England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHESTER COUNTY COURT
(HIS HONOUR JUDGE MACKAY)

		Royal Courts of Justice Strand, London, WC2A 2LL
		30th July 2009

Lord Justice Dyson:

1. On 16 July 2004 the claimants purchased a detached house at 32 Carlisle Road, Birkdale, Southport, from the defendants. The house had previously been converted from two flats into a single dwelling. It is the claimants' case that they first became aware of the conversion shortly after they purchased the house. They had concerns about the adequacy and appropriateness of the conversion works. Their concerns were confirmed by the report of a Mr Thomas Dears, dated 1 September 2004.
2. It is not in dispute that the claimants carried out works of repair to the house. They issued these proceedings against the defendants, alleging that they had been induced to purchase the house by a misrepresentation contained in the Seller's Property Information Form.
3. To the question whether any building works, including loft conversions and conservatories or any conversion had been carried out to the house, the defendants answered no. It was this alleged misrepresentation which formed the basis of the claimants' cause of action. They claimed that as a result of the misrepresentation they had suffered a diminution in value which they quantified at £37,000; alternatively, they claimed a diminution in value which they quantified at £25,882, being the alleged cost of the works of repair which they had carried out; in the further alternative, they claimed a diminution in value of £25,000.
4. The trial was heard by HHJ Mackay. There were many issues which are not material to this appeal. The misrepresentation was not in dispute; the judge found that the claimants had been induced by the misrepresentation to agree to purchase the house; there was an issue as to the reasonable cost of the remedial works and the consequent diminution in value if any.
5. Most of the remedial works were carried out for the claimants by AMF Solutions Limited ("AMF"). Four AMF invoices were put in evidence before the judge. These were invoice number 165, dated 20 August 2004, for discovering, inspecting and removing the staircase and landing floor and boards, £4,206.50 including VAT; invoice number 188, dated 10 October 2004, for additional consequential works to make good floor and walls where existing staircase and boards were removed, £3,015.05 including VAT; invoice number 192, dated 21 October 2004, for provision of new staircase, £7,108.75 including VAT; and invoice 236, dated 5 November 2004, for further additional works consequent on the removal and replacement of the staircase, £6,917.22 including VAT.
6. The total of these invoices is £21,247.52. In addition, the claimants' claim for some further work which, as I understand it, was not carried out by AMF.
7. The defendants' expert surveyor, Mr Byrom, said that the AMF invoices were excessive and that in consequence there was no diminution in value at all. In particular, Mr Byrom said that the cost of supply, fit, redecorate and finish a replacement staircase would be "say, £3,000". Mr Byrom gave evidence at the trial on behalf of the defendants. The claimants' expert surveyor, Mr Dears, produced a report in which he described the defects and said that he anticipated that the cost of remedying them would be in the region of £20,000 plus VAT. Mr Dears was unable to give evidence at the trial, but Mr Brack, a colleague of his, was called to give evidence on behalf of the claimants. Mr Brack supported the view of Mr Dears as to the existence of the defects, and said that the consequent reduction in value would be about £25,000. Mr Brack said that he had taken £25,000 because that was the amount that would have been needed to remedy the defects.
8. At paragraph 23 of his judgment the judge said that he found Mr Brack to be a much more convincing and acceptable witness than Mr Byrom. He said that he was "a far more convincing witness than Mr Byrom. I accept what he says".
9. The judge said at paragraph 26 that he was not convinced that the reduction in value would have corresponded pound for pound to the cost of the remedial work. He concluded that the diminution in value was £20,000. He awarded the claimants damages in that amount, to which he added modest sums for other heads of loss to which it is not necessary to refer.
10. It will be seen therefore that an important building block in the calculation of the diminution in value of the house was the judge's acceptance of the claimants' case that the cost of the remedial works was a sum in the order of £25,000. The defendants sought permission to appeal on a number of grounds. The scope of this appeal, as a result of discussion between Mr Gorton and the court and a ruling given by this court, has been confined to the question of whether or not the cost of remedial works claimed by the claimants and charged to the claimants by AMF was excessive and greater than formed the basis of the judge's decision.
11. The basis for that ground of appeal is fresh evidence which, it is said, might have affected the judge's decision if it had been available at the trial. The fresh evidence comprises three invoices dated September 2004 from Edwards and Hampson Ltd who are joinery contractors. These invoices are addressed to AMF. It is not in dispute that Edwards and Hampson were AMF's subcontractors, at any rate for the work which was the subject of AMF's invoice number 192.
12. These invoices show that Edwards and Hampson charged AMF £2,600 plus VAT for the supply and fitting of a staircase with handrail. The corresponding invoice from AMF is, as we have seen, in the sum of £6,050 plus VAT. It is common ground that the question whether the evidence of the Edwards and Hampson invoices should be admitted on appeal is to be determined on Ladd v Marshall principles, [1954] 1 WLR 1489 1491. In particular, the question is whether the evidence, if given, would probably have had an important influence on the result of the case, although it need not have been decisive.
13. On behalf of the defendants, Mr Gorton submits that the evidence of the Edwards and Hampson invoice would have had a real impact on the judge's reasoning in relation to the question of quantum. He submits that the Edward and Hampson invoice vindicates the opinion of Mr Byrom which was rejected by the judge in preference to that of Mr Brack. Dr Jess has sought to argue that there is not a necessary correspondence between the Edwards and Hampson invoice and the AMF invoice number 192. He has suggested that it is at any rate possible that, whereas it is clear that AMF included in its work the work of the 180 degree turn at the landing and the three rise flight from the landing upwards, it is not clear that that work was also included in the Edwards and Hampson invoice. It seems to me, looking at page 116 of the bundle, that, on any fair interpretation of the Edwards and Hampson documentation, their work included not only the fifteen risers but also the work to the landing and the three additional risers.
14. We are therefore left with the position that, in broad terms, AMF charged the claimants £7,000 for work for which AMF had in its turn been charged no more than £3,000 by its subcontractor. That, it seems to me, is strong prima facie evidence that, any rate in relation to that invoice, AMF's charge was excessive; and, in my judgment, at any rate in relation to that item of work, it is probable, that, had the judge had the Edwards and Hampson documentation, he would have come to the conclusion that the AMF invoice number 192 was unreasonable and that the cost of remedial works that were claimed to that extent was excessive.
15. But the matter does not rest there. It seems to me that, in the light of that material, it is probable, that the judge would have taken a different view of the relative merits of the evidence of Mr Byrom and Mr Brack. The judge would also have has to ask himself whether the other AMF invoices were similarly unreasonable and excessive. It is impossible for this court to make an assessment as to what effect this new material would have had on the judge's view of the reasonableness of the cost claimed in respect of remedial works, but I am satisfied that there are strong grounds for believing that it would well have had an important influence on the judge's determination of that question. If the judge had come to the conclusion that £25,000 was substantially too high as a reasonable quantum of the remedial works that were carried out, then that almost certainly would have had an impact on his assessment of the diminution in value.
16. I have come to the conclusion in these circumstances that justice requires the question of assessment of damages to be reconsidered by a different judge at a rehearing. I would therefore allow the appeal to the extent of setting aside the judge's decision as to quantum. His decision on liability should stand, so that the order should be that there will be judgment for the claimants with damages to be assessed, and I would remit the assessment of the damages to a different judge.
17. For those reasons I would allow this appeal.

Lord Justice Longmore:

18. I agree.

Lord Justice Patten:

19. I also agree.

Order: Appeal allowed