House purchasers who acted on a structural engineer’s advice, which subsequently proved to be incorrect, were able to claim for their loss based on a valuation made seven years after the event, the court ruled recently.
The mortgage company which was to provide the finance for the purchase required the purchasers to engage a firm of structural engineers to investigate the cause of cracks in the walls of the property and to suggest remedial work. The engineers issued a report to the effect that there was structural movement of the premises. They concluded that the cracking was due to trees growing close to the house and recommended that all large trees within four metres of the property be removed. The purchasers bought the property and removed the trees. However, further cracks appeared over time and the owners instructed a new firm of structural engineers, which concluded that the new cracks were the result of the removal of the trees. Whilst the original cracks had been caused by dehydration of the soil, the removal of the trees had led to the subsequent rehydration of the soil, and this was the cause of the new cracks.
It was established by a period of monitoring that the property was now stable and needed no further remedial work. However, the home owners sued the original firm of engineers for the loss of value of the property that had resulted from its negligence. Once the issue of liability was settled, the question which then arose was what should be the basis for calculating the value of the claim? The loss was valued at £20,000 by an expert valuer and the claim was brought for that sum.
The engineers argued that the loss should not be calculated based on 2007 values (when the valuer’s report was prepared) but on 2000 values, as this was when the negligent advice was given. As property prices had risen considerably in the intervening period, this would be a considerably smaller sum.
The court decided that the homeowners were entitled to £20,000 for the loss in value of their property on the basis that it would have been worth that amount more had the trees not been removed. In the view of the court, provided that the loss relates directly to the breach and the valuation of the loss took place at a reasonable date, ‘there is nothing inherently wrong in principle in valuing a diminution in value loss at a later date than the date of the breach’.
Normally, such damages are calculated based on the loss at the date of the breach. However, in this case the claimants had started their claim without delay once the further cracking had been discovered. In addition, the defendant failed to provide evidence of the value of the loss in 2000. This prevented the judge from using the 2000 value even if he had chosen to do so. In the court’s view, the choice of 2007 as the date on which to base the claim was reasonable.