England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
CIVIL DIVISION
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
LEEDS DISTRICT REGISTRY
TECHNOLOGY AND CONSTRUCTION COURT
(His Honour Judge S P Grenfell)

		The Royal Courts of Justice The Strand London Thursday 25 April 2002

 


Thursday 25 April 2002

1. LADY JUSTICE ARDEN: These are renewed applications for permission to appeal against the order of His Honour Judge Grenfell sitting in the Technology and Construction Court in the Leeds District Registry in three actions brought against the valuers of adjacent properties at 30, 30A and 31 Ure Bank Terrace, Ripon. The trial was on liability alone and the judge dismissed the action.
2. The actions concerned swallow holes, that is, holes which occur as a result of subsidence due to the action of water on gypsum. This type of subsidence is known to affect properties in parts of Ripon, including the area with which this case is concerned. Each purchaser obtained a valuation report from the defendant in the relevant action. Only in the valuation report prepared by Joplings was there any reference to the possibility of subsidence due to gypsum. Joplings advised that they had assumed that builders had carried out site investigations prior to construction but the Society's surveyor should verify this.
3. The properties in question were newly-constructed houses. Before the purchases with which we are concerned the builder had instructed consultants to prepare a report (known in the action as "the Solmek report" dated August 1994) which would advise on the problem of subsidence. Solmek carried out a number of tests and produced their report, in which they advised that in view of the history of the matter in that particular part of Ripon the provision of a raft foundation would provide some protection in the event of subsidence some time in the future. In February 1995 a swallow hole of some 5.5 m width had opened up about 50 m from the properties in question. The relevant purchases took place in October 1995 and January 1996. In 1997 a dramatic event occurred. The swallow hole which I have mentioned opened up very dramatically and resulted in the temporary closure of Ure Bank Terrace, the access road to the relevant properties.
4. The applicants' case at trial was that there was manifestly an inherent flaw in the valuations which had failed to take account of the possibility that the valuations could be dramatically reduced by further gypsum movement in the area. Had they done so, it was claimed, the valuers would have concluded that for mortgage purposes the houses were of no value to first-time buyers who were wholly dependent on mortgage assistance.
5. The judge examined the Solmek report. He concluded that it took account of the local subsidence and took the view that it concluded that it was safe to build on the subject property. As I have said, at the time the Solmek report was prepared there was a small hole or depression at Field View, but it was not as large as the hole that opened in February 1995 nor yet, of course, as large as the hole which subsequently opened up. It was therefore only after the Solmek report that the Field View hole opened to the extent of 5.5 m. When it opened up to that extent it was reported in a local newspaper.
6. The applicants and respondents had expert surveyors at the trial. The trial, we are told, lasted some four or five days. The valuers agreed that in the light of the knowledge which the valuer should have had of the gypsum phenomenon in the area, "in all three cases the valuer should have made recommendations for some further investigation" and "as such the valuation would have been conditional upon the results of such investigation". They also agreed "that such investigation would most likely have revealed the Solmek report and also Planning Permission and Building Regulation Approval" and that the building society would most likely have referred the information back to the valuer. At that point in time the action of the valuer would have depended upon the information available to him as the result of further investigation, the outcome of which they regarded as hypothetical.
7. The judge preferred the evidence of the defendants' expert, for reasons that he gave. In particular the judge accepted that the valuation report by Joplings was expressed in a way that a competent and responsible surveyor should have reported in the circumstances. The judge also held that he was not satisfied that, even if Joplings had said in their report that there was a swallow hole 50 m away, Mr Weatherburn, who was the prospective purchaser of the property on which Joplings were reporting, would have acted any differently. The judge held that he was satisfied that had the Solmek report been considered at the time it would have made clear that the subject properties were physically safe from any gypsum-related problem and in particular from being adversely affected by the Field View swallow hole. The judge assumed, in the absence of any geotechnical evidence to the contrary, that Ure Bank Terrace was safe for ordinary traffic for the foreseeable future.
8. The judge then turned to the other two cases where, as I have explained, the valuers had not advised on gypsum subsidence. The judge held that they should have given advice in the same terms as Joplings.
9. The next question the judge had to consider was what, on the balance of probabilities, the purchasers would have done about it. The judge heard evidence from Mr Yates and Mr Brown, the two prospective purchasers in question. He held on a balance of probabilities that each of the claimants would still have gone ahead with their purchases if they had been referred to the Solmek report. The judge held that the duty of a valuer was to provide information and a valuer who in breach of duty fails to provide the correct information does not assume responsibility for losses which would have occurred even if the information he gave had been correct. He referred to the decision of the House of Lords in SAAMCO v York Montague Ltd [1997] AC 191.
10. The judge considered the effect of subsidence on the values of the properties. He held that there was no information reasonably available at the time of the valuations that would have affected the valuation. He did not consider that the February 1995 opening of the swallow hole would have been sufficient to indicate property blight. He also held that no-one could have foreseen that there was any risk to the integrity of the road.
11. The judge considered what should be the date for the assessment of loss. He held that the appropriate value for the purpose of establishing loss was the value of the properties at the date they were in fact valued. He concluded there was nothing in the Solmek report which would have given any reason to suppose that the makers of that report should have modified their conclusions at the date of the valuations, notwithstanding the movement in the Field View swallow holes. The judge further concluded that as the problem of subsidence had abated by the date of his judgment there was no logical reason why the subject properties should not attract the security of a mortgage in the future.
12. In summary, the judge concluded that Joplings were not in breach of duty and although the other defendants were in breach of duty there was no loss attributable to that breach in law since there had been no diminution in value at the time they should have provided the correct information. In reaching this conclusion the judge relied on the reassurance provided by the Solmek report. The judge further concluded that the temporary property blight was plainly attributable to the April 1997 collapse of the Field View swallow hole which was an event which would have occurred even if the correct information had been provided in the valuations report. He held that the blight could not have been foreseen by a reasonably competent valuer and accordingly he held that Miss Yates and Mr Brown did not establish the complete tort of negligence. In making those findings, the judge examined with care the expert evidence before him and made his findings on the basis of that expert evidence.
13. The matter first came before me on paper. At that stage there were grounds of appeal and a skeleton argument from Mr Robert Moxon Browne QC. I dealt with the matter on paper by reference to the grounds of appeal. Those matters have not been the subject specifically of this morning's application, and I do not I think need to refer to them except to point out that those grounds of appeal included the ground that the judge was wrong in finding that the Solmek report had given reassurance. In my reasons when I refused the application I pointed out that since the Solmek report had advised that construction could be carried out safely the judge was entitled to conclude that it was reassuring and the claimant's expert, Mr Palmer, had had to withdraw his contention that the Solmek report was fatally flawed. I took the view it was not a valid criticism that the report had been prepared for the developer. Accordingly there was no real prospect of succeeding on the appeal on the argument that if the valuer had not advised negligently, the transaction would not have proceeded.
14. This morning the argument for the applicants has been presented by Mr Robert Moxon Browne QC, who appears with Mr David Gripton. Mr David Gripton, but not Mr Moxon Browne, appeared at the trial. On this application Mr Moxon Browne has presented the matter on the basis that the application should stand or fall by reference to the judge's understanding and findings on the Cooper report, to which I have not yet referred, and the Solmek report. The Cooper report is a report carried out by the British Geological Society in 1999. It was before the judge at the trial; however, it was not an agreed document as such. It was prepared in 1999 and it investigated the position in the light of the opening-up of the Field View swallow hole in April 1997. Mr Moxon Browne has taken us through that report in some detail. The report is a very careful study of the dangers of the site at Field View and in particular advises that, unless the hole is properly filled, there is a risk of further subsidence which might involve 25 Ure Terrace and also the road. Obviously the applicants are very concerned that the road should continue to provide a constant access to their properties.
15. The report prepared by Dr Cooper contains a number of conclusions and recommendations. In particular it concludes at paragraph 5 that if the sides of the open hole are not stabilised or supported, then further collapse of the subsidence pipe is likely. If more collapse of the fill material down the hole also occurs and it becomes deeper, then the zone of influence caused by the collapse of the sides of the hole may spread out. It could become large enough to seriously affect the road and all the surrounding area. Then the report summarises its conclusions:

"In summary, if the present open subsidence hollow is not stabilised then subsidence will adversely affect the road of Ure Bank Terrace. The road is currently unstable and dangerous to use for all but light pedestrian traffic. The time-scale over which this may occur is impossible to predict; it depends on how fast the present hole continues to collapse and how fast the sides fail. From the past collapse history of the subsidence pipe, it may be expected that the fill could subside to the level of the bedrock within a few years, and that further failure may occur on this sort of time scale. It is also probable that there is a second subsidence feature nearer to No 25; the failure of this would probably also affect the road."

16. There was a strong recommendation that the hole had to be filled with proper material. This is dealt with at page 17 of the report. Materials that would be suitable as fill include the demolition materials from the adjacent properties, excluding all wood, plasterboard, plastic and metal (except concrete reinforcing), and so on. The report laid stress on the quality of the fill materials and pointed out that the subsidence hole was very deep indeed, possibly some 28 m.
17. Mr Moxon Browne in effect submits that in the light of the Cooper report, the judge could not properly conclude that there was no diminution in the value of the remaining properties following the Field View opening as at the date of the trial. But, as against that, we have to take into account that the judge clearly heard other evidence at the trial. He refers to the Cooper report at paragraph 40 of his judgment. He says that:

" Dr Cooper's 1999 report makes it clear that the potential zone of influence from the Field View swallow hole breccia pipe falls well short of the properties".

18. He refers to the specific part of the report on which he founds that conclusion. He continues:

"I infer from his Conclusions and Recommendations that, once a properly engineered geotechnical scheme was adopted to stabilise and to support the sides of the open hole, the ground should be sufficiently stable to pose no further threat to the road".

19. Then he gives another reference to the passage in the report on which he relies. The judge continues:

"An engineering scheme has since been put into effect, by which the hole has been filled with appropriate fill material. Although suggestions were made at the outset of the trial and further considered at the site inspection, it has been clarified by Mr Masterman of North Yorkshire County Council, the Highways Authority for Ure Bank Terrace, that there has never been any evidence of movement in the pavement or road and that the road is now considered safe to take traffic. It follows that Dr Cooper's zone of influence must be taken as representing the extent of any physical influence emanating from the Field View swallow hole for the foreseeable future. Further, I must assume, in the absence of any geotechnical evidence to the contrary that the road, Ure Bank Terrace, is safe for the foreseeable future."

20. From that it seems to me clear that the judge had carefully considered the Cooper report and had heard further evidence to the effect that the recommendations as regards infill had been carried out and that it was not considered that the road or the subject properties were in danger.
21. At paragraph 64 the judge accepts the defendants' expert's view that with the reopening of the road and the clear geotechnical information, the subject properties are physically secure. He continues to say that it would seem that any properties not within the immediate sphere of influence of the Field View swallow hole are also physically secure. He then refers to the fact that one of the properties between the subject properties and Field View had been demolished, but that there was no evidence that that had been because of fears for its physical security. He refers to another report and adds:

"Finally, the conclusions of the Solmek report have not been challenged by any fresh geotechnical engineering evidence. From a physical point of view, therefore, the subject properties are quite simply secure from the effects of gypsum movement. In my view, the only other gypsum related factor likely adversely to affect the value is the security of the road. Since the Highways Authority has now passed the road safe for all normal traffic, this factor can now be removed from the equation. It follows that there is no logical reason why the subject properties should not attract the security of a mortgage from now on, albeit that the disappearance of temporary blight takes some time to catch up with the reality of the situation."

22. So on this particular part of Mr Moxon Browne's submission, while I see the concern in the Cooper report about the integrity of the Field View site and the adjoining area, as I see it the judge was entitled to come to his conclusions on the basis of the further evidence before him. Mr Moxon Browne has submitted that the judge should not have come to the conclusion that the breccia pipe had been filled with the appropriate material, but there is simply no evidence before us on which I could reach the conclusion that the judge's conclusion was ill-founded and contrary to the weight of the evidence. Accordingly I could not give permission to appeal on that basis. As I see it, having dealt with that qualification, there is really no ground upon which it could be said that the judge was not entitled to come to his conclusion, which I have now read, on the Cooper report.
23. The second matter on which Mr Moxon Browne said that his application stood or failed was the Solmek report. Again Mr Moxon Browne took us to this report and pointed out that it was not a report directed to the risk of subsidence in the way that the Cooper report had been directed to that issue. It was a limited report directed to considering the ground beneath the site and to advise the developer on whether it was safe to build. In that regard, what the report says about the objectives of the investigation was this, at paragraph 1.2:

"The objectives of the investigation were to investigate the nature and configuration of the ground and groundwater conditions beneath the site in order to provide engineering parameters to allow the formulation of safe and cost effective methods of foundation and groundworks for the proposed development."

24. The report, as I have said, relates that a number of inspections and trials were carried out. It notes at paragraph 2.2 that houses of various ages stand adjacent to the site both north and south and no signs of distress were noted in any of those properties. Having set out all the fieldwork done, the material paragraph of the report is paragraph 7.4:

"There was no information in the trial pits or in the excavated face or cut platform, to suggest that the ground has ever been disturbed by cavitation associated with gypsum dissolution. However, in view of the history of this part of the town the provision of a raft foundation would provide some protection in the event of subsidence at some time in the future."

25. As I see it, what the report is saying in that paragraph is that there was no evidence that this particular site was affected by gypsum subsidence but that the builder should take the precaution of using a raft foundation under the new buildings.
26. The judge dealt with the Solmek report at many stages of his judgment to which I have referred in my summary of it. The most important passage on Mr Moxon Browne's submissions was at paragraph 51 where the judge considers the question whether the February 1995 opening of the Field View swallow hole was sufficient of itself to anticipate property blight beyond perhaps the immediately neighbouring houses. The judge notes that the local authority and building inspector did not think so and nor did the builder as he would not then have embarked on the building.
27. The judge continues:

"Presumably it was [the builder's] concern about the general knowledge of gypsum related ground movement in the area that led him to commission the Solmek Report in 1994. This report made it clear that the properties were outside the potential zone of influence, but that to make doubly sure they were to be built on a specially designed raft. In other words, the properties would be physically safe from any gypsum related ground movement. No one has called the authors of that report to qualify it. In my view, if there was to be any qualification in the light of the events of 1995, it was for the claimants to establish it by calling at least one of the authors. I can only deduce from their absence that there could be no sensible basis for departing from the Solmek report as originally prepared in 1994. In the light of Dr Cooper's 1999 report I consider that there would have been no qualification."

28. Mr Moxon Browne submits that that paragraph shows that the judge must have misunderstood the Solmek report and that, had it had been properly understood, it would have been apparent that these buildings were being put on a site where there was a possibility of gypsum movement and therefore that matter would have affected valuation and would have led to other investigations. But as I see it the judge's interpretation of the Solmek report follows the passages on which Mr Moxon Browne has relied. Certainly the experts did not suggest to the contrary. It seems to me therefore that this particular point also cannot afford a sound basis for granting permission to appeal.
29. I note that at the end of his careful and persuasive judgment the judge expressed his sympathy for all of the claimants who remain, as he put it, "wholly innocent victims of circumstance". The judge, however, concluded that there was no reason to attribute loss that they might have incurred to any breach of duty on the part of the defendants. He regretted that he had to hold that the actions had to fail.
30. In my judgment, no ground has been shown on which this court could give permission to appeal against the judge's judgment, and my conclusion is that these applications must be dismissed.
31. LORD JUSTICE SIMON BROWN: Mr Moxon Browne QC has striven mightily to persuade us that the judge below fundamentally misunderstood two important reports that underlay much of the expert evidence in this case, the Solmek report and the Cooper report. His central difficulty, however, is that he is looking at these two reports for all the world as if they had not themselves been explored, no doubt in the greatest detail, in the course of extensive expert evidence given at this lengthy trial.
32. Although that, perhaps, is hardly surprising, since Mr Moxon Browne was not himself instructed in the trial, it really places him in a quite impossible position. Like my Lady, I find Judge Grenfell's judgment to be both careful and cogent. I am wholly unpersuaded that he misunderstood either, let alone both, of these two reports. Accordingly I agree that this application must be dismissed.
ORDER: Applications refused. Applicants' costs to have a detailed assessment. (Order not part of approved judgment)