Construction Law and Safety - Jimmybuild Ltd - Essay Example

?The first person examined will be the liability that might be encountered by Jimmybuild Ltd. Jimmybuild was aware of the problem with the foundation, yet concealed this information from Nina. There is the possibility that Jimmybuild would be liable under the Property Misrepresentations Act 1991, if they made a statement to Nina that there was not a structural defect, because this would mean that they made a false or misleading statement during a business transaction (Property Misrepresentations Act 1991 § 1(1)). Moreover, the statement would be material, as opposed to trivial, as judged by the perspective of a reasonable person, because the statement would go to a serious matter, as the foundation of the house was a material concern (Property Misrepresentations Act 1991). The offense is one of strict liability, which means that it does not matter if the statement was intentional or negligent, but, rather, just that the statement was made and that the statement was false. So, in this case, Jimmybuild Ltd., if they made a statement with regards to the condition of the building, any kind of statement to Nina along those lines, and did not mention the fact that the foundation was defective, they would be liable under the Property Misrepresentations Act 1991. A statement that contains an omission would make Jimmybuild Ltd. liable under the Act, so, because any statement regarding the condition of the property would contain that omission, Jimmybuild Ltd. would be liable. Peter, the surveyor, may be at risk of negligence. According Murdoch (2005) surveyors may be guilty of negligence when they do not use skill in preparing their reports and the homeowner relied upon the surveyor’s report (Murdoch, 2005, p. 1). Privity of contract has historically been used as a defense on the part of the surveyor, as there was not privity of contract between the homeowner and the surveyor. Therefore, historically, the homeowner could not recover damages from the surveyor. However, the case of Hedley Byrne v. Heller [1964] AC 465 changed this rule. Heldley concerned appellants who were advertisers with a client named Easipower. Easipower defaulted on contracts to advertise on certain television and radio programmes that were procured by the appellants, making the appellants personally liable on the contracts. The appellants, however, had relied upon reports prepared by the defendant bank in which the defendant bank, Heller and Partners, which stated that Easipower was creditworthy, when, in fact, Easipower was not. The lower court ruled that the bank did not owe a duty of care to the Appellants, because the lack of privity of contract. However, the decision in the House of Lords was that proximity was not necessary to establish when attempting to show whether there was a duty of care owed (Hedley Byrne v. Heller [1964] AC 465). Therefore, privity of contract is not necessary, and an individual may sue a surveyor for negligent misstatements or omissions. Yianni v. Edwin Evans & Sons [1982] QB 438 carried this principle through, and this case is on point for the facts at hand. In Yianni, the surveyors made a representation that a house was suitable for a loan of ?12,000. However, because of structural and foundational flaws, the house was actually worth very little, yet the appellant relied upon the representation that the house was worth ?12,000 and procured a loan based upon this representation. The court still found in favor of the appellants, thus establishing the fact that privity of contract was not necessary for the appellants to collect damages. (Yianni v. Edwin Evans & Sons [1982] QB 438). Thus, Yianni established that not only does there not need to be privity of contract to sue, but that, if the individual who relies upon the report is of modest means, there are no grounds for contributory negligence. These cases establish that privity of contract is not necessary. Nina did not have a contract with the surveyors, but, rather, had a contract with Jimmybuild Ltd., but this does not matter, she can still sue Peter and collect damages. Moreover, there was evidence that Nina relied upon the statements of Peter, as the facts state that Nina made the purchase after obtaining a copy of the report. Perhaps it could be said that Nina is contributorily negligent, as she did not hire an independent surveyor to survey the home, but this does not matter. Yianni actually dealt with this aspect as well, as found that if the buyer was of modest means, contributory negligence would not come into play because a person of modest means would not necessarily be able to afford an independent surveyor (Yianni v. Edwin Evans & Sons [1982] QB 438). Therefore, if Nina is of modest means, she cannot be guilty of contributory negligence. That said, a surveyor may not be liable if he is within 10% to 15% of the valuation (Singer & Friedlander Ltd. v. John D. Wood & Co [1977] 2 EGLR 84). Therefore, if the surveyor states that a piece of property is worth $100,000, and the property is only worth $90,000 or even $85,000, then that surveyor is within the margin of error and would not be liable. The reason for this principle is that two different, reasonable surveyors may come up with two different, reasonable, estimations of the worth of a property, and each of these surveyors may be not be wrong about the valuation. In this case, however, the property was valued at ?185,000 and the actual value of the property was only ?120,000, so the surveyor was not within the margin of error in this case. While the case of Singer & Friedlander established the margin of error principle, the case also spoke to the duty of care owed by the surveyors. The complexity of the task is one factor that a surveyor must consider. If the task is relatively simple, then the surveying may be done on a modest scale. However, if the task is more complex, the surveyor must undertake the job in more depth - “In some instances, the necessary inquiries and investigations preceding a valuation need only be on a modest scale. In others, a study of the problem needs to be in greater depth, involving much details and painstaking inquiries at many source of information” (Singer & Friedlander Ltd. V. John D. Wood & Co. [1977] 2 EGLR 84). In this case, there was some indication that the task at hand was relatively simple, in that is a single building that is at a modest price. So, Peter did not have the duty to undertake an elaborate survey of the building. Nevertheless, the facts indicate that Peter took only fifteen minutes to undertake the inspection, and this would still be negligent, in that fifteen minutes is not enough time to properly undertake an inspection under any circumstances. What the measure of damages is the next issue to be examined, and Watts v. Morrow [1991] 4 All ER 937 is instructive in this regard. In the Watts case, the plaintiffs relied upon a survey which stated that their new house was worth ?177,500. However, this survey did not mention that there would be substantial costs in repairing the structure, and the plaintiffs found that the repairs would cost around ?39,000. The plaintiffs paid the money to have the structure repaired, then sought damages on the basis that the surveyor indicated that the house would not require repairs, beyond that of regular maintenance. The Watts court found that the plaintiffs could only recover the dimunition in value, even if the plaintiffs were not planning on reselling the house. The reason for this, according to the Watts court, is that allowing for the recovery of the cost of repairs would give the plaintiffs more than their loss, because it would imply a breach of a warranty, even if, as in this case, no warranty was actually given (Watts v. Morrow [1991] 4 All ER 937). In this case, the property was worth ?120,000, and the costs of remediating the defects was ?75,000. According to the Watts court, Nina could not recover the ?75,000 amount, but, rather, would be able to recover the amount of ?63,000, which is the difference between the price that Nina paid for the structure and the price that the structure was actually worth, due to the fact that the foundation was defective. Peter would have a defense in this case, however, by relying upon the doctrine of laches. As explained by Goldsworthy v. Brickell [1987] Ch. 378, the doctrine of laches applies when the plaintiff essentially “sits” on her rights to sue, so that there is an “undue delay” in prosecuting the claim (Goldsworthy v. Brickell [1987] Ch. 378, 410A-C). Laches does not apply when there is a limitation period. There are a number of factors to which a court may look when deciding if laches applies in a certain case, including the length of delay; the reason for the delay; the effect of the delay on the defendant’s ability to defend the action, and on the cogency of evidence; the availability of legal advice; the nature of the remedy sought; the conduct of the defendant after the cause of action arose and any change in the defendant’s position; and the extent to which the conduct was induced or encouraged by the claimant or by the failure of the claimant to take action promptly (Lindsay Petroleum Co. v. Hurd (1873) 5 App. Cas 221, 239). In this case, Nina waited for two years after the cracking became prominent and does not take action until three years after the cracks were noticed. The facts indicate that during the two years before Nina takes action, the cracks actually became much worse, therefore the defendant’s defense would be that, had Nina brought the cause of action earlier, before the problem got worse, the damages would have been considerably less. There is no indication in the facts why Nina took so long to take action, therefore it is impossible to tell whether Nina had a good excuse for the delay. However, the delay probably would not be enough to preclude a cause of action, as two years is not a considerable amount of time. True, the cause of action would be undertaken a full seven years after the sale, but the facts indicate that the damage did not become apparent until five years after the sale, so the delay would not be considered to be seven years, but, rather, two. Laches does not begin to run until the plaintiff realizes that there is a cause of action (Holder v. Holder [1968] Ch. 353, 394). Conclusion This case is clearly a case of negligence on the part of the surveyor, as he carried out the survey of the house in only 15 minutes. The only questions are whether Nina can sue the surveyor, due to the lack of contract privity, and case law indicates that she can. Other case law indicates that Nina can get the diminution in value, which means that she would be entitled to around ?63,000. While Peter may rely on the doctrine of laches, due to the fact that Nina sat on her rights for several years, Peter probably will not succeed on this theory, due to the fact that Nina only waited for two years after the damage became apparent, so the clock started running from this date, not the date of the purchase. Nina should prevail on a negligence action against Peter and recover ?63,000. Sources Used Hedley Byrne v. Heller [1964] AC 465. Goldsworthy v. Brickell [1987] Ch. 378, 410A-C Lindsay Petroleum Co. v. Hurd (1873) 5 App. Cas 221, 239 Property Misdescriptions Act 1991 Singer & Friedlander Ltd. v. John D. Wood & Co [1977] 2 EGLR 84 Watts v. Morrow [1991] 4 All ER 937 Yianni v. Edwin Evans & Sons [1982] QB 438 Read More