A negligent engineer can be responsible for diminution in value of a development

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John Grimes Partnership –v- Gubbins [2013] BLR 126 Court of Appeal

Facts

Mr Gubbins was a farmer who had planning permission to build a housing development on his field by a main road.  The Highways Authority agreed to adopt the access road if it was built to an appropriate standard.  He hired John Grimes Partnership (JGP) as consulting engineers to design the road and drainage and obtain the necessary statutory approval.  JGP were dilatory and in breach of contract failed to complete the work by March 2007.  Highways Authority approval was only obtained in June 2009.  Over the period the sales value of the development fell by £398,000.  JGP’s defence was that a loss in speculative development value was too remote.

Held

  1. JGP knew what Mr Gubbins intended to do, and understood that there was a concern that delay might lead to a risk of the property market moving downwards.
  2. There was no express term in the contract about the consequences of breach or negligence, and the normal implied term imposed responsibility for the types of losses that could be reasonably foreseen by the parties at the time of the contract as being not unlikely to result from breach of contract.

Comment

  1. JGP tried to argue that their fee was only £15,000, and that it was implicit in agreeing such a small fee that the consultants would not take on such a large liability.
  2. There was nothing to stop the engineers from seeking a clause capping in their liability by reference to multiplier of the fee or even simply excluding the consequential loss.  In fact normal liquidated damages would have been less painful!

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