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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Joyce v Bowman Law Ltd  EWHC 251 (Ch) (18 February 2010)
Cite as:  EWHC 251 (Ch),  1 EGLR 129,  PNLR 22
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Strand, London, WC2A 2LL
B e f o r e :
| Paul Joyce
|- and -
|Bowman Law Limited
Ms Eva Ferguson (instructed by Beachcroft LLP) for the Defendant
Hearing dates: 8th, 9th, 10th and 11th February 2010
Crown Copyright ©
Mr Justice Vos:
"A picturesque character cottage adjacent to woodland and offering scope for modernisation and extension (subject to the usual consents)
(Subject to Contract)
The lower end of the garden is being retained by the vendor and a planning application for the erection of one dwelling is to be submitted. Should this prove unsuccessful, both on application or any subsequent appeal that might be considered, then the purchaser will have the option within 12 months of completing the purchase of Warren Cottage to purchase the additional area of garden at the price of £20,000 "
i) "5.1 In this Clause: 5.1.5 "the Option Notice" means the Notice served by the Buyer pursuant to clause 5.3"
ii) "5.2 In consideration of [£1] paid by the Seller to the Buyer the Buyer grants to the Seller the Option to require the Buyer to buy the freehold interest in the Additional Property [the "Additional Land"] at the Additional Purchase Price [£20,000]".
"very nice to meet you on Friday, e-mail as promised with full address of the [Property] Can you please arrange TPOs orders on the trees asap as I dont have the luxury of time I will forward you a file on [Yew Cottage] asap and send it to you r.e. the new planning application".
i) Mr Morse replied to Mr Joyce explaining how he was progressing the Tree Preservation Orders on the Additional Land (which Mr Joyce had instructed him to obtain in order to obstruct the Vendor's intended application for planning permission), and saying that a survey would be necessary and that "[t]he latter information will be required when we prepare a scheme to extend the present house [on the Property]".
ii) Mr Morse also sent Mr Joyce a letter explaining his charges in detail. Almost the entire letter is premised on the proposed extension to the existing Warren Cottage to make it into a 5/6 bedroom house.
Overview of the damages claim
Loss of a chance
i) Stuart Smith LJ said: " the plaintiff must prove as a matter of causation that he has a real or substantial chance as opposed to a speculative one. If he succeeds in doing so, the evaluation of the chance is part of the assessment of the quantum of damage, the range lying somewhere between something that just qualifies as real or substantial on the one hand and near certainty on the other. I do not think that it is helpful to seek to lay down in percentage terms what the lower and upper ends of the bracket should be".
ii) Hobhouse LJ said: "The plaintiffs have satisfied the court that the loss they have suffered is not nominal. They are not obliged to prove more than that they have lost something of substance. This they have done by showing that they had a measurable chance of negotiating significantly better terms. They are entitled to an assessment of their damages.
I agree with Stuart-Smith L.J. that the correct approach is that summarised by Lord Reid in Davies v. Taylor  A.C. 207, 213:
"You can prove that a past event happened, but you cannot prove that a future event will happen and I do not think that the law is so foolish as to suppose that you can. All that you can do is evaluate the chance. Sometimes it is virtually 100 per cent.: sometimes virtually nil. But often it is somewhere in between"".
i) Is Mr Joyce entitled to recover consequential losses based on the building profit that would have been made?
ii) What did Bowman know about Mr Joyce and his intention to develop the Property?
iii) Had Mr Joyce been properly advised, was there a real and substantial chance that:-a) Mr Joyce would have been granted the buyer's option?b) Mr Joyce would, in the event, have been able to exercise that option, had it been granted?c) Mr Joyce would have been able to obtain permission for the March 2009 Plans, had the buyer's option been granted and exercised?d) Mr Joyce would have been able to obtain the funding for the development of the March 2009 Plans?
iv) What were the percentage chances that Mr Joyce would have succeeded in surmounting these four hurdles?
v) What would Mr Joyce's profit have been from building out the March 2009 Plans, and when should they be assessed?
vi) Has Mr Joyce failed to mitigate his loss?
vii) What damages is Mr Joyce entitled to?
Witnesses of fact
i) First, he told me expressly that he had, right from the beginning, wanted a newly built house with a footprint that was 12 metres by 18 metres.
ii) Secondly, as I have already mentioned, he explained his 9th September 2005 e-mail to Mr Morse saying he did not want to build a new house at all, by saying that he or they had got their wires crossed.
The evidence of the planning consultants
i) The Property is situated in an Area of Outstanding Natural Beauty.
ii) Even with the Additional Land, the site was very small at only just over half an acre.
iii) The Planners were very sensitive about height as well as footprint.
iv) The Planners were also keen to see a sensitive development of the cottage type. Mr Joyce's proposed house would have been bulky and somewhat obtrusive. It would have been larger than the adjoining Woodlands that Mr Joyce was, on his own analysis, originally seeking to emulate.
First Issue: Is Mr Joyce entitled to recover consequential losses based on the building profit that would have been made?
"The principles to be applied in assessing damages in this case are, in my judgment, these.
(1) The overriding rule was stated by Lord Blackburn in Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39 and has been repeated on countless occasions since: the measure of damages is
'that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation.'
As Megaw LJ added in Dodd Properties (Kent) Ltd v Canterbury City Council  1 All ER 928 at 934,  1 WLR 433 at 451:
'In any case of doubt, it is desirable that the judge, having decided provisionally as to the amount of damages, should, before finally deciding, consider whether the amount conforms with the requirement of Lord Blackburn's fundamental principle. If it appears not to conform, the judge should examine the question again to see whether the particular case falls within one of the exceptions of which Lord Blackburn gave examples, or whether he is obliged by some binding authority to arrive at a result which is inconsistent with the fundamental principle.'
(2) On the authorities as they stand the diminution in value rule appears almost always, if not always, to be appropriate where property is acquired following negligent advice by surveyors. Such cases as Philips v Ward  1 All ER 874,  1 WLR 471, Pilkington v Wood  2 All ER 810,  Ch 770, Ford v White & Co  2 All ER 755,  1 WLR 885 and Perry v Sidney Phillips & Son (a firm)  3 All ER 705,  1 WLR 1297 lay down that rule and illustrate its application in cases involving both surveyors and solicitors.
(3) That is not, however, an invariable approach, at least in claims against solicitors, and should not be mechanically applied in circumstances where it may appear inappropriate. In Simple Simon Catering Ltd v J E Binstock Miller & Co (1973) 228 EG 527 the Court of Appeal favoured a more general assessment, taking account of the 'general expectation of loss'. In other cases the cost of repair or reinstatement may provide the appropriate measure (see Dodd Properties (Kent) Ltd v Canterbury City Council  1 All ER 928 at 938,  1 WLR 433 at 456 per Donaldson LJ). In other cases the measure of damages may properly include the cost of making good the error of a negligent adviser: examples are found in Braid v W L Highway & Sons (1964) 191 EG 433 and G & K Ladenbau (UK) Ltd v Crawley & de Reya (a firm)  1 All ER 682,  1 WLR 266.
(4) While the general rule undoubtedly is that damages for tort or breach of contract are assessed as at the date of the breach (see, eg, Miliangos v George Frank (Textiles) Ltd  3 All ER 801 at 813,  AC 443 at 468 per Lord Wilberforce), this rule also should not be mechanically applied in circumstances where assessment at another date may more accurately reflect the overriding compensatory rule. The Dodd Properties case both affirms this principle and illustrates its application.
(5) On the facts of the present case the diminution in value rule would involve a somewhat speculative and unreal valuation exercise
(6) Even after an appropriate measure has been found to reflect damage recoverable under the first limb of the rule in Hadley v Baxendale (1854) 9 Exch 341,  All ER 461, there will be cases in which a plaintiff will not be adequately compensated unless he receives damages to reflect his loss under the second limb also ".
"33. This was a property with development potential. It is common ground that this property was no longer to be used as a village hall. It would have to be used for some other purpose; and there would have to be some development so that it could be used for that purpose. The question was: for what development could planning permission be obtained and how valuable would the property be on completion of that development? But those are the factors which a properly informed market will take into account in fixing the market value of property. The profit potential of the property is an element to be taken into account in fixing its market value. It is not suggested that there was anything special about this property to the appellants as purchasers. It is not suggested that there were not other developers in the market for property of this nature who could have made a proper assessment of the value of this property. The problem for the appellants in the present case is that they never sought to persuade the judge - and never adduced evidence to establish - that the market value of this property, Dukes Hall, was anything greater than the £67,500 which the Parish Council was seeking. It is for those reasons that the claim for loss of profits is one which the court could not entertain in this case.
35. In the present case, there is no evidence that these appellants would not have been able to purchase other property in the market which they could develop profitably with the use of the money which they did not lay out in the purchase of Dukes Hall. There is no evidence that the respondents, insofar as their duty lay in contract, were aware of any special circumstances which made it impossible for the respondents to employ their funds in the ordinary course of their business, or of any circumstances which suggested that this property was being sold at an under-value. Indeed, in the circumstances that they were acting for the vendors, the Parish Council, it would be most unlikely that they would regard the property as being sold at an under- value rather than at market price".
Issue 2: What did Bowman know about Mr Joyce and his intention to develop the Property?
i) It was Mr Joyce's intention was to develop the Property for profit;
ii) A specific development was contemplated; and
iii) The Additional Land was necessary for that development.
Issue 3: Had Mr Joyce been properly advised, was there a real and substantial chance that (i) Mr Joyce would have been granted the buyer's option? (ii) Mr Joyce would, in the event, have been able to exercise that option, had it been granted? (iii) Mr Joyce would have been able to obtain permission for the March 2009 Plans, had the buyer's option been granted and exercised? (iv) Mr Joyce would have been able to obtain the funding for the development of the March 2009 Plans?
i) Mr Joyce being granted a buyer's option that he could have exercised after one year if planning permission had not, by then, been obtained.
ii) Mr Joyce actually exercising that option in September 2006, since planning permission would not have been obtained by the Vendor.
iii) Mr Joyce being able to obtain permission for the March 2009 Plans; and
iv) Mr Joyce obtaining the funding for the development of the March 2009 Plans.
Issue 4: What were the percentage chances that Mr Joyce would have succeeded in surmounting the four hurdles?
Issue 5: What would Mr Joyce's profit have been from building out the March 2009 Plans, and when should they be assessed?
Issue 6: Has Mr Joyce failed to mitigate his loss?
Issue 7: What damages is Mr Joyce entitled to?