Scottish Court of Session Decisions

Hughes v. Barratt Urban Construction [2003] ScotCS 115 (15 April 2003)

OUTER HOUSE, COURT OF SESSION
A441/00	OPINION OF L.J. DORRIAN, Q.C. (Sitting as a Temporary Judge) in the cause JOHN JOSEPH HUGHES Pursuer; against BARRATT URBAN CONSTRUCTION (SCOTLAND) LIMITED Defender:   ________________

 

 

Pursuer: Smith, Q.C.; Dundas & Wilson

Defender: Borland; MacRoberts

15 April 2003

1. The pursuer in this action sues for damages for breach of contract. In 1982 the pursuer purchased a flat from the defenders. Subsequently certain defects were discovered in the property. The pursuer avers he thereby occasioned loss and sues to recover that loss. When the case came before me for proof on 11 February 2003 I was advised that the defenders' principal argument was that the action was time-barred. If the action were held not to be time barred, the defenders accepted that the defects in the property arose from breach of contract on their part and that they would be liable for losses occasioned thereby, counsel for the defenders specifically conceding a breach of warranty in terms of clause 3 of the parties' agreement. In that case the remaining issue between the parties would be as to the quantification of damages. It was not disputed that the substantial cause of the problems at the site came from inadequate compaction of the material used by the defenders as infill when the site was developed.
2. In 1982 the pursuer purchased from the defenders the property at 121 Monteith Row, Glasgow. The property was a ground floor flat in a new block of eight flats, four on the ground floor and four on the first floor. The pursuer's block contained numbers 119 to 131. On 9 August 1994 the pursuer noticed a cracked brick in the front wall, underneath the bedroom window. On 11 August 1994 he submitted a claim to his insurers. Over time more cracks appeared, including cracks in the mortar, and other parts of the block were affected. Similar problems appeared in the block next door, at number 117. The pursuer's property and number 117 were separated by a pathway.
3. The pursuer's insurers instigated investigations through loss adjusters who, on behalf of several insurers involved in the site, in turn instructed an engineer, Mr Elwyn Berchowitz, to investigate the cause of the apparent structural problems and to report. He inspected the property at number 121 on 9 September 1994 and his first report (6/5 of process) to the loss adjusters is dated 6 October 1994. In that report he said that the pattern of cracking suggested that the south west corner of the property had settled and that the corner of the adjacent building (i.e. 117) exhibited similar characteristics. He said that the settlement appeared to be local to the area in the vicinity of these two corners. In the conclusions of the report he states "We are not able to say with any certainty what has caused the movement at this stage. Possible causes could be a burst water main or defective drainage, soft spots in the underlying soils or disruption of the stone columns." He noted that substantial movement had taken place in other properties on the site, adjacent to London Road, which suggested that "underlying soils are subject to potential problems". He advised that "Further investigations will be necessary to try to determine the exact cause of the movement at number 121 Monteith Row.
4. A second report followed, dated 9 March 1995. (6/6 of process). For this report Mr Berchowitz had inspected various architectural and engineering drawings relating to the development of the site. These were available for inspection at the Mitchell Library and from these he was able to reach some conclusions about the apparent nature of the fill used at the site. He also inspected maps of the area back to 1778 (also in the Mitchell Library) and a book "The Buildings of Scotland -Glasgow" which he had in his office. These enabled him to identify the location of basements or partial basements which had been present before the site was prepared for the current development. The work which he carried out for this report was described as a "desktop" survey. In the conclusions and recommendations of this report he noted that there were "a number of factors which could cause a certain amount of differential settlement". The loads from old tenements on the site would have consolidated the soils below, possibly creating "hard spots" under parts of the new walls and foundations which might lead to differential settlement. The variable depth of the fill and the variable nature of the soils below were also likely to contribute to such settlement. He concluded that it was "possible that the cracking is the result of some or all of the above factors" but that other factors, such as drainage, should be considered. He advised that shallow trial holes should be excavated in the vicinity of the walls in question.
5. At this stage of Mr Berchowitz's evidence, Counsel for the pursuer asked the following question: "At this stage you had an inkling at least that the problem lay with the compaction but you were suggesting that there could be other problems?". This question was the subject of an objection on the basis that it was designed to suggest that the witness did not at that point know the cause of the problem. This was not consistent with the pursuer's position on record at page 19D. Counsel for the pursuer did not insist on the question at that stage. Instead he took Mr Berchowitz to his next report 6/7 of process dated 18 April 1995. For the purposes of that report a couple of trial holes had been excavated at the site. These confirmed that the source of the problem was differential settlement. Asked at what point he was aware that the problem was attributable to fault on the part of Barratts, he said it was when they excavated the trial holes and became aware of the nature of the fill and realised that was a big part of the problem. At this point Counsel for the defenders renewed his earlier objection, namely that the key date relied on by the pursuer for knowledge was March 1995 and there was no record for any later date. Counsel for the pursuer pointed out that the action had been raised in February 2000 and submitted that it was immaterial whether the relevant date was in March or April 1995. I allowed the line to continue under reservation as to competency and relevancy.
6. Mr Berchowitz said that in April 1995 he was able to start commenting more specifically about the nature of the problem. Prior to this, he had been leading to the conclusion that Barratt's were at fault but it was now becoming more specific. Before the trial holes were dug, they were also considering other possible causes. By the time of this report they were eliminating other causes. In cross examination he agreed that in the March 1995 report he was identifying the variable nature of the fill as a possible contributory factor.
7. The defenders' counsel pointed out that the March 1995 report came five months after Mr Berchowitz's first involvement in October 1994 and suggested that it should in fact have taken only a matter of weeks. Mr Berchowitz agreed that on its own the desktop survey was not going to take five months. He could not now exactly recollect what had happened in the interim but he was "probably waiting for instructions and things like that". There were various loss adjusters and insurers, who were notoriously slow. There was also a process of telephoning people, e.g. Cementation, and waiting for them to get back to him. There would have been good reason for the length of time taken. If he hadn't taken five months he might have had to submit a more limited report.
8. Mr Stuart MacMichael was the engineer who gave evidence for the defenders. His report is number 6/14 of process. He focused on 117 and 119 Monteith Row and was instructed to establish the cause of movement in the properties. He was first involved in March 1998 and his report is dated January 1999. He had five or six meetings with Barratts, made initial recommendations verbally and had further discussions before making his findings available. His report is not a desktop survey: boreholes were drilled and C.C.T.V. footage of the drainage system was examined.
9. Mr MacMichael said that an engineer using reasonable diligence should have taken only a couple of weeks to carry out the desktop exercise which resulted in Mr Berchowitz's report 6/6 of process. If instructed to do it at about 6 November 1994 he'd expect to complete it by the end of November. "I've carried out the exercise myself, the records are available on request." He thought it seemed an extraordinary time to present a report, even allowing for possible difficulties in dealing with loss adjusters and insurers. He felt a loss adjuster would normally be empowered to authorise such a report without reporting back to insurers or underwriters.
10. In cross examination of this matter he acknowledged that he did not know what instructions Mr Berchowitz had received, nor when he had received them, nor did he know what information Mr Berchowitz had thought it relevant to attempt to obtain.
11. Mr MacMichael said that on the basis of the information in the March 1995 report (6/5 of process) he himself would not have felt confident in saying that this was a problem for which Barratt's were responsible. He would have needed to do non-desktop investigations before being able to do so.
12. In my view, Mr MacMichael's evidence on the reasonableness of the time taken by Mr Berchowitz to produce the desktop survey was not entirely consistent with what he himself had done. The pursuer's counsel asked whether the recommendations in 6/6 as to carrying out further investigations was a responsible step. Mr MacMichael said that in his opinion it was too late. "That's one of the first investigations which should be done." He was then asked "It was the first thing you did?" and replied "It was the first meat I needed for my report". Counsel then sought to ascertain when exactly this had been done, Mr MacMichael having been instructed in March 1998. It transpired however that he had not himself had these investigations carried out immediately. First, he said that he had had a large file to read. Second, these were investigations which required the instruction of contractors, so it may be reasonable to take two to three months from instruction for this to be arranged. Eventually he said that his own first site visit was in the August of 1998 and in answer to a question from me it appeared that the contractors work was not carried out until August or September. This in my opinion was one of several examples of Mr MacMichael appearing not to allow to Mr Berchowitz the latitude which he himself enjoyed. His criticism of the five months between Mr Berchowitz's original instruction and presentation of his report in March 1995 fell into the same category. Looking at the whole picture, Mr Berchowitz was instructed in August 1994 and by 18 April 1995 he had arranged for certain semi-invasive tests which enabled him to reach the conclusion that Barratt's were likely to have been at fault - a period of some nine months in total. Mr MacMichael was instructed in March 1998 and even with the benefit of obtaining some information from Mr Berchowitz and discussing matters with him, it was late 1998, a similar period of nine months, before he himself felt confident in identifying Barratt's as being at fault. In these matters I thought he was being somewhat unfair to Mr Berchowitz. I am sure this was not intentional on his part: rather I felt that he was inclined to be precipitate in answering when a pause for reflection might have served him well. This was reflected in my view on a few occasions when I felt that he was inclined to answer before being certain that he fully understood what was being put to him.
13. On the issue of when he had become aware that Barrats were at fault, the pursuer pointed out that he is a layman who had put the matter in the hands of his insurers. Thereafter he was relying on the experts to get to the bottom of it. It was only two and a half years down the line that they had decided that the complaint was not an insured peril. Following guidelines in a booklet he had been given he was initially led to believe that the problem was one of normal subsidence. It was only two or three years later when he ascertained it was Barratts' fault, when his insurers declared that it was not an insured peril. At that stage he discovered that a neighbour had obtained a copy of the engineer's report and he asked the insurers for a copy which he was given. Following the involvement of the insurance ombudsman, the insurers did eventually compromise the claim.
14. On the matter of time bar, counsel referred to Glasper v Rodger 1996 S.L.T. 44 and Greater Glasgow Health Board v Baxter, Clark and Paul 1992 S.L.T. 35. The pursuer's counsel submitted that there was nothing else the pursuer could reasonable have done and that the timescale in which Mr Berchowitz had proceeded was a reasonable one. He described Mr MacMichael as arrogant in his criticism of Mr Berchowitz and pointed out that it took Mr MacMichael from March 1998 to December 1998 to reach the same view as Mr Berchowitz. The defenders' counsel submitted that "the guillotine comes down on 23 February 1995" and submitted that the pursuer could with reasonable diligence by that date have discovered his loss was caused by the defenders' fault. From the pleadings, he said, the key report by means of which the pursuer had the necessary information is March 1995. In that case, one has to analyse Mr Berchowitz's actings and see whether he could have acted more quickly. The March report was a desktop survey based on readily available information. Even if one were to assume a lengthy period of delay in obtaining instructions, say three months, the report should have been available by the end of January 1995.
15. In considering this issue I do not accept Mr MacMichael's criticism of the time taken by Mr Berchowitz to produce his report in March 1995. As counsel for the pursuer put it, at the time of his report in October 1994 Mr Berchowitz did not have an open mandate. It was necessary for him to obtain instructions from all those concerned. I accepted Mr Berchowitz evidence when he said that there would be good reasons for the time taken. Nor do I consider that in the circumstances reasonable diligence would have required to pursuer to take any further action at that stage than he did, having put the matter in the hands of his insurers. I consider it was entirely reasonable for him at that stage to "rely on the experts to get to the bottom of it." Accordingly I do not consider that the pursuer could with reasonable diligence have become aware that he had suffered loss as a result of the defenders' breach of duty prior to 24 February 1995. Given the view I have taken about the preparation of Mr Berchowitz's report of March 1995 and of the pursuer's own actions, the pursuer's counsel is correct to suggest that it becomes immaterial whether Mr Berchowitz actually identified the fault in March or April 1995. In these circumstances the defenders' second plea in law falls to be repelled.
16. Turning to the issue of the measure of damages, the parties were in agreement that the correct measure of damages was the difference in the value of the property in August 1994 in its defective state compared to the value it would have had at that date without defects. Counsel for the defenders specifically submitted that the diminution in value should be assessed at August 1994. Notwithstanding this fact, he maintained an objection to questions from the pursuer's counsel designed to establish valuations in August 1994 on the basis that this was inconsistent with the pursuer's position on record, where, at p.15, the measure of loss was said to be the difference in the defective/non-defective value in 2003. In his pleadings at page 15 the pursuer also gives notice of what he maintains was the value of the property without defects in 1994. The defenders obtained a report (number 7/1 of process) from a Chartered Surveyor, Mr Joseph Rourke, assessing the value of the property in its defective and in a non-defective state as at August 1994 and led Mr Rourke's evidence on that matter. The defenders cannot and did not claim that they were taken by surprise regarding this issue or in any way inconvenienced or prejudiced in their preparation or presentation of the case. The defenders counsel maintained that there may be prejudice to the defenders if in consequence of assessing the loss at August 1994 had an affect on the interest which might be awarded. I consider that is an entirely separate issue which I deal with in paragraph 34 below. Having allowed the evidence under reservation I now repel the objection.
17. In submitting that the loss fell to be assessed at August 1994 counsel referred to McGregor on Damages, 16^th edition paragraphs 1148 and 1150; Alcoa Minerals of Jamaica Inc v Herbert Boderick 2002 1 A.C. 37; Gardner & Another v Marsh & Another Times Law Reports, 2 December 1996 and Duncan v Gumleys 1987 S.L.T. 729.
18. The pursuer's evidence was that he could not afford to move until the insurers agreed to pay off his mortgage. At that stage he bought another house, also from Barratts. They operate a part-exchange scheme in relation to other Barratt properties but were unwilling to accept 121 Monteith Row for that purpose. He was unable to insure the property and as far as he knew no-one would give a mortgage on it. The pursuer considered the property to be worthless. Concern about the lack of public liability insurance had led him to give the property to his wife in December 2001 on the basis that she would let it out and put the proceeds into a fund for demolition. She had no other assets. He understood that similar steps had been taken by other proprietors, for example one had formed a limited company to which title to her property had been transferred for the purposes of letting. Had he been able to get insurance for the property he might have stayed in it, or even let it out at a higher figure. The property is currently let to a family member at a reduced rent of about £300 per month.
19. Mr Berchowitz had last monitored the site about a week before the proof and found that there had been some further movement of the pursuer's property by about 1.2 or 1.3mm over a year and a half. He accepted, in cross-examination, that the movement was not dramatic but it did indicate that the problem was progressive. The adjacent house (117) continues to move and he had advised that that building should be vacated. Building Control have inspected the property and reached the same view and a section 13 notice declaring it unsafe has been issued. Asked about the "life expectancy" of number 121, he said that although there were techniques which could be used to fill the void, there would be no guarantee of not making the problem worse. He was cautious on the subject of repair, since repairs on the London Road end of the site had subsequently ended in demolition. He had an "intuitive feeling", having been involved in quite a few foundation repairs, that the most cost effective solution would be demolition. He had spoken to the loss adjusters and based on what the cost of a normal underpinning would be, the repairs needed here were more extensive. He did not have any exact figure to put on it but the cost, compared to the value of the property would be relatively high, although he could not give a percentage. It would be very difficult to confine repair to one part of the block: to do so might create a hard spot compared to next door which in turn would cause differential movement.
20. It was put to Mr Berchowitz in cross-examination that in August 1994 the property would have had a ten year "life expectancy". He said that he would have been reluctant to give a life span without investigating the problem. He didn't know how severe the problem was, although he accepted that the cracking apparent in 1994 could not be described as severe. He would not have given any prediction of "life expectancy" - he would need to see how the cracks developed and identify the source of movement. The pattern of cracking at number 121 was the same as that at number 117 but the extent of the cracking is greater at number 117. There is no section 13 notice in relation to number 121 and Mr Berchowitz would be surprised if the Council issued such a notice at present. The property at the moment is probably not a structural risk but it doesn't work from a serviceability point of view, by which he means that windows won't open properly, the floor might bounce and so on.
21. Mr MacMichael's evidence on the other hand was that had he been asked his opinion in 1994 of the "life expectancy" of number 121 Monteith Row his opinion would have been that it would not be affected at all by the defects. The defects were very minor at that time. As at August 1994 it had the life expectancy of any other property. If asked in 1994 he'd have given an opinion on "life expectancy" although as with any property would not have given a guarantee. In 1994 he'd have given it the normal "life expectancy" of any similarly constructed property, which could be over 100 years.
22. He would tend to agree with Mr Berchowitz's view that the property was currently sound. It was not possible to compare the condition of number 117 with that of number 121, the problems at number 117 being significantly worse. If the property had moved 1.2 to 1.3mm he'd consider that to be minor movement. In his view the condition of the property has not deteriorated significantly in the last five years.
23. Had a prospective purchaser in August 1994 instructed him to carry out a desktop survey and he had reached the same conclusion as Mr Berchowitz had in 6/6 of process, his opinion would still have been that the property had a reasonable life expectancy, which he described as more than ten years.
24. At present he felt confident that the property would last more than 10 years. The maintenance costs would be higher in a building which exhibited cracks in the masonry and movement. However, based on proper maintenance being carried out and given that the property is currently structurally sound, it would have a "significant" life span. His assessment of the life span was dependent on two things: first, that the rate of movement did not increase; and second, that additional maintenance required by the condition of the property was duly carried out. His position eventually seemed to be that he would not be prepared to put this into writing. He'd be surprised if in the short term it moved enough to constitute a danger.
25. His opinion was that it would be feasible to carry out structural repairs to the property. I had some difficulty in understanding Mr MacMichael's position on the relative cost of these. Initially he said the costs would be no higher than the amount spent on any property, indeed could be lower than on some schemes he had been involved with. He went on to say that the relative proportion would be no higher than in others, it could be lower because communal obligations of proprietors for the foundations might reduce the individual cost. However, when the defenders' counsel asked whether on an assumed value of £34,000 he'd consider the likely cost of necessary repairs to be relatively high, his evidence was that they would be considered to be relatively high compared with ordinary repairs. Then he said it might be perceived to be high but the relative proportion would be no higher than for any other property. I cannot accept both these propositions as being true: if the cost was in the same relative proportion as repairs would be on other properties, I fail to see how they could at the same time be described as "relatively high". The cost, he said, would certainly be no more than £34,000. He thought the cost of foundation repairs would be split at least two ways, perhaps more but he hadn't seen the title deeds. He thought for number 121 it would be 50/50 with the upstairs flat.
26. I accept that evidence of Mr Berchowitz that a repair scheme for the property, would not be an economical proposition, whether or not it were feasible to carry out repairs to numbers 121 and 123 in isolation from the rest of the block. That does not mean however, that the property did not have any residual value in 1994.
27. The pursuer led evidence from a Chartered Surveyor, Mr Alexander Hutchison. Mr Hutchison is a partner in Barr Brady, Glasgow who specialises in valuations of residential property in Glasgow and the Glasgow conurbation. He reported in a letter dated 14 January 2003 which is number 6/22 of process. He had inspected the outside of the property at 121 Monteith Row and he noted the evidence of movement in the brickwork and window openings. He said that valuations of property can be made on a comparative basis or a revenue basis. A revenue valuation proceeds on the basis of the hypothetical rental which the property could achieve, less expenses, which sum is then capitalised. It is usual in the case of residential property to use the comparative basis. To enable such valuations to be carried out, his firm subscribe to a service provided by the Land Valuation Unit at Paisley University which collates information from the Land Registry. Using this material in relation to the estate in question, he reached two conclusions: one, that the volume of sales was low compared with the overall number of properties on the estate; and two, there was not a great deal of evidence of capital growth. Property values had remained static in the area, whereas generally values have risen over the last ten or fifteen years. He understood that the problem with number 121 was identified in 1994. When that happens other unaffected properties become blighted. In addition, so far as number 121 is concerned, the inability to obtain insurance affects the mortgagability of the property: it reduces the available market and reduces the price which might be obtained. As to the letting market, without a report from an engineer giving a "life span" for the property, Mr Hutchison would not be willing to advise a client to purchase the property for letting purposes. Without such an estimate "I'd strongly advise a client not to touch it. In effect, I'd be looking for a safety net."
28. The value which Mr Hutchison would place on the property in August 1994 without defects is £34,000. In its defective condition he considered that it only had a "cleared site value" meaning the value which would be placed on a level site ready for development. The cleared site value as at 1994 would have been £3,500. The current value without defects given by Mr Hutchison in his report was £49,000 but in his evidence he suggested a figure of £45,000 to £46,000 having regard to comparative values. The cleared site value would be £5,000. I understood Mr Hutchison to indicate that in 1994 and now the cleared site value given by him would require to be discounted again by about half to reflect demolition costs.
29. Mr Hutchison had seen the report prepared by the defenders' surveyor, Mr Rourke. He had known Mr Rourke for a long time and had professional respect for his views. Mr Rourke's valuation in August 1994 without defects was higher, £37,000 to £38,000. (Report number 7/1 of process). Mr Hutchison could not agree with that valuation and noted that even the average of the figures produced by Mr Rourke as comparators was in fact £34,000. He agreed with Mr Rourke that the properties were not suitable for mortgage purposes. He did not agree that the property could be sold to a cash buyer for £15,000 as Mr Rourke suggested. "Without some form of comfort from an engineer I would take the view that it is unsaleable." He considered that a cash purchase would only be an option if an engineer were willing to put a life span on the property. He agreed in cross-examination that if the property had a ten year life span it would have a residual value. He accepted that the market for a cash buyer was essentially one of speculators who would take into account that there might be no guarantee of life span available. Such a speculator would also take into account the fact that no section 13 notice had been issued in respect of the property and Mr Berchowitz's view that it was unlikely that one would be issued at present. If the property was still moving and an engineer was not willing to give a life span Mr Hutchison's view would be that it was too big a risk at any price.
30. Mr Joseph Rourke, the defenders' surveyor and a partner in Speirs Gumley, Glasgow is, like Mr Hutchison, someone who specialised in valuations of residential property in Glasgow and the Glasgow area. He spoke to his report number 7/1 of process. He had been asked to value the property as at August 1994 in its blighted condition and to offer an opinion as to its value without such defects. In 1994 it was known that there was some movement in the property but the movement was slight and the cause then unknown. In carrying out his valuation he too relied on the material collated by the University of Paisley. Even a simple comparison of figures showed an average value of £34,000. The property at number 121 had an attractive outlook and was less affected by traffic disturbance compared with other properties on the site and was further away from the "barras" which also made it more desirable than some other properties on the estate. In his view it was likely to attract a premium and his valuation of it, without defects, as at August 1994 was £37,000 to £38,000. He considered Mr Hutchison's valuation of £34,000 to be within the bounds of reasonableness: any figure between the two would be reasonable but he did feel the correct valuation was at the upper end of the scale.
31. In its defective condition in 1994, the property would be unsuitable as a security for mortgage purposes - the possibility of ongoing movement would not recommend it to a lender. The property would have had to be disposed of at a discounted price to a cash purchaser who would not be using it as a security. It was Mr Rourke's opinion that a speculator might purchase the property. A speculator might make a judgement on limited information and balance the risk with the return. There are "dabblers who look for run down property to buy, much discounted to put on the rental market and they usually get a high return for their capital." Mr Rourke gave as an example a type of property known as a Whistson-Fairhurst which he said have been known to disintegrate: nevertheless such properties continue to be purchased by speculators. There is a market for such property and in each case the return reflects the risk. Mr Rourke thought a speculator would be looking for a twenty per cent return, i.e. five years purchase. In other words a speculator would approach it by saying "if this stands for five years I've got my money back". In this instance aiming to recoup the outlay after five years would be appropriate. After five years a speculator would still have the rent and may even have some capital growth. Mr Rourke indicated that the supply of rental properties in Glasgow has increased and so rental levels have dropped back to that of 1994. In 1994 there was much less supply in the buy to let market. His view was that an appropriate valuation of the property with defects in 1994 would have been £15,000, based on the assumption that £38,000 was the correct valuation without defects. If £34,000 were correct, the defective valuation would be about £13,750.
32. A speculator would look to gather all available information. The fact that movement had been identified in the property did not mean that it was in imminent danger of collapse. Speculators are experienced in these matters and capable of making judgements about them. On what Mr Rourke surmises was the visible damage in 1994, it would probably have been a more than reasonable bet that it would stand for five years minimum. He considered there would have been a very good chance of someone speculating on the property in 1994. Usually an engineer will give an informed judgement on the risk although they would never give a guarantee. If the property is let for £300 per month that would be about right. Even today he considers there to be a residual value in the property which would be in the sum of about £18,000. He certainly felt he would not have much trouble getting £15,000 for the property, and would be confident of finding someone interested at £10,000. He would not quibble with a current value without defects of £45,000 to £46,000. Like Mr Hutchison he said that residual clear site values would have to be discounted for demolition. He could not accept that in 1994 or now the property was basically worthless.
33. In 1994 once the cracks had appeared, even a speculator would be advised to ask Mr Berchowitz for an opinion on (a) whether the building was likely to collapse; and (b) whether it had a reasonable life span. If Mr Berchowitz said he could not give any guidance then Mr Rourke would have asked if they could take Mr Berchovitz's findings to another engineer for a view. In his experience it is often possible to get an engineer to proffer a view on the most likely scenario. He considers that in 1994 he would have been able to get an engineer to give him an informed opinion but not a guarantee.
34. Mr Rourke was aware that the owner of the property at 123 Monteith Row, a Mr McGibbon, had transferred his title to Mrs Hughes for no consideration but this did not alter his view. He considered that Mr McGibbon had been ill advised to do so. He thought the transaction was suggestive of panic on Mr McGibbion's part. In his view the property at 121 would remain of interest to a speculator today. If there were significant ongoing movement which was irredeemable and rendered the building in imminent danger of collapse his view would be different.
35. There was little difference between Mr Hutchison and Mr Rourke as to the appropriate valuation of the property in 1994. I did feel that Mr Hutchison perhaps had not given enough weight to the factors which cause Mr Rourke to conclude that number 121, without defects, would have been likely to attract a premium. I accepted that £38,000 would be the value of the property without defects in 1994. As to the remaining issue between them I thought that Mr Hutchison was over-cautious in his approach. Much of his evidence focused on the advice which he would give rather than on the issue of whether a speculator would have been attracted to take a chance on the property. I could fully accept that the professional advice which Mr Hutchison would feel bound to give to a client would be not to proceed with a purchase. I think counsel for the defenders was correct to describe Mr Hutchinson as a man who would advise prudently and cautiously. That is not to say that I think Mr Rourke would have done otherwise, clearly he would have advised a client, even a speculator to seek advice from an engineer. However, Mr Rourke in my view addressed much more directly the real question, namely whether a speculator would in any event have been likely to proceed even without a report from an engineer. As he identified, a speculator is essentially taking a gamble and I accept his evidence that such people weigh up all the known factors, of which the availability of some source of comfort from an engineer was only one. Speculators as he said are experienced and can make these kind of judgements. It is a matter of balancing the risks against the potential benefits. I considered Mr Rourke to be a thorough and impressive witness whose evidence was persuasive. I accept his evidence that there would have been a very good chance of someone speculating on the property in 1994 and that it did therefore have a residual value. I accept also his assessment of that value in the sum of £15,000. The measure of the pursuer's loss is therefore £23,000.
36. The remaining dispute between the parties was on the question of interest. The pursuer's first conclusion seeks interest at the rate of 8% per annum from the date of decree to follow hereon until payment. In submissions the pursuer's counsel sought interest at 8% per annum from 9 August 1994. Counsel for the defenders referred me to section 1(1) of the Interest on Damages (Scotland) Act 1958 which provides that:

"Where a court pronounces an interlocutor decreeing for payment by any person of a sum of money as damages, the interlocutor may include decree for payment by that person of interest, at such rate or rates as may be specified in the interlocutor, on the whole or any part of that sum for the whole or any part of any period between the date when the right of action arose and the date of the interlocutor."

He submitted that before the pursuer could invoke the court's discretion to award interest from a date earlier than the date of decree the pursuer required to specify in the conclusion the date from which interest was sought. In this case the pursuer in his pleadings selected January 2003 as the date at which the measure of his loss should be assessed, averring that this amounted to £58,000 and this is reflected in the conclusion which seeks payment of £58,000 with interest thereon from the date of decree. Indeed in January 2003 the pursuer had recast his averments of loss and amended the sum sued for but had not made any alteration to that part of the conclusion which seeks interest. In these circumstances counsel submitted that the pursuer was not entitled to invoke the courts' discretion to award interest from an earlier date. He referred me to Orr v Metcalfe 1973 S.C. 57 in which Lord Cameron, at page 62, under reference to section 1(1) of the Interest on Damages (Scotland) Act 1958, said:

"This ... is a discretionary power and in my opinion, it would be necessary for a pursuer who seeks to invoke it in his favour to include a conclusion or crave for interest in his summons or writ in such a way as to give notice that he intends to seek such an award of interest, and, in the form of the conclusion or crave, to give the Court the full statutory range of selection of rate and period of interest sought. This discretionary power relates to all awards of damages, and the interest which may be decerned for is additional to the sum awarded in name of damages itself and therefore, does not form part of it."

Lord Cameron went on to find that the exception to this applies, in terms of section 1(1A) of the act, only to cases of damages or solatium for personal injuries alone, in which case a pursuer need not specifically conclude for interest. In reply to these submission, the pursuer's counsel submitted that the conclusion was to be seen as a consolidation of the loss and that interest need not specifically be sought from a specific date. However, as Orr v Metcalf makes clear the conclusion can only be treated as a consolidation in a case where a pursuer is seeking damages or solatium for personal injuries. It does not apply to the present case and the pursuer's conclusion cannot be seen as a consolidation. The terms of the conclusion are quite clear on the matter of interest: interest is sought "from the date of decree to follow hereon until payment". Standing the terms of that conclusion (which counsel did not seek to amend) and in the light of Orr v Metcalf I cannot do other than uphold the defenders' submissions this matter. I consider the defenders' submissions to be well founded. The Interest on Damages (Scotland) Act 1958 did not introduce any general rule as to the awarding of interest; rather it gave the court power, if it thought fit in the exercise of its discretion to do so, to vary the normal rules regarding the payment of interest where particular circumstances so warrant. In my view it is therefore incumbent upon a pursuer who wishes to assert that circumstances warrant such a variation to give notice of his intention to do so in his pleadings and in the conclusion of the summons. The pursuer does not do so. The fact that I have concluded that the correct date at which his loss is to be assessed in 1994, and to allow him to lead evidence thereanent, does not mean that he is automatically entitled to interest from that date. It is in respect of this issue that the absence of notice in his pleadings is critical.

37. The defenders' counsel submitted that, were I to conclude that the pursuer could invoke the discretion given under section 1(1), I should not in any event exercise that discretion in his favour for two reasons (a) that the case was one where the measure of damage was not readily quantifiable at a date earlier than the date of decree; and (b) that there was a benefit to the pursuer in remaining in occupation of the house and this would cancel out any interest applicable during the period of occupation.. He made reference to Macrae v Reed and Mailk 1961 S.C. 68, Applegate v Moss 1971 1 Q.B. 406 and King v Parsons & Co  1973  1 W.L.R. 29. Had I been awarding interest, I would not have agreed with either of these propositions. I did not consider that this was a case where quantification caused any real difficulty. Applegate v Moss does not establish any general principle that the benefit of occupation cancels any entitlement to interest. I do not consider that the fact that the pursuer remained in occupation simply because he had no alternative is a factor which should cancel out a claim for interest, had such a claim been properly pled. The pursuer could not move from the property until the insurance claim was settled in 2001 because he could not afford to do so.
38. In summary therefore I will sustain the first plea in law for the pursuer, repel the pleas-in-law of the defenders and pronounce decree for the sum of £23,000.