Judgments - Farley v. Skinner

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    23. The first argument fastened onto a narrow reading of the words "the very object of [the] contract" as employed by Bingham LJ in Watts v Morrow [1991] 1WLR 1421, 1445. Cases where a major or important part of the contract was to secure pleasure, relaxation and peace of mind were not under consideration in Watts v Morrow. It is difficult to see what the principled justification for such a limitation might be. After all, in 1978 the Court of Appeal allowed such a claim in Jackson v Chrysler Acceptances Ltd [1978] RTR 474 in circumstances where a spoiled holiday was only one object of the contract. Counsel was, however, assisted by the decision of the Court of Appeal in Knott v Bolton (1995) 11 Const LJ 375 which in the present case the Court of Appeal treated as binding on it. In Knott v Bolton an architect was asked to design a wide staircase for a gallery and impressive entrance hall. He failed to do so. The plaintiff spent money in improving the staircase to some extent and he recovered the cost of the changes. The plaintiff also claimed damages for disappointment and distress in the lack of an impressive staircase. In agreement with the trial judge the Court of Appeal disallowed this part of his claim. Reliance was placed on the dicta of Bingham LJ in Watts v Morrow [1991] 1 WLR 1421, 1445.

    24. Interpreting the dicta of Bingham LJ in Watts v Morrow narrowly the Court of Appeal in Knott v Bolton ruled that the central object of the contract was to design a house, not to provide pleasure to the occupiers of the house. It is important, however, to note that Knott v Bolton was decided a few months before the decision of the House in Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344. In any event, the technicality of the reasoning in Knott v Bolton, and therefore in the Court of Appeal judgments in the present case, is apparent. It is obvious, and conceded, that if an architect is employed only to design a staircase, or a surveyor is employed only to investigate aircraft noise, the breach of such a distinct obligation may result in an award of non-pecuniary damages. Logically the same must be the case if the architect or surveyor, apart from entering into a general retainer, concludes a separate contract, separately remunerated, in respect of the design of a staircase or the investigation of aircraft noise. If this is so the distinction drawn in Knott v Bolton and in the present case is a matter of form and not substance. David Capper, "Damages for Distress and Disappointment - The Limits of Watts v Morrow" (2000) 116 LQR 553, 556) has persuasively argued:

    "A ruling that intangible interests only qualify for legal protection where they are the "very object of the contract" is tantamount to a ruling that contracts where these interests are merely important, but not the central object of the contract, are in part unenforceable. It is very difficult to see what policy objection there can be to parties to a contract agreeing that these interests are to be protected via contracts where the central object is something else. If the defendant is unwilling to accept this responsibility he or she can say so and either no contract will be made or one will be made but including a disclaimer."

There is no reason in principle or policy why the scope of recovery in the exceptional category should depend on the object of the contract as ascertained from all its constituent parts. It is sufficient if a major or important object of the contract is to give pleasure, relaxation or peace of mind. In my view Knott v Bolton 11 Const LJ 375 was wrongly decided and should be overruled. To the extent that the majority in the Court of Appeal relied on Knott v Bolton their decision was wrong.

    25. That brings me to the second issue, namely whether the plaintiff's claim is barred by reason of the fact that the surveyor undertook an obligation to exercise reasonable care and did not guarantee the achievement of a result. This was the basis upon which Hale LJ after the first hearing in the Court of Appeal thought that the claim should be disallowed. This reasoning was adopted by the second Court of Appeal and formed an essential part of the reasoning of the majority. This was the basis on which they distinguished Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344. Against the broad sweep of differently framed contractual undertakings, and the central purpose of contract law in promoting the observance of contractual promises, I am satisfied that this distinction ought not to prevail. It is certainly not rooted in precedent. I would not accept the suggestion that it has the pedigree of an observation of Ralph Gibson LJ in Watts v Morrow [1991] 1 WLR 1421, 1442B-D: his emphasis appears to have been on the fact that the contract did not serve to provide peace of mind, and so forth. As far as I am aware the distinction was first articulated in the present case. In any event, I would reject it. I fully accept, of course, that contractual guarantees of performance and promises to exercise reasonable care are fundamentally different. The former may sometimes give greater protection than the latter. Proving breach of an obligation of reasonable care may be more difficult than proving breach of a guarantee. On the other hand, a party may in practice be willing to settle for the relative reassurance offered by the obligation of reasonable care undertaken by a professional man. But why should this difference between an absolute and relative contractual promise require a distinction in respect of the recovery of non-pecuniary damages? Take the example of a travel agent who is consulted by a couple who are looking for a golfing holiday in France. Why should it make a difference in respect of the recoverability of non-pecuniary damages for a spoiled holiday whether the travel agent gives a guarantee that there is a golf course very near the hotel, represents that to be the case, or negligently advises that all hotels of the particular chain of hotels are situated next to golf courses? If the nearest golf course is in fact 50 miles away a breach may be established. It may spoil the holiday of the couple. It is difficult to see why in principle only those plaintiffs who negotiate guarantees may recover non-pecuniary damages for a breach of contract. It is a singlarly unattractive result that a professional man, who undertakes a specific obligation to exercise reasonable care to investigate a matter judged and communicated to be important by his customer can in Lord Mustill's words in Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344, 360 "please himself whether or not to comply with the wishes of the promisee which, as embodied in the contract, formed part of the consideration for the price". If that were the law it would be seriously deficient. I am satisfied that it is not the law. In my view the distinction drawn by Hale LJ and by the majority in the Court of Appeal between contractual guarantees and obligations of reasonable care is unsound.

    26. The final argument was that by failing to move out the plaintiff forfeited a right to claim non-pecuniary damages. This argument was not advanced in the Court of Appeal. It will be recalled that the judge found as a fact that the plaintiff had acted reasonably in making "the best of a bad job". The plaintiff's decision also avoided a larger claim against the surveyor. It was never explained on what legal principle the plaintiff's decision not to move out divested him of a claim for non-pecuniary damages. Reference was made to a passage in the judgment of Bingham LJ in Watts v Morrow [1991] 1 WLR 1421, 1445C. Examination showed, however, that the observation, speculative as it was, did not relate to the claim for non-pecuniary damages: see the criticism of Professor M P Furmston, "Damages - Diminution in Value or Cost of Repair? - Damages for Distress" (1993) 6 JCL 64, 65. The third argument must also be rejected.

    27. While the dicta of Bingham LJ are of continuing usefulness as a starting point, it will be necessary to read them subject to the three points on which I have rejected the submissions made on behalf of the surveyor.

VIII. Quantum

    28. In the surveyor's written case it was submitted that the award of £10,000 was excessive. It was certainly high. Given that the plaintiff is stuck indefinitely with a position which he sought to avoid by the terms of his contract with the surveyor I am not prepared to interfere with the judge's evaluation on the special facts of the case. On the other hand, I have to say that the size of the award appears to be at the very top end of what could possibly be regarded as appropriate damages. Like Bingham LJ in Watts v Morrow [1991] 1 WLR 1421, 1445H I consider that awards in this area should be restrained and modest. It is important that logical and beneficial developments in this corner of the law should not contribute to the creation of a society bent on litigation.

IX. Conclusion

    29. In agreement with the reasoning of Clarke LJ I would therefore hold that the decision of the majority in the Court of Appeal was wrong. I would also reject the subsidiary written argument of counsel for the surveyor that the plaintiff was not entitled to his costs at trial.

X. Inconvenience and discomfort

    30. It is strictly unnecessary to discuss the question whether the judge's decision can be justified on the ground that the breach of contract resulted in inconvenience and discomfort. It is, however, appropriate that I indicate my view. The judge had a great deal of evidence on aircraft noise at Riverside House. It is conceded that noise can produce a physical reaction and can, depending on its intensity and the circumstances, constitute a nuisance. Noise from aircraft is exempted from the statutory nuisance system and in general no action lies in common law nuisance by reason only of the flight of aircraft over a property: see section 6(1) of the Civil Aviation Act 1982 and McCracken, Jones, Pereira and Payne, Statutory Nuisance, 2001, 10.33. The existence of the legislation shows that aircraft noise could arguably constitute a nuisance. In any event, aircraft noise is capable of causing inconvenience and discomfort within the meaning of Bingham LJ's relevant proposition. It is a matter of degree whether the case passes the threshold. It is sufficient to say that I have not been persuaded that the judge's decision on this point was not open to him on the evidence which he accepted. For this further reason, in general agreement with Clarke LJ, I would rule that the decision of the Court of Appeal was wrong.

XI. Disposal

    31. I would allow the appeal and restore the judge's decision.

LORD BROWNE-WILKINSON

My Lords,

    32. I have had the advantage of reading in draft the speeches of my noble and learned friends, Lord Steyn and Lord Scott of Foscote. For the reasons they have given I too would allow the appeal.

LORD CLYDE

My Lords,

    33. In December 1990 the appellant plaintiff, Graham Farley, was interested in buying a house at Blackboys, East Sussex. The trial judge described it as a beautiful house in a beautiful setting. It had a terrace, a croquet lawn, a tennis court, an orchard, a paddock and a swimming pool. The property is not very far from Gatwick Airport. He engaged the respondent defendant, a surveyor, to inspect and report on the property. He also asked him to report on certain specific matters, including whether the property would be affected by aircraft noise. The defendant did so, but it is now accepted that his report was negligent in relation to the aircraft noise. The plaintiff relied on the report and bought the property. Considerable work required to be done to the house and some time passed before the plaintiff was able to move in. He then discovered the extent of the aircraft noise. Had the defendant made an adequate investigation of the aircraft noise he would have ascertained the true position and the plaintiff would not have bought the property. His enjoyment of the amenity of the property outside the house has been diminished by aircraft noise. He has not sought to sell the property and does not intend to do so He claims damages for the impairment to his use and enjoyment of the property caused by aircraft noise.

    34. Much weight in the argument was placed upon the observations of Bingham LJ in Watts v Morrow [1991] 1 WLR 1421, 1445. Having expressed the general rule that a contract-breaker is not in general liable for the distress and suchlike which may follow upon the breach, his Lordship continued:

    "But the rule is not absolute. Where the very object of a contract is to provide pleasure, relaxation, peace of mind or freedom from molestation, damages will be awarded if the fruit of the contract is not provided or if the contrary result is procured instead. If the law did not cater for this exceptional category of case it would be defective. A contract to survey the condition of a house for a prospective purchaser does not, however, fall into this exceptional category. In cases not falling within this exceptional category, damages are in my view recoverable for physical inconvenience and discomfort caused by the breach and mental suffering directly related to that inconvenience and discomfort."

In the ordinary case accordingly damages may be awarded for inconvenience, but not for mere distress; but where the contract is aimed at procuring peace or pleasure, then, if as a result of the breach of contract that expected pleasure is not realised, the party suffering that loss may be entitled to an award of damages for the distress.

    35. It would detract from the importance of this summary in Watts v Morrow if the words used were to be treated as written in stone and subjected to the kind of analysis which might be more appropriate to a conveyancing document. The expression "physical inconvenience" may be traced at least to the judgment of Hobbs v London and South Western Railway Co (1875) LR 10 QB 111, 122, where in that case damages were awarded for the inconvenience suffered by the plaintiffs for having to walk between four and five miles home as a result of the train on which they had taken tickets to Wimbledon travelling instead to Esher. They had tried to obtain a conveyance but found that there was none to be had. A further claim was made for the consequences of an illness which the wife contracted as a result of the walk but that was refused by the Court of Appeal as too remote. The railway company paid into court £2 as being ample to cover the cost of a conveyance. They resisted a larger award for inconvenience, relying on the observations of Pollock CJ in Hamlin v Great Northern Railway Co (1856) 1 H & N 408, 411 to the effect a plaintiff could recover whatever damages naturally resulted from the breach of contract, "but not damages for the disappointment of mind occasioned by the breach of contract". Cockburn CJ referred, at p 115, to the claim which was allowed as one for "personal inconvenience". Blackburn J referred to it, at p 120, as an "inconvenience". Mellor J, at p 122, contrasted matters of "real physical inconvenience" with matters "purely sentimental". Archibald J observed, at p 124: "The case is not one of mere vexation, but it is one of physical inconvenience, which can in a sense be measured by money value…." It does not seem to me that there is any particular magic in the word "physical". It served in Hobbs's case to emphasise the exclusion of matters purely sentimental, but it should not require detailed analysis or definition. As matter of terminology I should have thought that "inconvenience" by itself sufficiently covered the kinds of difficulty and discomfort which are more than mere matters of sentimentality, and that "disappointment" would serve as a sufficient label for those mental reactions which in general the policy of the law will exclude.

    36. In Hobbs's case the defendants were prepared to compensate the plaintiffs for the cost of a conveyance, even although they had not been able to find any. In the present case the defendant would be prepared to pay for the costs of sale and removal if the plaintiff had decided to sell because of the noise. It is said by the respondent that since he has decided to keep the house he is not entitled to any damages at all. But in Hobbs the plaintiffs were entitled to damages in respect of the inconvenience. It is hard to understand why a corresponding result should not follow here. That an award may be made in such circumstances is to my mind in line with the thinking of this House in Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344. In that case there was a breach in the performance of a contract to provide a pleasurable amenity, a swimming pool. The cost of rebuilding it to conform to the required specification was an unreasonable and inappropriate measure of the damages. The House restored the judge's original award of general damages for loss of amenity. So also here, where the plaintiff has decided to remain in the property despite its disadvantage, he should not be altogether deprived by the law of any compensation for the breach of contract. It may be noticed in passing that in Hobbs's case the damages awarded for the inconvenience were substantially more than the cost of the conveyance. In the present case it seems that the cost of removal, for which at an earlier stage the plaintiff was claiming, far exceeded the sum awarded for inconvenience. But those differences do not affect the principle.

    37. The judge found that the plaintiff was not a man of excessive susceptibility and he refers to the inconvenience he was suffering as "real discomfort". I do not consider it appropriate to explore the detail of the inconvenience as being "physical", either because it impacts upon his eardrums, or because it has some geographical element, such as the relative locations of the aircraft and the property, or the obviously greater audibility of their movements when the plaintiff is seeking to enjoy the amenity of the terrace and the gardens than when he is inside the house. In my view the real discomfort which the judge found to exist constituted an inconvenience to the plaintiff which is not a mere matter of disappointment or sentiment. It is unnecessary that the noise should be so great as to make it impossible for the plaintiff to sit at all on his terrace. Plainly it significantly interferes with his enjoyment of the property and in my view that inconvenience is something for which damages can and should be awarded.

    38. As I have already noted the plaintiff's claim has been not for disappointment at the absence of the expected pleasure but for inconvenience. The claim related to the use and enjoyment of the property, but I do not understand this as intended to include injury to his personal feelings. The judge quoted from the headnote to Watts v Morrow [1991] 1 WLR 1421, 1422, where the summary is given in these terms: "(2) That in the case of the ordinary surveyor's contract general damages were recoverable only for distress and inconvenience caused by physical consequences of the breach of contract…" That formulation is no doubt prompted by such passages in the judgment of Ralph Gibson LJ, at p 1442C ("distress caused by physical consequences") and 1443D ("the physical consequence of such a breach"). But elsewhere he uses the expression "physical discomfort or inconvenience resulting from the breach…" (eg at p 1440B-C) and the language of Bingham LJ, at p 1445, which I have already quoted is in like terms. But it seems plain that the judge was proceeding upon the basis that this was an ordinary surveyor's contract and the award which he sought to make was intended to be within the guidance which Watts v Morrow gave him on that approach. That is to say that it was not an award falling within the exceptional category noted in Watts v Morrow. He recorded that the plaintiff found the noise to be a "confounded nuisance", but the award which he made was intended to meet the "real discomfort" which he found the plaintiff to be suffering. It seems to me that he decided the case as an ordinary example of inconvenience following on a breach of contract. In my view he was entitled to make an award on that basis. While the judge thought that the award would be regarded by the plaintiff as almost derisory I would regard it as almost erring on the side of generosity. But I would not interfere with it. In my view the appeal can be allowed on the foregoing basis.

    39. But it is possible to approach the case as one of the exceptional kind in which the claim would be for damages for disappointment. If that approach was adopted so as to seek damages for disappointment, I consider that it should also succeed.

    40. It should be observed at the outset that damages should not be awarded, unless perhaps nominally, for the fact of a breach of contract as distinct from the consequences of the breach. That was a point which I sought to stress in Panatown Ltd v Alfred McAlpine Construction Ltd [2000] 4 All ER 97. For an award to be made a loss or injury has to be identified which is a consequence of the breach but not too remote from it, and which somehow or other can be expressed and quantified in terms of a sum of money. So disappointment merely at the fact that the contract has been breached is not a proper ground for an award. The mere fact of the loss of a bargain should not be the subject of compensation. But that is not the kind of claim which the plaintiff is making here. What he is seeking is damages for the inconvenience of the noise, the invasion of the peace and quiet which he expected the property to possess and the diminution in his use and enjoyment of the property on account of the aircraft noise.

    41. The critical factor on this approach, as it seems to me, is that the plaintiff made the specific request of the defendant to discover whether the property might be affected by aircraft noise. It is suggested that because this point was wrapped up together with a number of other matters in the instructions given by the plaintiff it cannot be regarded as constituting the "very object" of the contract. But that approach seems to me simply to be playing with words. What is referred to as a breach of contract is often a breach of a particular provision in a contract. The effect of that breach may affect the continued existence of the other terms of the contract, so as to bring the whole to an end. But the point which is the focus of concern is a particular provision in the whole agreement. I can see no reason for distinguishing the present case from a situation where the plaintiff had instructed the defendant simply to advise on the matter of aircraft noise, having already obtained a survey report covering all the other matters. The defendant's argument gained some support from Knott v Bolton (1995) 11 Const LJ 375 where the Court of Appeal regarded the failure to provide the wide staircase and gallery which the clients had particularly requested as the main object of the contract with the architects was held to be the designing of the house, not the giving of pleasure in respect of the staircase and the gallery. In so far as the court proceeded on the basis that the contract could only be regarded as a whole I consider that it was mistaken. The approach involves a very literal reading of the passage in Watts v Morrow [1991] 1 WLR 1421, to which I have already referred.

    42. What was said in Watts v Morrow must be seen in the context of the case. It is instructive to refer to a passage in the judgment of Ralph Gibson LJ with which Bingham LJ was expressly in complete agreement. He said, at p 1442, of the proposition that the contract in that case was a contract whose subject matter was to provide peace of mind or freedom from distress:

    "That, with respect, seems to me to be an impossible view of the ordinary surveyor's contract. No doubt house buyers hope to enjoy peace of mind and freedom from distress as a consequence of the proper performance by a surveyor of his contractual obligation to provide a careful report, but there was no express promise for the provision of peace of mind or freedom from distress and no such implied promise was alleged. In my view, in the case of the ordinary surveyor's contract, damages are only recoverable for distress caused by physical consequences of the breach of contract."

The present case is not an "ordinary surveyor's contract". The request for the report on aircraft noise was additional to the usual matters expected of a surveyor in the survey of a property and could properly have attracted a extra fee if he had spent extra time researching that issue. It is the specific provision relating to the peacefulness of the property in respect of aircraft noise which makes the present case out of the ordinary. The criterion is not some general characteristic of the contract, as, for example, that it is or is not a "commercial" contract. The critical factor is the object of the particular agreement.

    43. The defendant, following something of the thinking in the second hearing before the Court of Appeal in the present case, sought to take from the passage in the judgment of Ralph Gibson LJ in Watts v Morrow, at p 1442, support for an argument that while damages for distress might be granted in the case of a breach of a warranty for the provision of peace and quiet, an award should not be permitted where the case is one of a failure to exercise reasonable skill and care in the performance of a contractual obligation to provide information. I am not persuaded that that can fairly be taken from the passage in question nor that the alleged consequence follows from the distinction. There would be no sufficient logic in allowing damages for inconvenience where the travel agent warrants that the client will have peace and quiet on the beach at Brighton and refusing damages where he negligently advises his client that that beach would be a place to find peace and quiet. Nor does it seem to me that the distinction is one supported by precedent. On the contrary Heywood v Wellers [1976] QB 446 was a case of negligent advice by a solicitor where an award for the consequent distress was made.

    44. The object of the request to consider the risk of aircraft noise was very plainly to enable the plaintiff to determine the extent of the peace and quiet which he could enjoy at the property. It would be within the contemplation of the defendant that if the noise was such as to interfere with the occupier's peaceful enjoyment of the property the plaintiff would either not buy it at all or live there deprived of his expectation of peace and quiet. Each of these consequences seems to me to flow directly from the breach of contract so as to enable an award of damages to be made on one or other basis. The present case can in my view qualify as one of the exceptional cases where a contract for peace or pleasure has been made and breached, thereby entitling the injured party to claim damages for the disappointment occasioned by the breach.

    45. For the foregoing reasons I would allow the appeal and restore the judge's award.

LORD HUTTON

My Lords,

    46. I have had the advantage of reading in draft the speech of my noble and learned friend Lord Steyn and I gratefully adopt his account of the facts of the case and of the issues to which they give rise and I can therefore proceed to state my opinion on those issues. I consider first the question whether the plaintiff is entitled to recover damages to compensate him for the annoyance and nuisance from aircraft noise to which the defendant's breach of contract exposed him, the judge having found that the plaintiff would not have bought the house if the defendant, as he should have done under the contract, had advised him of the true position in relation to aircraft noise. I propose to consider this issue on the assumption (contrary to the opinion which I express later) that the annoyance and nuisance from aircraft noise did not constitute physical inconvenience and discomfort.

The principle, and the exception to it, stated in Watts v Morrow

 
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