Introduction
This essay analyses the landmark case of Watts v Morrow [1991] 1 WLR 1421 (CA), a significant decision in the field of tort law concerning damages for negligent surveyor reports. The purpose of this discussion is to address five key aspects of the case: the facts and arguments, the central legal issue, the distinction from prior authorities, the ratio decidendi on financial loss and general damages, and notable obiter dicta. By exploring these elements, this essay aims to provide a sound understanding of the legal principles governing damages in negligence cases and their broader implications for property transactions in the UK.
Facts and Arguments
In Watts v Morrow, the claimants purchased a property in 1987, relying on a survey report prepared by the defendant surveyor, Mr Morrow. The report failed to identify significant structural defects, which later required repairs costing around £34,000. The claimants argued that they had overpaid for the property by approximately £15,000 due to the negligence and sought damages for financial loss and distress. Conversely, the defendant contended that damages should be limited to the difference in property value attributable to the defects, rather than the cost of repairs or emotional harm. The trial judge initially awarded damages based on the repair costs and a modest sum for distress, reasoning that the claimants had suffered direct financial and emotional consequences from the surveyor’s negligence.
Legal Issue and Significance
The primary legal issue before the Court of Appeal was whether damages for negligent surveyor reports should include the cost of repairs or be confined to the diminution in property value, alongside the appropriateness of general damages for distress. This issue was significant because it addressed the scope of recoverable losses in professional negligence, particularly in property transactions where buyers rely heavily on expert reports. A broader approach to damages could increase liability for surveyors, influencing professional standards and client expectations.
Precedent and Distinction
The Court of Appeal distinguished Watts v Morrow from prior authorities such as Philips v Ward [1956] 1 WLR 471, where damages were based on diminution in value rather than repair costs. The court argued that while Philips set a general precedent for assessing financial loss in negligence, the specific circumstances of Watts—namely, the claimants’ immediate need to rectify defects—did not necessitate a strict adherence to this formula. This distinction highlighted the relevance of context in applying precedents, ensuring that damage awards reflect the actual loss suffered by claimants.
Ratio Decidendi on Damages
The ratio decidendi in Watts v Morrow clarified the approach to damages in two respects. First, regarding financial loss, the Court of Appeal, led by Bingham LJ, held that damages should typically be limited to the diminution in value (£15,000), not the repair costs, as this better reflected the economic loss suffered (Watts v Morrow [1991] 1 WLR 1421 at 1445). The reasoning was rooted in established tort principles aiming to restore claimants to their pre-negligence position without overcompensation. Second, on general damages for distress and inconvenience, the court awarded a nominal sum of £750 per claimant, acknowledging that while non-pecuniary loss was compensable, it should be modest unless exceptional circumstances applied. This decision balanced fairness with the risk of excessive claims.
Obiter Dicta and Future Guidance
Bingham LJ’s judgment included obiter dicta suggesting that general damages for distress might be higher in cases involving severe emotional impact or where the primary purpose of the contract was personal satisfaction (Watts v Morrow [1991] 1 WLR 1421 at 1445). These comments, though not binding, serve a valuable purpose in guiding future courts by indicating potential flexibility in damage assessments, particularly in contracts with personal significance, such as those involving family homes.
Conclusion
In summary, Watts v Morrow [1991] 1 WLR 1421 (CA) provides critical insights into the assessment of damages for negligent surveyor reports. The Court of Appeal’s rulings on financial loss and general damages establish clear boundaries while allowing limited flexibility for non-pecuniary awards. The distinction from prior authorities and Bingham LJ’s obiter dicta further enrich the legal framework, offering guidance for future negligence claims. Indeed, this case underscores the importance of context in damage awards, with lasting implications for professional liability in property transactions.
References
- Watts v Morrow [1991] 1 WLR 1421 (Court of Appeal).
- Philips v Ward [1956] 1 WLR 471 (Court of Appeal).
