already present in the walls. Whether this was because he did not notice that the degree of tilt was as stark as Mr Taylor measured it to be (and I have found to record the tilt accurately), or noticed it and without measuring it decided it was acceptable, does not really matter. By failing to mention the degree of tilt in the walls at all in his report, he simply omitted to record any professional view about the existing state of the walls and the consequences this had. In my judgment, it must also be the case that regardless of whether there is continuing movement or not, a wall that is tilting at 1/19 in one place, and 1/24, 1/27, 1/32 and 1/34 in others, applying the terms of the BRE Digest, that building has reached (if not well exceeded) its "ultimate limit". Table 2 in the Digest makes it clear that for this amount of tilt "the building may be regarded as in a dangerous condition". Mr Sheppard's approach to this subject is therefore, in my judgment, outside the range permissible of structural engineer exercising reasonable care and skill. The fact that the building in question has not yet fallen down is no answer.
- Floors within a building can slope – as these did – and can be levelled. Mr Sheppard addressed the floors. In my judgment, however, a far more important element of the Property within the context of this case is the walls. Mr Sheppard failed to state that the walls were tilting as they were, and the consequences of that, and failed to state that the Property would require demolition. Given my findings about Mr Taylor's measurements, the walls were tilting to a considerable degree and this would have been visible in June 2011. It follows in my judgment that on this single occasion Mr Sheppard fell below the standard expected of the profession and was therefore negligent. He ought to have referred, not only to the tilting walls – which in my judgment could be correctly described as severely tilting – but drawn specific attention to the fact that (to use the phrase from the BRE Digest) the building may be regarded as in a dangerous condition, and require demolition. In my judgment, the Property was both in a dangerous condition and required demolition in 2011. There was no need for him to have opined on suitable remedial schemes alternative to demolition of the type hypothesised by Mr Cockayne. I have no doubt that my finding in respect of Mr Sheppard will be a blow to him. Having been in practice for over 50 years he can, I hope, take comfort from the fact that for so many thousands of inspections and clients no such issue arose before this case. However, the effect of my findings on breach of duty in this case means that the claimants' case succeeds. It is therefore necessary to consider causation.
- Having obtained the report from Sheppard Ltd, the three claimants decided to purchase the Property although they did negotiate a reduction in the asking price of £310,000. It was in fact purchased for £247,000. Each of the claimants read the report. Reliance is in issue as can be seen from Issue 7.
- Dr Scott, Mr Scott and Mrs Scott all struck me as intelligent people who were taking sensible steps in moving towards the decision to purchase. Dr Scott is a Consultant Paediatrician; Mr Scott was a Major in the British Army and appointed the Adjutant of his Regiment, and after returning from Afghanistan attended Staff College; Mrs Scott was about to train as a teacher. Obtaining a report from a structural engineer was recommended in the Home Buyer Report, and they did this. Buying a property is, for a great many people, the most serious investment and financial decision that they will make. Although people do move house, and may buy and sell property on more than one occasion, each such purchase is a major one. Even though Dr Scott was in the wings whilst Mr and Mrs Scott embarked upon this purchase (and he and his wife contributed substantial funds), in my judgment that does not have any effect upon the question of reliance at all. I find, on a balance of probabilities, that all three of the claimants relied on the contents of the Sheppard Report – as would most if not all prudent purchasers – in deciding to purchase the Property at the price agreed of £247,000.
- Issue 8 is sensibly conceded. It is therefore necessary to consider contributory negligence and quantum.
J: Contributory Negligence
- As can be seen from Issue 12, contributory negligence falls within a number of quantum issues but in my judgment should be usefully considered first.
- The question of contributory negligence arises because the claimants did not inform the defendant of their plans to carry out works to the Property including a loft conversion (which is expressed as "roof conversion" in the Agreed List of Issues, but this is the same). This issue was reformulated in Closing Submissions (without objection by Mr Howarth) to reflect the fact that the plans formulated by the claimants were not made until after the instruction had been made to engage Sheppard Ltd. The reformulation is that the plans, it was said, were made prior to purchase, and it is submitted that the claimants "ought to have run those plans past a structural engineer prior to committing to their purchase". Mr Goldstone for the defendant invites me to find that this is of high causative potency, such that a sizeable percentage reduction ought to be applied to the award of damages in accordance with the usual principles set out in the Law Reform (Contributory Negligence) Act 1945.
- The starting point, therefore, is to consider the decision making of the claimants in terms of the loft conversion. It is now accepted by the defendant that this plan was formulated after instruction of Sheppard Ltd in June 2011. Conversion plans were commissioned in August 2011, and a quote obtained on 17 August 2011 from Whirligig. Contracts were exchanged on the Property on 27 October 2011, and on 28 October 2011 a planning application was submitted in respect of the conversion works. The works in fact commenced in January 2012.
- The defendant relies upon the obtaining of a quote, and the drawing of the conversion plans, as demonstrating that a firm plan had been made prior to purchase. It is also said that the application for planning permission being made so soon after exchange of contracts shows a firm plan was in place by then. Accordingly, it is said, had the conversion drawings been given to a structural engineer for consideration this would have led to a further inspection for a full structural survey (either by Sheppard Ltd, or another practice) and that would have led to a further discovery of the state of the foundations. It is common ground that Mr Sheppard could not have been expected to inspect the foundations on his LVI, but that a full structural survey would have. It is also said that the claimants ignored the recommendations of their solicitor acting on the purchase to undertake such a full structural survey.
- That latter point was not explored in any detail in cross-examination with Dr Scott, Mr Scott, or Mrs Scott, and I reject it. In any event, Mr Sheppard did not recommend a full structural survey in his report. The Home Buyer Report recommended further structural investigation and that is what the claimants obtained from Sheppard Ltd. So far as they were concerned, that report set out what they needed to know in terms of structural stability. I find as a fact that their plan to perform a loft conversion post-dated the exchange of contracts, notwithstanding the preparatory steps prior to that date including the drawing up of plans. This conclusion is supported by the fact that BdR were not instructed to perform the necessary structural analysis until the beginning of 2012. It is correct that the application for planning permission was made shortly after exchange, but that is not determinative of a crystallised plan to have the works done prior to exchange. Not least, Mr and Mrs Scott were probably waiting to see what would happen with the application before they came to a firm decision. It is not, in my judgment, necessary to consider either fault or causative potency to arrive at a suitable percentage reduction because there is no contributory negligence on the part of any of the claimants.
- There is one main item of quantum, and two smaller items. The main item relates to the principal loss caused by the claimants purchasing the Property in circumstances where, had the Report been prepared without negligence, that purchase would not have taken place.
- Mr Julian Wells, an Associate and Chartered Surveyor with Knight Frank LLP, prepared a report on valuation of the Property dated 22 March 2013. By the time of the trial he was no longer with Knight Frank and it was agreed by the defendant that his superior at Knight Frank, Mr Michael Harrap, could adopt his report as he had checked through and signed off the contents of the March 2013 report at the time. Mr Harrap, therefore, was the person who attended trial and was cross-examined on the report. Mr Harrap is a Chartered Surveyor, a partner of Knight Frank, and a Fellow of the RICS.
- The main item of quantum is overpayment for the Property. The two other smaller items are miscellaneous expenditure, which are costs associated with the drawing up of plans and some initial work on the conversion, and accommodation and storage costs.
- Mr Harrap calculated the overpayment for the Property in the following way. The value of the Property in good condition (which he put at £350,000-360,000) should have the sums of £75,000 and £25,000 deducted from it. The former is the cost of necessary refurbishment, the latter the cost of repairs. The value of the land itself (the site value) was £70,000 and this should also be subtracted. This exercise gives a figure for overpayment of £177,000.
- The defendant does not take issue with this methodology, or with the figure for value of a property in good condition, or for the site value. The only elements which are in dispute are the figures for refurbishment and repair which are said to be insufficient. The figures suggested, which take some account of some contemporaneous quotations for such works, are £135,000 for the two, which would give a deduction of £35,000 more than the total deduction of those two components of £100,000. Adopting the defendant's figures therefore would give a figure for overpayment of £150,000 (using £355,000, less £135,000, less £70,000).
- It can therefore be seen that the difference between the two approaches gives only a modest difference of £27,000.
- In my judgment, in the absence of any expert quantum evidence to the contrary for the defendant, any attack on Mr Harrap's approval of Mr Wells' figures would have to demonstrate either an error, a failure to take something into account which should have been taken into account, or the taking of something into account which ought not to be taken into account. A challenge to his expert analysis of the suitable figures requires more, in my judgment, than merely pointing to the total of some of the contemporaneous quotes which in any event include figures for works that would improve the property beyond that required for Mr Wells' exercise.
- In my judgment, the defendant has not succeeded in demonstrating that Mr Harrap's approval and/or Mr Wells' figures are wrong to that extent, or indeed at all. The correct deduction is £100,000. It follows and I find that the correct figure for overpayment is the one maintained by the claimants, namely £177,000.
- The first smaller item, miscellaneous costs, is agreed in the sum of £23,347.18. The second smaller item relates to accommodation and storage costs during the period when the replacement house was being constructed, and is in the sum of £2,745 for storage costs (which is agreed). There were no alternative accommodation costs incurred as Mrs Scott lived with Dr Scott and her mother-in-law.
- So far as interest is concerned, an up to date figure should be agreed by the parties upon the total sum awarded in damages which is £203,092.18. In the unlikely event that this is not possible, the court will resolve any differences upon the handing down of this judgment.
- Taking into account all my findings in the body of the judgment above, my answers to the different issues are therefore as follows:
1. Yes. This was conceded by the defendant
2. This does not arise in light of the concession to Issue 1.
3. As at 30 June 2011 the Building needed to be demolished by reason of the extent to which the external walls of the Property were tilting, which was in excess of the BRE categorisation of "ultimate limit".
4. The defendant was negligent in failing to advise that the Property needed to be demolished.
5. The relevance of the inspections of the Property carried out by, and the conclusions drawn by, the following is for each of them:
(a) Mr Farrow of the local Council. Not relevant to the engineering issues because Mr Farrow was not qualified as a structural engineer. It demonstrates that even to the lay observer there were immediate concerns about the Property. Mr Farrow's failure to express any view on danger, existing stability or demolition is not directly relevant.
(b) Meridian. This showed that to a professional surveyor (but not a structural engineer) there were immediate and obvious signs that the structural condition of the Property was a concern.
(c) Tribrach. This report described a "severe outward lean", "serious distortion" to window openings and that the whole of the rear elevation "leaned significantly towards the front". It demonstrates that the professional view of a structural engineer who inspected the Property was expressly to the effect that the stability of the building was compromised and it should be demolished.
(d) Mr Best of BdR. His professional view was supportive of that of Mr Taylor in terms both of the condition of the Property, and also his professional view that demolition was required.
6. It is agreed that the flood which occurred owing to the failure of a water tank in the roof space did not have any effect upon the tilting walls which could be seen in 2011. Although, because the Property had been stripped out, and the consequence of this was that more could be seen in the basement, the findings in this judgment take account of the fact that Mr Sheppard could not see this at the time of his inspection.
7. The claimants all relied upon the Sheppard Report in deciding to purchase the Property at a price of £247,000.
8. The claimants would have decided not to purchase the Property had the defendant advised that it needed to be demolished. This was conceded.
9. The sum that is awarded to the claimants in relation to their claim for overpayment in respect of the acquisition of the Property is £177,000.
10. The sum that is awarded in relation to the claim for miscellaneous expenditure is £23,347.18.
11. The sum that is awarded in relation to the claim for accommodation and storage costs is £2,745.
12. The claimants were not contributorily negligent in failing to inform the defendant of their plans to carry out works to the Property including a roof conversion as this plan was not formulated at the time of the instruction. That plan was not finalised until after the purchase had been made.
13. Accordingly, the question of a discount to any judgment sum as a result of contributory negligence does not arise.
14. Interest is to be agreed by the parties, failing which it will be decided by the court upon the handing down of this judgment.