Judgment

H.H. Judge Keyser Q.C.:

Introduction

1. In these proceedings the claimants, Mr and Mrs Kellie, claim damages for professional negligence against the defendant, Wheatley & Lloyd Architects Limited.

2. The claimants’ case is as follows. In 2004 they engaged the defendant to act as their architect in, among other things, the design and construction of a detached garage/workshop at their house. They indicated to the defendant that their favoured design for the garage/workshop was in the “Border Oak” style, with a pitched roof, but the defendant advised them that such a design could not be achieved because it required planning permission that would not be forthcoming. As a result, and in accordance with the advice they were given, the claimants had the garage/workshop constructed in a different style and with a nearly flat roof. The defendant’s advice was negligent, in that the garage/workshop could indeed have been built in the desired style, having regard in particular to permitted development rights (PDR) attaching to the property. In consequence, the claimants have suffered loss, in that (a) the value of their house is less than it would be if the garage/workshop had been built to their preferred design and (b) it would have cost less to build a garage/workshop to their preferred design.

3. The defendant disputes each part of the case against it. It denies that the claimants expressed any wish for a construction of the design they now claim to have wanted. It says that its advice was proper in the circumstances and that the alleged losses are illusory. And it contends that the claim is statute-barred in any event.

4. At trial I received oral evidence from the claimants, from Mr John Wheatley, who was the senior director of the defendant company, and from a number of other witnesses of fact. The parties also adduced expert evidence in respect both of liability and of quantum of damages; I shall discuss that evidence later in this judgment.

5. I am grateful to Mr Troup for the claimants and Mr Lixenberg for the defendant for their excellent submissions.

Summary of the facts

6. The proceedings relate to a property (‘the Property’) called Middleton Barn, Little Hereford, near Ludlow. The Property had been owned and occupied by Mrs Kellie’s parents. When her father died in July 2003, it became owned solely by her mother, Mrs Kelly.

7. In 2003 the Property comprised a two-storey detached dwellinghouse (‘the Barn’), which was a converted agricultural barn, and a detached garage, set in about three-quarters of an acre of land. To the west of the Property is a highway, and to the north, east and south are fields. As viewed from the highway, the north end of the barn is at the left. The garden is broadly on two levels. At the back (east) of the house is a lawned area. To the north the land slopes up to a higher level, which is a small orchard that was planted by Mr Kelly. In 2003 the detached garage was behind (east) and to the right (south) of the Barn.

8. After her husband’s death, Mrs Kelly did not want to move away from the area, nor did she want to live at the Property by herself. Therefore she asked her daughter and son-in-law, the claimants, to go to live with her at the Property. It was agreed that they would do so and that works would be undertaken at the Property to make it suitable for the three of them, as follows:

The claimants, who were both divorcees and had married each other earlier in 2003, intended to finance the works out of the proceeds of the sale of Mr Kellie’s previous house in Sutherland. (In the event, those proceeds proved insufficient and the claimants provided further funding by remortgaging both the Property and Mrs Kellie’s house in Cornwall.)

9. For convenience, I shall mention here what became of the ownership of the Property after it had been agreed that the claimants would move to reside there. In June 2005 Mrs Kelly transferred a 50% share of the Property to her daughter, Mrs Kellie, by a deed of variation. In April 2006 Mrs Kelly transferred three-quarters of her remaining 50% share to her son-in-law, Mr Kellie. In November 2006 she transferred to him her remaining 12.5% share. On 6 December 2006 the claimants, who were by then the beneficial owners of the Property, were registered as the proprietors at HM Land Registry.

10. However, to return to the events of 2003 and 2004: Mrs Kelly was the sole owner of the Property and Mr and Mrs Kellie had agreed to go to reside there on the basis I have explained. The services of an architect were required in respect of the necessary works. Mr Kellie enquired of the Royal Institute of British Architects, which provided to him the details of a number of architects in the vicinity of the Property. The claimants got in touch with some of the architects mentioned by RIBA, who however were not confident about obtaining planning permission for the Annexe. Mrs Kellie then searched on the internet for other suitable architects. She found the defendant company’s details, and she and her husband decided to get in touch with the defendant.

11. The defendant was a two-person architects’ practice based in Tenbury Wells, Worcestershire. The two architects, and the directors of the company, were Mr Wheatley and Mrs Lesley Lloyd. Mr Wheatley was the sole shareholder of the company; in evidence, Mrs Lloyd, who worked part-time, referred to him as her boss and to herself as his employee, and that was substantially though not technically correct. The practice was set up in about 2000 and continued until 2008, when Mr Wheatley retired. Both Mr Wheatley and Mrs Lloyd were Accredited Conservation Architects and had experience of planning practice and procedures in rural areas. The company employed Mr Jason Green as an architectural technician with responsibility for the production of drawings.

12. On 19 January 2004 Mr Kellie made a telephone call to the defendant. He spoke to Mrs Lloyd and had a brief discussion with her about his and Mrs Kellie’s intentions. Mrs Lloyd said that she would get Mr Wheatley to call Mr Kellie.

13. Mr Wheatley duly called Mr Kellie by telephone on 21 January 2004. Mr Kellie’s note of the conversation reads: “Mr Wheatley thought there was a possibility of doing something. He would have a look at Middleton Barn and discuss things with South Shropshire District Council. Ring him in a week if no news.” On 25 January 2004 Mr Wheatley made a drive-past observation of the Property, and on 26 or 27 January 2004 he spoke to Mr Kellie, whose note of the conversation records that he told Mr Wheatley that he and his wife “wanted to extend the kitchen and construct a garage”. Further conversations over the next three weeks concerned the need to obtain a copy of the original planning permission in respect of the conversion of the Barn. Mr Kellie’s evidence was to the effect that Mr Wheatley told him to bring to their forthcoming meeting some pictorial indication of the kind of thing he had in mind for the proposed garage/workshop.

The meeting on 19 February 2004

14. The initial meeting between the claimants and Mr Wheatley took place at the defendant’s office on 19 February 2004. Although Mr Wheatley had held some preliminary discussions by telephone with planning officers of the local planning authority, details of the grant of planning permission for conversion of the Barn were still awaited. No attendance note of the meeting by Mr Wheatley has been found; his diary records that it lasted two hours, though his oral evidence implied that some of that period was taken up waiting for the claimants, who had difficulty in finding the office, and that the meeting itself was shorter. Mr Kellie’s very brief note of the meeting records, “We discussed the development and [Mr Wheatley] thought it could be possible.” It says nothing else about discussions regarding the planning merits of the proposed works and nothing concerning matters of design.

15. There is a significant issue between the parties concerning one aspect of the meeting, namely what was said about the design of the Garage and, in particular, “the Border Oak style”. I shall discuss this issue in the following paragraphs. In the course of doing so I shall make some general observations on the evidence, as they arise in connection with this issue.

16. Border Oak Design & Construction Limited (BODCL) is a company based in Leominster, Herefordshire. It designs and manufactures buildings, both houses and outbuildings, with oak frames in a broadly traditional manner. Its current brochure for outbuildings states, “Our oak frames make use of a traditional post and beam principle with arched braces and oak pegs.” Those features, which are illustrated in the numerous photographs within the brochure, together with a pitched roof, encapsulate “the Border Oak style”, of which BODCL’s products may be taken to be the archetype. The expression “the Border Oak style” is not a term of art, and outbuildings may be nearer to or further away from the archetype, as they show its features to a lesser or greater extent.

17. The claimants’ evidence was that at the meeting on 19 February 2004 they gave to Mr Wheatley a catalogue from BODCL and told him that they wanted the Garage to be in that style, with a pitched roof if possible. They favoured that style because they liked it and thought it in keeping with the design of the Barn. In cross-examination Mr Kellie said that the catalogue was intended as a starting point for the design. Because of the importance of security, it would have been necessary to have doors instead of the open bays in the standard BODCL designs; a conventional double-pitch roof would be desirable but, if it were not feasible, an alternative would have been considered. However, according to the claimants, Mr Wheatley was immediately dismissive of the suggestion that the Garage be in the Border Oak style. He ignored the catalogue and told them that they would not be able to get planning permission for such a structure. Instead he advised them that the Garage would have to have minimal visual impact and that the local planning authority would only accept a building constructed into the bank adjacent to the Barn, with a single-pitch roof. Indeed, he advised them that they were unlikely to obtain planning permission for a garage/workshop at all, because the Barn already had a detached garage. Mr Kellie said that he was very disappointed that Mr Wheatley advised against the Border Oak style and was particularly concerned to be told that no permission at all might be forthcoming for a Garage. As to the latter point, Mr Kellie may have been concerned, but I do not think that the advice that no permission might be obtained could have come as any surprise; both his own evidence and that of Mr Wheatley suggest that this is in line with what he had been told by other architects. At all events, the claimants say that Mr Wheatley asked them to go away and prepare sketches of the proposed Garage, based on his advice as to what might be acceptable.

18. For the defendant, Mr Wheatley’s evidence was to the effect that the discussion at the meeting was conducted in very general terms; the focus was on the claimants’ wish to convert the existing detached garage into a residential Annexe, and the construction of a new garage/workshop was a secondary issue. As regards the Garage, he simply asked the claimants to go away and produce a diagram of their proposals, showing its location and proposed design and dimensions. Specifically, Mr Wheatley denied that the claimants expressed a preference for a Garage in the Border Oak style. Although the claimants’ evidence as to the substance of the positive advice regarding the design of the Garage was not challenged (namely that it should be of minimal visual impact, with a low roof, and set into the bank), the tenor of Mr Wheatley’s evidence was in fact that such remarks were made not on 19 February 2004 but later.

25. It is right to say at the outset that Mr Wheatley’s evidence was problematic in a number of respects. First, he said that after the meeting he recorded on his Dictaphone a note of what had transpired; I think it likely that he did so. However, no copy of that note has been produced and Mr Wheatley said that he did not know whether the recording had been transcribed or, if it had, what had become of it. The fact that Mr Wheatley’s evidence concerning the meeting is unsupported by an attendance note means that the quality of the underlying recollection is open to doubt; it does not, though, mean that the evidence must necessarily be rejected. Second, the evidence of both Mr Wheatley and Mrs Lloyd in respect of mention of the Border Oak style changed shortly before trial. In his witness statement dated 11 March 2013 Mr Wheatley stated:

“At no time during this meeting on 19 February [2004] or in our previous or subsequent meetings do I recollect the Kellies mentioning any desire to have the garage/workshop constructed in the ‘Border Oak’ style. I feel certain that I would have remembered this if they had done so, because at that time I was aware of Border Oak buildings: fresh in my mind was a major problem with a Border Oak structure where I was acting as expert, which resulted in a successful claim for £1 million plus costs.”

Similarly, Mrs Lloyd’s statement dated 6 March 2013 said that she had first heard the suggestion that the claimants had wanted the Border Oak style for the Garage a few months before she made the statement; she had never heard the suggestion during the course of the project. But on 25 March 2014 Mr Wheatley made a further statement, in which he recalled a discussion at one of the early meetings—in his oral evidence he said it was at the first meeting, on 19 February 2004—when Mrs Kellie had mentioned Border Oak as a possible style, not for the Garage but for a proposed single-storey extension to the Barn. Mr Wheatley stated that he had advised against such a design, as being out of keeping with the adjacent part of the Barn. In her second statement, also dated 25 March 2014, Mrs Lloyd recalled a conversation in which, after a meeting with the claimants, Mr Wheatley had mentioned their interest in the Border Oak style; she did not, however, remember whether this was in connection with the Barn or the Garage, because she was not working on the project at the time. The circumstances in which both Mr Wheatley and Mrs Lloyd came to make supplemental statements to similar effect have not been fully explained. On balance it seems likely that Mrs Lloyd first recalled that Mr Wheatley had said something to her about Border Oak, that she mentioned it to him, and that his recollection was stirred by hers. It was not suggested by Mr Troup that Mr Wheatley’s evidence was deliberately untruthful, and I do not think that it was. On the other hand, the possibility has to be borne in mind that Mr Wheatley, having been prompted to recover a very vague and unreliable recollection of some mention by the claimants of Border Oak, has subconsciously persuaded himself that the mention was nothing to do with the Garage. A third feature of the evidence tends to confirm that one should be cautious of treating Mr Wheatley as a reliable historian. On instruction, Mr Lixenberg challenged the claimants’ evidence that the defendant’s office had rooms adjacent to a main open-plan area and further rooms upstairs. Mr Wheatley gave evidence that his office was entirely open plan, with no rooms other than a lavatory and a kitchen. However, Mrs Lloyd confirmed that there were a kitchen, a lavatory and a print room upstairs, and that downstairs there was a small waiting area and a meeting room. I accept the evidence of Mrs Lloyd and the claimants that there was a separate meeting room, apart from the open-plan office, although Mr Wheatley was unable to remember it. That inability is surprising, even though, in fairness to Mr Wheatley, it should be noted that the defendant appears to have moved offices at some date before his retirement.

26. I accept, as being consistent with the tenor of Mr Kellie’s evidence and as being inherently plausible, Mr Wheatley’s evidence that the focus of the meeting on 19 February 2004 was the conversion of the existing detached garage to a residential Annexe and that the question of the Garage was a secondary matter. In the light of all the evidence, it is likely that there was some mention of the Border Oak style at the first meeting, on 19 February 2004. The principal question is whether it related to the design of the Garage or to that of the proposed extension to the Barn.

27. Despite the problems with the evidence of Mr Wheatley on this matter, and after careful consideration of all of the evidence, I have come to the conclusion and find as a fact that the claimants mentioned the Border Oak style in connection with the extension to the Barn and not in connection with the Garage. This conclusion is based on a combination of reasons, which individually are of varying weight.

28. The claimants’ letter of claim, written by the solicitors who then acted for them, is dated 11 October 2007. Mr Kellie confirmed that he and his wife gave instructions jointly to the solicitors and that he reviewed important correspondence before it was sent out on their behalf. The letter of claim annexed a third revision of a schedule prepared on behalf of the claimants by Mr David Andrews, a Chartered Building Surveyor; the original schedule was dated 19 July 2007 and the third revision was dated 6 September 2007. The letter of claim (six pages) and the schedule (twelve pages) make allegations of broadly three sorts: design defects; deficient supervision of the builders under the subsequent building contract; and certification errors under the building contract. But neither document says that Mr Wheatley wrongly advised the claimants that they could not have a Border Oak style garage but would have to settle for something else. This is particularly important in the case of Mr Andrews’ schedule, which contains the following passage on page 4:

“W+L failed to select an appropriate roofing material for the residential/traditional rural location. The failed to select a roof design that was any where near the optimum for the given situation. They failed to show any design skill or lateral thought. They failed to table alternative solutions or provide any options. Several alternatives existed to standard industrial profiled sheet steel for covering the garage roof. Other options would have been more expensive, however the client did not state that the design had to be the lowest possible cost, indeed the need for quality over cost was emphasized at design brief stage. ... Furthermore, there is no record of W+L challenging the planning requirements or suggesting that an acceptable garage design could be achieved by creating a complementary building, i.e. an architectural pleasing structure in its own right, rather than attempting to bury a square box shape structure into a bank side. W+L did not advise on the option of appealing upon unfavourable planning decisions. The garage design is a lost opportunity and the as built structure fails to add any aesthetic value to the property. … [A]t or around the same time, planning permission was granted (by the same LPA) for the erection of two large pitched roof out-buildings on the neighbouring site, i.e. Upper House Farm. This indicates that there was a very good possibility of obtaining planning permission for a vastly superior garage block at Middleton Barn.”

In my view, it is very likely that, if Mr Andrews had been told that the claimants had asked the defendant for a Border Oak style Garage, he would have recorded the fact in this passage; the point is so material that, as Mr Lixenberg says, it could hardly have been passed over. Mr Kellie’s evidence on this matter was inconsistent: at first he accepted that he had not told Mr Andrews that he had asked for a Border Oak style construction, but he then said that the point had been mentioned to Mr Andrews at the outset. Mrs Kellie said that she thought they had probably told Mr Andrews about their expressed preference for the Border Oak style, but she did not pretend to a recollection. As already indicated, I think it unlikely that Mr Andrews was told that the claimants had asked the defendant for a Border Oak style garage/workshop. This raises three questions: First, why did the claimants not mention the point to Mr Andrews? Second, why did they not advert to the point, which now assumes such importance, when the schedule was in the course of revision? Third, why did they not mention the point to their solicitors, or at least ensure that it was mentioned in the letter of claim?

29. For the claimants, Mr Troup submitted that the letter of claim and the schedule prepared by Mr Andrews had to be understood in context. Mr Andrews was a building surveyor, not an architect, and he was instructed to advise on the Garage “as built”, rather than on possible alternatives to the general design that was adopted. At the time when the letter of claim was written, the claimants were unaware that there were PDR attaching to the Barn and that the Garage could have been built in the Border Oak style. That possibility became apparent in the course of Mr Andrews’ instruction; as a result, Mr Kellie made enquiries of the local planning authority, and when sufficient information as to PDR was to hand a further letter was sent by the claimants’ solicitors on 2 April 2008, which referred specifically to the instruction regarding the preference for the Border Oak style.

30. I am not persuaded by that response.

31. If, contrary to my finding, the claimants did tell Mr Wheatley that they favoured the Border Oak style for the Garage, they can have done so only as a tentative and general suggestion. Mr Kellie confirmed several relevant points in evidence: cost was important, because the claimants had a relatively tight budget and would not have wanted to throw money at the garage/workshop; security was important and any design would have to incorporate secure doors and enclosed bays; a pitched roof was not essential, if it could not be achieved; the claimants did not want to become embroiled in a dispute over planning issues regarding the Garage. Even on the claimants’ case, it is unrealistic to view them as having said, “This is what we want”; a tentative and passing mention is the most that is at all likely.

32. As to what Mr Wheatley said about the Garage at the first meeting, I think it was probably fairly limited. The discussion was mainly about other things and the claimants had not produced any indicative sketch to show what they wanted. It is probable that Mr Wheatley confirmed that there might be difficulties getting planning permission at all; the point should not be forgotten that the Property already had a garage and that the real point of issue concerned the loss of that garage by its conversion into a residence. Beyond that, he probably confirmed that any new building would have to have minimum visual impact, and asked the claimants to provide some sketches of what they had in mind at a forthcoming site meeting.

33. At the meeting on 19 February 2004, Mr Wheatley gave to the claimants some documentation relating to the defendant’s terms of business. It is common ground that a contractual retainer came into existence. It is said, however, that the defendant failed to put in place a proper letter of instruction and a written record of the terms of the retainer; indeed, paragraph 9 of the amended particulars of claim avers that the defendant’s conduct in this regard amounted to a breach of professional codes of conduct and practice. As I have not found this aspect of the case to be material to my deliberations on the issues arising from the pleaded case as to actionable breach of duty, however, I shall say no more about it.

After 19 February 2004

34. On 27 February 2004 Mr Wheatley spoke by telephone to a member of the planning department of Herefordshire Council, which had since 1 April 1998 been the relevant local planning authority in succession to Leominster District Council. That conversation was probably part of Mr Wheatley’s continuing efforts to obtain a copy of the planning permission pursuant to which the Barn had been converted from its original agricultural use. I find that it was on 1 March 2004 that Herefordshire Council sent by fax to the defendant a copy of the planning permission, which had been granted by Leominster District Council on 2 June 1986. For present purposes the important feature of the planning permission was that it did not impose a condition that the PDR that would otherwise attach to the converted barn be removed. Although it was not unknown for Leominster District Council to omit the condition removing PDR—Mr Wheatley said that he had come across such cases previously—it was more usual to remove PDR from barn conversions, precisely in order to ensure that permission for one piece of rural development did not confer a right to additional consequential development.

35. In order to understand the relevance of the discovery that the Barn had PDR, it is necessary to explain what those rights were. In 2004, the relevant legislation was the Town and Country Planning (General Permitted Development) Order 1995 (“the 1995 Order”), which applied to all land in England and Wales, subject to certain provisions that had no application to the Property. Article 3 of the 1995 Order provided, so far as material for present purposes:

“(1) … planning permission is hereby granted for the classes of development described as permitted development in Schedule 2.

(2) Any permission granted by paragraph (1) is subject to any relevant exception, limitation or condition specified in Schedule 2.

(4) Nothing in this Order permits development contrary to any condition imposed by any planning permission granted or deemed to be granted under Part III of the [Town and Country Planning] Act [1990] otherwise than by this Order.”

Part 1 of Schedule 2 to the 1995 Order set out several classes of permitted development within the curtilage of a dwellinghouse. Class E was in the following terms, so far as relevant:

“Permitted development

E. The provision within the curtilage of a dwellinghouse of any building or enclosure required for a purpose incidental to the enjoyment of the dwellinghouse as such …

Development not permitted

E.1. Development is not permitted by Class E if—

…

(c) where the building to be constructed or provided would have a cubic content greater than 10 cubic metres, any part of it would be within 5 metres of any part of the dwellinghouse;

(d) the height of that building or enclosure would exceed—

(i) 4 metres, in the case of a building with a ridged roof or

(ii) 3 metres, in any other case”.

36. On 1 March 2004 Mr Wheatley called Mr Kellie by telephone to tell him that he had received a copy of the planning permission. Mr Kellie’s manuscript note of the conversation states: “There does not appear to be any restrictions in the consent although expansion would probably be restricted to a % of the existing buildings house and garage[;] not sure on this one. John suggested we get some preliminary drawings together for provisional discussions with the planning people.” It is of interest to note that Mr Wheatley was clearly addressing his mind to the implications of the 1986 planning permission. In cross-examination, he said that on receipt of the planning permission he did review his thinking on the claimants’ proposals, but that at that stage he focused on their priority, which was the Barn and the Annexe, not on the Garage.

37. On 8 March 2004 Mr Wheatley attended for the first time at the Property, where he was shown around by Mr Kellie and met Mrs Kelly. I accept Mr Wheatley’s evidence as to what happened at that meeting, which was to the following effect. As previously, the order of priority for the claimants was: first the Annexe, so that the Barn would be free for their occupation; second, the Barn, which required work to provide adequate living accommodation for them; and third the Garage. There was discussion about replacing the extension at the southern end of the Barn with a larger structure; Mr Wheatley was sceptical about the prospects for achieving this, but Mr Kellie wanted him at least to “test the water” with the local planning authority. In accordance with Mr Wheatley’s previous request, Mr Kellie produced some rough sketches that showed what the claimants had in mind for the Barn and the Garage. Two sketches are particularly relevant for present purposes. One showed the proposed position of the Garage relative to the Barn. It showed an entrance and paved area to the north (left) of the Barn, leading to the Garage/Workshop, which was to the north-east of the Barn and on a west-east axis (i.e. perpendicular to the Barn). The paved area extended along the south side of the Garage/Workshop. The second sketch showed the proposed layout of the Garage. The west side had double doors leading into a double garage that comprised roughly forty per cent of the total structure. The remainder of the structure comprised three bays or sections, which were accessible through doors on the south side: one was for “bike storage”, one was a “workshop area”, and one was marked “covered storage only (trailers)”. The position of the Garage as shown on the sketches indicated that it was to be built into the rising ground to the north of the Barn; that is where it was built. Mr Wheatley advised the claimants that what he calls the “cellular form” of the Garage, which I have already described, would be suitable for building into the bank, without the need for a retaining wall. (In the event, as mentioned below, it was concluded that a retaining wall was necessary.) There was further discussion concerning the layout of the Garage. One point mentioned was the requirement that it have a depth of six metres, in order to accommodate a particular large car.

38. Mr Wheatley set about the work of preparing designs for the Annexe. He also took Mrs Lloyd on a drive-by inspection of the property, in anticipation of her subsequent involvement on the project.

39. On 1 July 2004 the claimants attended at the defendant’s premises. While they were there, Mr Wheatley had a conversation by telephone with Mr Duncan Thomas, a senior planning officer at Herefordshire Council. There was some dispute in the evidence as to whether Mr Wheatley remained in the company of the claimants while this conversation took place or, as they maintain, went into another room and reported back to them afterwards. Nothing of importance seems to me to turn on the issue, but for what it is worth I prefer the claimants’ evidence that they were not in the same room as Mr Wheatley when he spoke to Mr Thomas. No notes of the conversation exist. Mr Wheatley and Mr Thomas spoke again on 8 July 2004, and it is possible that the details of the conversations have become conflated in Mr Wheatley’s mind. Again, that possibility does not seem to me to be important.

40. Mr Wheatley’s evidence was to the following effect. Mr Thomas made it clear that the Garage would have to be a modest structure with a low visual impact. Mr Wheatley suggested the possibility of achieving these requirements by having a building with a flat roof and enclosing it within the bank. Mr Thomas considered that this suggestion was appropriate, and he said that corrugated iron was an example of the kind of roof covering that was consistent with agricultural buildings in the area generally and those that had been built on the site. Regarding the Annexe, Mr Thomas considered that the existing double garage was suitable for conversion to a residential dwelling. However, he advised that any application for an extension on the Barn was unlikely to be successful.

41. Mr Thomas gave evidence on behalf of the claimants. Although there was a degree of tension between the written statements of Mr Wheatley and Mr Thomas, this was largely resolved in the course of the oral evidence. Unsurprisingly, Mr Thomas had no actual recollection of the conversations with Mr Wheatley. He said, however, that the local planning authority encouraged discussions before applications were made for planning permission. He also confirmed that he would have considered it important that the Garage be inconspicuous and have no harmful effect on the Barn. Although Mr Thomas said that in early discussions he would not seek to be prescriptive about matters of design, material and construction, he would have been willing to engage with suggestions made to him. The advice attributed to him by Mr Wheatley accorded generally with the kinds of thing he would have said. He would probably not have made a suggestion that corrugated iron be used, but he might well have agreed that it was a suitable material, if the suggestion had been made to him; there were better materials, however. He would not have favoured a flat roof in the literal sense, as they tend to be unsatisfactory. However, the Garage as constructed has a roof with a shallow single pitch; if that is what is meant, he would have approved a suggestion of such a design. A particular concern was that a building with a shallow pitch of the roof is less suitable for later conversion into a dwelling; a shallow pitch would therefore be preferable on grounds of planning control. Another point emphasised in evidence by Mr Thomas—and one that Mr Wheatley said informed his advice and design on this occasion and generally—was the principle that the hierarchy of buildings on a site should be respected and maintained, so that buildings ancillary to the main structure (as, for example, outbuildings to a dwelling) should be physically subordinate to the main structure and not dominate or compete with it.

42. Mr Wheatley accepted that he did not tell Mr Thomas that there were PDR attaching to the Barn. Mr Thomas said in re-examination that knowledge of the existence of PDR would have been most material to him; he would have given advice as to what was capable of being achieved without the need for planning permission. However, this evidence has to be considered in a wider context. It is common ground that the Garage could not lawfully have been constructed without planning permission for engineering works to construct a suitable base. Mr Thomas said in evidence that, when considering an application for planning permission for engineering works to create a level surface, his first questions would be, “Why do you want it? What is it for?” In the light of the answers to those questions, the application would be viewed against the relevant planning policies. This is important, because it fundamentally affects the relevance of the PDR for a garage/workshop. Mr Thomas’s evidence—and I should make clear that no one suggested that his approach was wrong or inappropriate; indeed, it was accepted as being correct—indicates that the grant of planning permission for the engineering works will be judged by reference to the substantive planning merits of the development for which those engineering works are required. The need for planning permission for the engineering works accordingly makes it immaterial that the building to be constructed thereafter would not itself require planning permission. To put the point more specifically and bluntly: if planning permission would not be granted for a Border Oak style garage, but such a garage could in principle be built without planning permission under PDR; nevertheless, if the building of such a garage requires engineering works for which planning permission is required, such planning permission will be refused, because the substantive development would not have received planning permission. (I shall say more about planning issues later in this judgment.)

43. Mr Wheatley’s evidence was that both as a matter of principle and because of the practical advantage of maintaining a constructive relationship with the local planning authority, he proceeded in accordance with the views expressed by Mr Thomas. The design that he produced, with only a slight pitch on the roof and the structure built into the bank, complied with the planning authority’s requirements and avoided the inherently undesirable outcome of putting up a building that had an inappropriate visual impact. In the light of Mr Thomas’s evidence concerning planning permission for engineering works, it is relevant to note that Mr Wheatley’s evidence showed clearly that he was well aware of the need for such planning permission and that he would have regarded any attempt to divorce the planning permission for the solid base from the structure for which it was required as inappropriate; in other words, it was inappropriate to attempt to conceal the purpose of the base, in the hope of then utilising the PDR independently. Mr Wheatley also said in evidence that the requirement that the Garage have a depth of six metres effectively ruled out the use of PDR, because it would not have been possible to achieve a pitched roof structure with a height no greater than four metres (see paragraph 35 above).

44. On 12 August 2004 Mr Wheatley submitted to Herefordshire Council an application for planning permission for the conversion of the existing garage to a residential annexe. On 23 August he sent a copy of the application and associated documents to the claimants; the letter (which appears to be the first sent by Mr Wheatley to the claimants) included the following passage:

“Looking a little bit further ahead we have been giving more thought to the location of the garage/workshop facilities. Given that it would be both your own and Mrs Kelly’s wishes that the Ash tree be removed, it will be possible to excavate into the bank to the east of the barn and thus conceal most of the garage/workshop from any normal view point.

The next move would be to carry out a measured and levelled survey or the site area concerned and to discuss with you the proposed garage/workshop accommodation and looking a step further ahead discuss also relationships with the barn and a possible extension to it, to accommodate your own needs.”

(The ash tree referred to is immediately to the east of the Garage; only the stump remains.)

45. On 31 August 2004 Mr Kellie replied with a number of comments arising out of and in connection with the planning application. One of the comments read as follows:

“Whilst we are very comfortable with the submission of the planning application, we are only prepared to proceed providing we are granted permission to construct the garage/workshop and modify Middleton Barn along the lines we have tentatively discussed.”

46. Mr Wheatley replied on 8 September 2004:

“Construction of garage/workshop and modifications to Middleton Barn: As we have discussed during telephone conversations, I have had a look at the relative levels of the land immediately to the north of the barn and know that garage/workshop accommodation can be provided almost within ground section profiles with very little projection above upper garden levels. Such a building would really only have a south ‘entrance’ elevation, which for practical purposes would not be visible from any external viewpoint. I mentioned this to the planning authority—they do not see a particular problem and have advised that an application for a garage/workshop could be submitted in sequence after the application for the conversion of the garage has been determined.”

47. Planning permission for the Annexe was granted on 4 January 2005.

48. Under cover of a letter dated 29 March 2005 the defendant submitted to Herefordshire Council an application for planning permission for the Garage, which was described as “Proposed car port, garage and workshop for personal use”. The drawings were prepared, to a design by Mr Wheatley, by Mr Green. The design was now for a car port, open at the south, in the west end of the Garage, with a double garage in the middle and a workshop to the east.

49. On 25 May 2005 planning permission was granted for the Garage in accordance with the application. The decision to make the grant was taken by the local planning authority’s divisional planning officer under delegated powers. The Delegated Decision Report contained an appraisal by Mr Thomas as the planning officer acting as case officer for the application. The appraisal contained a section referring to relevant planning authority and guidance. Mr Thomas recommended approval and said:

“This application proposes a stand-alone building that will be cut into an embankment that is on the north side of Middleton Barn. The building will be in an inconspicuous position so as not [to] have a significant impact on the setting of the converted building.”

(Shortly afterwards revised plans were drawn, showing that the positions of the garage and the workshop were to be reversed. This amendment was also approved.)

50. On 1 June 2005 Mr Green sent a copy of the planning permission for the Garage to the claimants. On 11 June 2005 Mr Kellie sent to Mr Green a note:

“Hi Jason, I assume you will handle the attached. Well pleased with the ‘shed’ approval. Best regards, Peter Kellie.”

51. In June 2005 the defendant issued a specification in respect of the Annexe for competitive tender. In August 2005 a revised tender was sought on the basis of the inclusion of works for the entire project, including the Garage and the Barn, with a view to achieving economies. An application for planning permission for the Barn was submitted on 19 August 2005 and, as was expected, was refused. The decision was taken to appeal against the refusal. Before the appeal was lodged, the claimants accepted a tender of £220,000 for the entire project from P.H. Postons & Son Ltd. On 7 November 2005 the claimants entered into a building contract (JCT: minor building works) with Postons. The “Architect/Contract Administrator” was the defendant.

52. Works on the Annexe commenced on 31 October 2005, before the signing of the building contract, and were ongoing when works on the Garage commenced at the end of November 2005.

53. During 2005 it had been recognised that Mr Wheatley’s initial belief that the Garage could be built into the bank to the north without the need for a retaining wall was incorrect. The drawings submitted in support of an application for Building Regulation approval in June 2005 showed that the design of the wall would be based on calculations to be provided by structural engineers. There was disagreement at trial as to the precise reason why a retaining wall was required. Mr Wheatley said that excavation of the bank had disclosed that there was a perched water table, which resulted in increased hydrostatic pressures in the bank. This explanation was challenged at trial, with particular reference to a photograph taken in or about November 2005, which was said to show, first, that there was no surplus of water and, second, that the bank had been excavated for a significant period of time without collapsing. Although the photograph does show a scene where there is no surplus water and no sign of the excavation collapsing, I do not think that it establishes that Mr Wheatley is incorrect in referring to the water table and the hydrostatic pressures as constituting the reason why a wall was required. The contention that Mr Wheatley is wrong on the point might be correct, but it has not been substantiated and the photograph is inadequate evidence to support it. Further, Mrs Lloyd, who was an impressive witness, confirmed that the need for a retaining wall arose from the higher than expected hydrostatic pressure. Anyway, despite the interest shown in this point at trial, I cannot say that I regard it as having any relevance to the issues in the case.

54. What is clear is that, after consulting engineers had provided calculations for the design, it was apparent that the cost of the retaining wall would be significantly more than anticipated. At a site meeting on 18 January 2006, attended by the claimants, Mrs Lloyd, Mr Green and Mr Postons of the building company, Mr Postons reported that the original tender had been based on a budget cost of £5,496 but that the cost of the structure required in the light of the engineering calculations was £9,850. The minutes of the meeting record that the claimants were “alarmed” by this increase, and Mrs Lloyd suggested that it might be possible to absorb it within the overall budget on a “swings and roundabout” basis. After the meeting, the claimants prepared a Note that set out their concerns and queries. The final comment reads:

“Had Wheatley Lloyd provided a cost estimate [scil. before the works on the Garage were commenced] it would have been preferable to downsize the garage design rather than compromise on the specification of the living accommodation as a result of the clients’ budget constraints.”

(In a letter dated 21 January 2006 to Mrs Lloyd, the claimants stated that the additional costs “cannot be considered”: “We are not prepared to compromise the specification of any aspect of the project to accommodate this unexpected cost.) The fourth of the “questions” in the Note reads:

“We believe the need for the reinforcement of the wall was due to the potential loading imposed by the bank. Rather than increase the strength of the wall, why not ‘batter’ the bank and remove the problem!”

A further site meeting took place on 25 January 2006, when it was recorded that Postons and the defendant thought it likely that the “swings and roundabouts” approach would permit the additional cost of the retaining wall to be absorbed within the existing contract price. One possibility recorded in the minutes was:

“Consider scrape back bank behind retaining wall to reduce cost of backfill between the wall and bank.”

At a site meeting on 15 February 2006 the matter was discussed again:

“[Mr Kellie] raised comments regarding what was said about the retaining wall …

[Mrs Lloyd] said that on reflection she was convinced that there had been no feasible alternative option to the retaining wall or its construction. It was not feasible to rake out the ground levels back instead. [Mr Postons] suggested that there would have been planning issues to contend with. [Mrs Lloyd] agreed that this would have been the case potentially causing delays and other cost implications.”

On the basis of these minutes, it was put to Mrs Lloyd in cross-examination that she had not considered any alternative to a retaining wall until Mr Kellie raised the possibility in January 2006, and that even then she had not considered the possibility of removing the bank (rather than merely raking it back behind the retaining wall). Mrs Lloyd said that, on the contrary, she had at an early stage considered and rejected the possibility of battering back the bank. It was, she said, not feasible for two reasons: first, it would have involved a very considerable amount of excavation, resulting in greatly increased costs not only of engineering but of disposal of the excavated waste; second, the claimants’ instructions were that the trees in the orchard on the top of the bank were to be preserved, and battering the bank back would have resulted in the loss of trees.

55. On 10 May 2006 the claimants’ appeal against the refusal of planning permission for the works at the Barn was allowed and planning permission was granted.

56. The remainder of the narrative can be taken shortly. The claimants became seriously dissatisfied with both the standard of Postons’ work and the performance of the defendant as Architect/Contract Administrator. Mr Wheatley says that the problems arose largely from constant interference from, and changes to the specification by, the claimants, which led to increased costs and delay. (The rights and wrongs of the matter might have been material to the issue of costings, considered below, though the evidence of the course of the works has not been sufficiently analysed to permit conclusions to be drawn. Happily the uncertainty in this regard does not affect the conclusions I shall reach.) The last Interim/Progress Payment Certificate was issued by the defendant on 24 November 2006; at that stage works on the Annexe and the Garage had been largely completed but works on the Barn had not commenced, and the claimants were refusing to permit Postons access to the Property to complete the works. On 6 December 2006 Mrs Lloyd wrote to the claimants, informing them that, until they both permitted Postons to return to the site to achieve practical completion of the works at the Garage and paid the defendant’s outstanding invoice, the defendant would not communicate with them further. On 30 January 2007 Mr Andrews, the building surveyor engaged by the claimants (see above), wrote to the defendant, terminating with immediate effect both the defendant’s retainer and the building contract.

Planning Guidance

57. Both the factual evidence and the expert evidence made reference to matters of planning law and policy, and it will therefore assist to mention some of those matters before considering the expert evidence in a little detail.

58. At the material time, section 70 of the Town and Country Planning Act 1990 provided that, in dealing with an application for planning permission, the local planning authority shall have regard to the provisions of the development plan, so far as material to the application, and to any other material considerations. Material considerations included national planning policy and guidance.

59. In 2005 the principal national guidance on planning policy in England was Planning Policy Statement (PPS) 1: Delivering Sustainable Development, which was based on a consultation document published in 1997 that itself contained in updated form material from an earlier Planning Policy Guidance Note 1. Paragraph 5 of PPS 1 contained guidance at a high level of generality on achieving “sustainable and inclusive patterns of urban and rural development”. Paragraph 12 emphasised the importance of pre-application discussions. Design issues were addressed in paragraphs 33 to 39; again, the discussion is general and provides guidance for local planning authorities in the formulation of plans and policies. Some selections from the text must suffice here.

“33. Good design ensures attractive usable, durable and adaptable places and is a key element in achieving sustainable development. Good design is indivisible from good planning.

34. Planning authorities should plan positively for the achievement of high quality and inclusive design for all development, including individual buildings … Good design should contribute positively to making places better for people. Design which is inappropriate in its context, or which fails to take the opportunities available for improving the character and quality of an area and the way it functions, should not be accepted.

35. High quality and inclusive design should be the aim of all those involved in the development process. … This requires carefully planned, high quality buildings and spaces that support the efficient use of resources. Although visual appearance and the architecture of individual buildings are clearly factors in achieving these objectives, securing high quality and inclusive design goes far beyond aesthetic considerations. Good design should: …

- be integrated into the existing urban form and the natural and built environments; …

36. Planning authorities should prepare robust policies on design and access. … Key objectives should include ensuring that developments: …

- respond to their local context and create or reinforce local distinctiveness; …

- are visually attractive as a result of good architecture and appropriate landscaping.

38. Design policies should avoid unnecessary prescription or detail and should concentrate on guiding the overall scale, density, massing, height, landscape, layout and access of new development in relation to neighbouring buildings and the local area more generally. Local planning authorities should not attempt to impose architectural styles or particular tastes and they should not stifle innovation, originality or initiative through unsubstantiated requirements to conform to certain development forms or styles. It is, however, proper to seek to promote or reinforce local distinctiveness …”

60. In 2005 local planning policy for the area in which the Property was located was set out in two local plans: the Leominster District Local Plan, and the Hereford and Worcester County Structure Plan. The local district plan was of more immediate relevance to the development at the Property. Policy A.2, headed “Settlement Hierarchy”, contained the following provision:

“(D) Development will not be permitted in the countryside or in villages, hamlets or other groups of houses for which no settlement boundary has been defined unless it accords with one of the following exceptional circumstances: …

(vi) It is an extension to an existing dwelling or a building ancillary to the enjoyment of a dwelling house in accordance with policy A.56”.

The explanatory text to the policy contained the following passages:

“3.19 … Small hamlets and groups of houses scattered through the District often have a distinctive character akin to the countryside where non-essential development should be resisted.

3.20 The protection of the wider countryside and high quality agricultural land is a basic planning principle. New development in the countryside will only be allowed where one or more of the exceptional circumstances listed in part (D) exist.”

Mr Thomas referred to policy A.2, among others, in the Delegated Decision Report (DDR) in respect of the Garage. When he gave evidence he said that he considered policy A.2 to be the most relevant. He said that policy A.3, which was not mentioned in the DDR, was also of some, though lesser relevance:

“Development proposals should create an attractive built environment: where appropriate, they will be required to reinforce or establish a sense of place or identity. In considering proposals account will be taken of: …

(B) The inclusion of traditional rural design elements within buildings in the countryside”.

61. Mr Thomas attached particular importance to Policy A.24, headed “Scale and Character of Development”, which was mentioned in the DDR.

“When considering matters of scale and character the local planning authority will require proposals to satisfy the following requirements:

(1) The size of any buildings in terms of height, scale and mass should respect adjacent buildings and the spatial quality and form of prevailing use(s) within the area. …

(2) Materials should be used which do not strike discord with their surroundings but appear in harmony in terms of colour, form and texture;

(3) Building design should respect the density, general proportions and detailed features which are common and traditional to a particular settlement or area; …

(8) Proposals should not result in a cramped form of development when compared to their surroundings.”

The explanatory text to the policy included the following passage:

“4.58 Development proposals should fit in with the existing character of the area and preferably represent an improvement in environmental terms. When considering planning applications, the Council will normally attach great weight to the impact of the proposed development upon both its surroundings and the settlement or area in general, particularly where these are small and rural in character and exhibit attractive landscape features such as narrow lanes, banks and hedgerows.”

62. The DDR referred to policy H.20 in the county structure plan.

“Residential development in the open countryside outside the green belt will not normally be permitted except where: …

(f) It is an extension to an existing dwelling which is in scale with the original dwelling and does not become the dominant feature.”

63. The DDR also referred to policy H19, headed “Alterations and extensions”, in the draft Herefordshire Unitary Development Plan, which came into force in March 2007, when it replaced the district local plan and the county structure plan.

“Proposals for the alteration or extension of dwellings or for buildings incidental to the enjoyment of a dwelling will be permitted where:

1. the original building … would remain the dominant feature;

2. the proposal is in keeping with the character of the existing dwelling and its surroundings in terms of scale, mass, siting, detailed design and materials;

3. the proposal would not be cramped on its plot … and would not adversely impact on the privacy and amenity of occupiers of neighbouring residential property; and

4. the level of resulting off street parking provision is in accordance with policy H16.”

Expert evidence on liability

64. Expert evidence on matters relating to liability was given for the claimant by Mr Kenneth Bate and for the defendant by Mr Colin Buggey, both of whom are chartered architects. They wrote their joint statement pursuant to CPR r. 35.12(3) together with the expert witnesses on matters relating to quantum of damages, namely Mr Linden Alcock and Mr David Prosser, chartered surveyors instructed on behalf of the claimant and the defendant respectively. Although I am not entirely sure that this assisted clarity, it does reflect the fact that the evidence from the different disciplines was to some extent interrelated. For convenience, I shall summarise the main parts of the evidence by reference to the liability and quantum issues separately.

65. Mr Bate and Mr Buggey agreed on certain matters.

66. The following points may be noted from Mr Bate’s evidence.

67. I should mention briefly at this stage some difficulties with the several planks of Mr Bate’s argument that planning permission would very probably have been given for a garage in the Border Oak style.

68. The following points may be noted from Mr Buggey’s evidence.

69. Regarding the prospects of obtaining planning permission for a garage/workshop in the Border Oak style, at the end of his cross-examination it was put to Mr Buggey that, if one sought planning permission for engineering operations that were necessary in order to achieve development for which one had PDR, one would have a good chance of persuading the planning offer to support the application. Mr Buggey said that he had never encountered the situation but was inclined to agree with the proposition. I shall bear that answer in mind when forming my conclusions. However, such a tentative response to a hypothetical question, after much detailed cross-examination directed to the specifics of the case, must be viewed with caution and placed carefully in the context of all the other evidence.

70. Mr Buggey was asked about some hypothetical cases involving Border Oak style outbuildings. He was shown the BODCL brochure for outbuildings and asked about Model 2, Model 3 and Model 4.3. These are shown as having ridge heights of, respectively, 3.9 metres, 4.4 metres and 4.8 metres. It was put to Mr Buggey that, if the claimants had decided to buy off-the-shelf from BODCL, they would have had some genuine choice. He replied that the models would have provided only very limited garage facilities and would have been of little use as a workshop. This line of cross-examination did not seem to me to advance matters. None of the models comes close to meeting the claimants’ requirements, either as to design or as to dimensions; I deal with this point further in paragraph 85 below. A further difficulty is that, if reliance is being placed on the supposed ability to build with the bank directly abutting the structure—only so could it possibly be feasible to achieve a ridge line within the scope of PDR, making use of Article 1(3) of the 1995 Order—a fully timber structure would be unsuitable. Partly for this reason, perhaps, it was put to Mr Buggey that a hybrid building could be constructed: Border Oak style at the front, and brick at the rear. He raised three objections to this: first, that aesthetically the essence of the Border Oak style would be lost; second, and more importantly, that the resulting structure would lack integrity, giving the appearance of something that it was not, and would on that account not be favoured by most architects (this, incidentally, was the precise objection raised to such structures on planning grounds by Mr Thomas when he gave evidence: a building “should not try to be what it is not”); third, the cost of such a building, if built to an acceptable standard, would be very high.

Expert evidence on quantum of damage

71. It is easiest to consider the remaining expert evidence by reference to the two broad issues that it addressed, namely (1) the enhancement of value that a Border Oak style garage would have achieved and (2) the amount by which the cost of constructing a Border Oak style garage would have been less than the cost of the actual Garage.

Difference in value

72. Mr Alcock stated: “Outbuildings constructed on these principles [that is, Border Oak method] are prestigious and add value considerably to a property, particularly when constructed within the curtilage of a period dwelling such as Middleton Barn.” He was of the opinion that such an outbuilding would have been in keeping with the area—he produced photographs of three outbuildings in the vicinity that he said were to a greater or lesser degree in the Border Oak style—and that the appropriate pre-application discussions would have secured planning officer approval for such a building. He described the Garage as built as “an unattractive building of no architectural merit” and said that it “visually detract[ed] from the property by virtue of its boring, longitudinal design and monopitch, profile-sheet roof and verge cladding”.

73. In his report, Mr Alcock expressed the opinion that the market value of the Property as at June 2006 would have been as follows (the corresponding valuations in September 2009 are shown in parentheses):

In the joint statement, he said that his long professional experience led him to the view that “a Border Oak Limited or Border Oak style outbuilding would add no less than £30,000 to the value of Middleton Barn.”

74. When he was cross-examined concerning this opinion, Mr Alcock was shown a photograph of a not entirely dissimilar building to the Garage, but with a pitched roof covered with man-made tiles. Subject only to changing the roof covering, Mr Alcock confirmed his opinion that, if the roof shown on the photograph were substituted for the roof that is present on the Garage, there would be a substantial increase in the value of the Property. When questioned further, he initially said that he could not put a figure on that increase in value. When pressed, he stated a figure of £10,000. However, he also confirmed that he stood by the figure of £30,000 mentioned in the joint statement. The relationship of the two figures was not explored; presumably the lower figure reflects the enhancement attributable to a pitched roof alone, while the higher figure reflects the full benefit of a complete structure in the Border Oak style. There is some difficulty with such an explanation, however, because the classic Border Oak style lacks the secure doors along the front of the structure, which do have the effect of altering the appearance of the building considerably. I should remark that Mr Lixenberg complained strongly about the difficulty occasioned by the imprecise concept of the Border Oak style.

75. Mr Prosser did not accept that an outbuilding in Border Oak style would make any difference to the value of the Property. There were many factors relevant to the value of any property: general and particular location; style of the property; accommodation and amenities; condition, and so forth. The most important factor in the valuation of the Property was its rural location, with views over the adjacent countryside. Matters such as the pitch of the roof or the manner of construction of the Garage were well down the list in order of priority, as well as being largely dependent on personal taste.

76. In the joint statement and in oral evidence Mr Alcock and Mr Prosser were agreed that “it [was] impossible to find meaningful comparable evidence with which to address this issue [namely, enhancement of value]”.

Difference in cost

77. The experts’ joint statement states an agreed premiss:

“It was agreed that the cost of the existing garage as built was £48,977.14 excluding VAT, based on contractor’s applications for payment. The figure includes the cost of excavation works.”

Having agreed that point, the experts did not record any further discussion on it.

78. Despite that agreement, the case for the claimants as advanced before me was that the cost of the Garage was considerably more than £48,977.14. It is convenient to summarise the evidence, both expert and factual, at this point.

79. The issue arises because of the difficulty in correlating the contractor’s applications for payment with the payment certificates under the contract. A total of nine Interim/Progress Payment Certificates were issued by the defendant as Architect/Contract Administrator. All were shown as issued under the single contract, with a contract price of £220,000. Those up to and including Certificate No. 6, which was issued on 4 May 2006, did not distinguish on their face between different parts of the total project.

80. In his report, Mr Alcock said that the discrepancy between the amounts referable to the Garage in the certificates and the amount attributed to the Garage in the contract was unexplained, save for “the £9,000 specification upgrade for works which I am instructed was requested by Mr and Mrs Kellie after the quotation of £40,794 was received”. He did not specifically advert in this connection to the fact, which he mentioned in a different context, that the quotation was a budget price and was subject to alteration when the cost of the retaining wall was known. As had been mentioned above, the wall was significantly more expensive than had been allowed for in the budget price, and it was proposed that the cost would be absorbed within the total contract price on a “swings and roundabouts” basis. Mr Alcock disregarded Certificate No. 8 (Garage), because he was instructed that the only additional costs in that certificate were for the excavation of a trench by a sub-contractor. He did not comment on the manuscript annotations on his exhibited copy of Certificate No. 7 (Garage): “+ variations”; perhaps that is the “specification upgrade”. He recorded that by June 2006 no works had commenced on the Barn itself.

81. On the basis of Certificate No. 7 (Garage), in his report Mr Alcock calculated the total cost of the Garage, inclusive of architects’ fees and VAT, at £87,565.13: £67,138.31 for the cost of the works; £11,749.20 for VAT thereon; £7,385.21 for architects’ fees calculated as a percentage of the cost of the works; and £1,292.41 for VAT thereon. The figure of £87,565.13 compared with the total figure of £53,213.40 that would be produced by the apportionment of the contract sum as shown on the later certificates. Although he did not do the arithmetic, it compared with approximately £65,212.50 if the specification upgrade is taken into account.

82. The exhibits to Mr Prosser’s report included Postons’ Interim Valuation No. 8, dated 19 October 2006. For the purposes of this judgment it is unnecessary to discuss this detailed document at length. The following observations will suffice.

“However, it must be borne in mind that the majority of the additions were specifically requested by the claimants and cannot legitimately be added to the cost of the Garage/Workshop for comparison purposes with an alternative Border Oak style structure, because they would have been added by the claimants whatever the design of the structure. [He gives specific examples and continues:] Other additions that need to be deducted include everything other than the retaining wall. It will be seen therefore that the true cost of the Garage/Workshop, after all client-requested additions have been removed, was (£39,894 + £8,881) £48,775.”

The figure of £39,894 is, of course, the value of the contractual works attributed to the Garage on the Postons valuation. The figure of £8,881 is the cost of the retaining wall.

83. As for the comparison, the experts’ joint statement recorded agreement that the Garage could have been located up to 7 metres to the east of its present position, without significantly impairing the quality of the views, and that this would have “given rise to the possibility of less excavation work … Mr Bate and Mr Alcock believe that the saving in cost due to less excavation could well have been over £3,000.” Mr Buggey and Mr Prosser accepted that excavation costs would have been reduced. (Mr Troup says that Mr Buggey accepted the reduction in cost as being £3,000, though that is not reflected in my note.) However, as I have mentioned (paragraph 65, above), Mr Prosser made clear that his agreement that the Garage could have been moved by up to 7 metres without affecting the views was based on the assumption that it was the same building, that is, the Garage with a nearly flat roof. If the building were to have a pitched roof, the view would be adversely affected. In his report, Mr Prosser said that the placing of a Border Oak garage on the lawn area would substantially detract from the value of the Property; I did not understand him to resile from that view.

84. Mr Alcock was of the opinion that planning permission for the engineering operations necessary for a garage in the Border Oak style would probably have been given, and he said that such a garage would have been significantly cheaper. Allowing for the claimants’ specification upgrade, and for the omission of the cost of excavation and construction of a retaining wall—“most or all of which cost I believe to have been unnecessary”—he said that the cost of the garage should have been no more than £50,000 plus VAT. He gave two possible methods of achieving such an outcome.

85. The first of these alternatives gives rise to a very obvious problem, because BODCL’s Model 1.3 units are not remotely comparable to the Garage as constructed. Model 1 is described as, “A simple and modest structure, ideal for a potting shed, a shelter or a studio.” It has a width of 8.325 metres, so that two units would have a combined length slightly longer than that of the Garage. But its depth is only 3.8 metres, as against the required depth of 6 metres, which was achieved in the Garage. And the ridge height is only 3.9 metres. To achieve a depth of 6 metres would require Model 4. Two units of Model 4.2 would achieve a combined width of 11.2 metres, compared with the Garage’s width of 15.6 metres. Two units of Model 4.3 would achieve the required width, a total of 16.65 metres. On the basis of the price lists produced by Mr Alcock, and allowing his suggested 15% reduction to provide the figures for June 2005, the total cost of those units would (by my reckoning) be about £39,676 plus VAT: £46,619. (Mr Prosser, who pointed out the difficulty in Mr Bate’s approach, gave a figure of £41,322 plus VAT: £48,553.) To that are to be added all the additional costs mentioned by Mr Alcock, together with the specification upgrade, gravel drive and paved entrance in the original specification. No effort has been made to perform the additional costing exercise in a professional manner. In short, it is clear to me that Mr Alcock has simply not thought his argument through. I say nothing about what seems to me the frankly extraordinary notion that two such units of such dimensions and with pitched roofs could possibly be considered to be appropriate, having regard to the very proper planning concern with maintaining the hierarchy of buildings within the curtilage.

86. In his report, Mr Prosser expressed the view that a suitable alternative building from BODCL would have cost £83,385 plus VAT. (In the joint statement, he said that this was a conservative figure.) This compared, on a like-for-like basis, with £48,977 plus VAT for the existing Garage; this is the figure accepted by Mr Alcock in the joint statement. Elements of the calculation of the cost of providing a like for like BODCL product are doubtless open to argument. In fact, however, in the joint statement the issue taken by Mr Alcock and Mr Bate with Mr Prosser’s comparison rested on two arguments: first, that a suitable Garage could have been provided by using BODCL Model 1.3 (as to this, see above); second, that a bespoke building could have been constructed more cheaply. This brings us back to Mr Alcock’s two examples.

87. Together with Mr Buggey, Mr Prosser rejected the propriety of using the two bespoke examples given by Mr Alcock as a guide to price. No detailed costings had been provided, and it was impossible to know whether there was truly a like-for-like comparison with the Garage. Part of the disagreement concerned the detailed specification of the buildings. But part related to the referent of “Border Oak style”. Mr Prosser and Mr Buggey took the expression to refer to buildings with traditionally jointed green oak structural frames and the use of “generously proportioned oak posts, beams, bracing members and trusses as a central design feature.” They considered that Mr Alcock’s examples were not of that type or quality. He responded that his clients were happy with the buildings and had not objected on grounds of method of construction.

88. As for specification, Mr Prosser, again in agreement with Mr Buggey, believed that the cost of upgrading Mr Alcock’s examples to match the Garage, by for example the construction of inner skin block walls, block partition walls and fittings to match the Garage, would result in a substantially more expensive structure. The joint statement said: “They further believe that unless a fully costed specification is provided it is not possible to give meaningful consideration to this proposal.”

Discussion

Duty of care

89. The existence of a duty of care in contract and in tort is not disputed. The nature of that duty is conveniently set out in Jackson & Powell on Professional Liability (7^th edition, 2012) at para 9-128:

“As in the case of other professions the standard generally required of an architect in discharging his duties is the reasonable skill, care and diligence of an ordinary competent and skilled architect. The standard was more fully described by Windeyer J in the Australian case of Voli v Inglewood Shire Council [1963] A.L.R. 657 as follows:

‘An architect undertaking any work in the way of his profession accepts the ordinary liabilities of any man who follows a skilled calling. He is bound to exercise due care, skill and diligence. He is not required to have an extraordinary degree of sill or the highest professional attainments. But he must bring to the task he undertakes the competence and skill that is usual among architects practising their profession. And he must use due care. If he fails in these matters and the person who employed him thereby suffers damage, he is liable to that person. This liability can be said to arise either from a breach of his contract or in tort.’”

Breach of the duty of care

90. In the light of my findings regarding the allegation that the claimants told Mr Wheatley they wanted a garage/workshop in the Border Oak style, the allegations of breach of duty fall away. All of the substantive allegations in paragraph 11 of the amended particulars of claim—I disregard the particular identified as (f), that the defendant failed to make a written record of its instructions, as being an evidential matter and not itself bearing on the performance of the instructions or retainer—are premised on the facts set out in paragraph 10:

“During the course of a meeting which took place on 19 February 2004 at the defendant’s offices, the claimants instructed the defendant that they wished the Garage to be designed in the Border Oak style with a pitched roof. The defendant, acting by its director Mr John Wheatley, advised them that planning permission would not be granted for such a design. Instead, the defendant, again acting by Mr Wheatley, advised that the local planning authority would only accept a Garage with a flat roof built into a bank in order to achieve minimum visual impact.”

Regarding the allegations themselves:

91. As I have said, the pleaded allegations are put firmly on the basis of the facts alleged in paragraph 10 of the amended particulars of claim. Regardless of the pleading point, however, it is clear that the allegations, with their focus on the Border Oak style, cannot survive the rejection of that factual basis. The Garage has the correct dimensions, layout and function. What then could be the basis of complaint? One possibility, in theory, might be that the design is so aesthetically displeasing that no reasonable architect would have come up with it; another might be that the cost of construction of the Garage was so great that an alternative design should have been thought of; another might be that the impact of the chosen design on the value of the Property as a whole, when compared to the impact on value that other designs would have had, was such that a different design should have been chosen. All such suggestions would in my judgment be entirely fanciful: the whole case is premised on the contention that there was a failure to implement or at least explore practicable and feasible instructions; once that contention has fallen away, the basis of the allegations of breach of duty falls away also. In fact, none of the possible suggestions that I have mentioned has any plausibility.

92. My conclusion as to breach of duty would not have been different even if I had accepted that the claimants expressed to Mr Wheatley a preference for a Border Oak style Garage.

Causation of damage

93. Because I have rejected the allegations of breach of duty, questions of causation of damage do not arise for determination. In the circumstances, I shall say only a little concerning the matter.

94. In order to consider whether a breach of duty has caused damage, it is necessary to identify the breach. In view of my decision on breach of duty, there is obvious artificiality in exploring that question in this judgment. However, the correct approach to the question is clear enough. Insofar as causation of loss turns on what the claimants would have done, if they had been properly advised, they must prove on the balance of probabilities what would have happened. But insofar as the matter turns on what a third party (here, the local planning authority) would have done, the question is whether there was a substantial chance of the third party acting in the way suggested (here, granting planning permission for a Border Oak style Garage). If there was such a substantial chance, the degree of likelihood is dealt with at the stage of quantification of damages. This is set out clearly in the following passages in Allied Maples Group Ltd v Simmons & Simmons (a firm) [1995] 1 W.L.R. 1602. In a lengthy passage beginning at 1609H, Stuart-Smith LJ, with whose reasoning and conclusions Hobhouse LJ agreed, said this:

“In these circumstances, where the plaintiffs’ loss depends upon the actions of an independent third party, it is necessary to consider as a matter of law what it is necessary to establish as a matter of causation, and where causation ends and quantification of damage begins.

(1) What has to be proved to establish a causal link between the negligence of the defendants and the loss sustained by the plaintiffs depends in the first instance on whether the negligence consists of some positive act or misfeasance, or an omission or non-feasance. In the former case, the question of causation is one of historical fact. The court has to determine on the balance of probability whether the defendant’s act, for example the careless driving, caused the plaintiff's loss consisting of his broken leg. Once established on balance of probability, that fact is taken as true and the plaintiff recovers his damage in full. There is no discount because the judge considers that the balance is only just tipped in favour of the plaintiff; and the plaintiff gets nothing if he fails to establish that it is more likely than not that the accident resulted in the injury.

Questions of quantification of the plaintiff’s loss, however, may depend upon future uncertain events. … It is trite law that these questions are not decided on a balance of probability, but rather on the court’s assessment, often expressed in percentage terms, of the risk eventuating or the prospect of promotion, which it should be noted depends in part at least on the hypothetical acts of a third party ...

(2) If the defendant’s negligence consists of an omission, … causation depends, not upon a question of historical fact, but on the answer to the hypothetical question, what would the plaintiff have done if [the defendant had done what it omitted to do]? This can only be a matter of inference to be determined from all the circumstances. …

Although the question is a hypothetical one, it is well established that the plaintiff must prove on balance of probability that he would have taken action to obtain the benefit or avoid the risk. But again, if he does establish that, there is no discount because the balance is only just tipped in his favour. …

(3) In many cases the plaintiff’s loss depends on the hypothetical action of a third party, either in addition to action by the plaintiff, as in this case, or independently of it. In such a case, does the plaintiff have to prove on balance of probability, as Mr. Jackson submits, that the third party would have acted so as to confer the benefit or avoid the risk to the plaintiff, or can the plaintiff succeed provided he shows that he had a substantial chance rather than a speculative one, the evaluation of the substantial chance being a question of quantification of damages?

Although there is not a great deal of authority, and none in the Court of Appeal, relating to solicitors failing to give advice which is directly in point, I have no doubt that Mr. Jackson’s submission is wrong and the second alternative is correct.”

At 1614 E Stuart-Smith LJ continued:

“[I]n my judgment, the plaintiff must prove as a matter of causation that he has a real or substantial chance as opposed to a speculative one. If he succeeds in doing so, the evaluation of the chance is part of the assessment of the quantum of damage, the range lying somewhere between something that just qualifies as real or substantial on the one hand and near certainty on the other. I do not think that it is helpful to seek to lay down in percentage terms what the lower and upper ends of the bracket should be.”

95. Those principles would have to be applied in the light of the specific findings of breach of duty. Conscious of the degree of artificiality inherent in the exercise, I limit myself to the following observations.

Quantum of damage

96. In view of my findings on liability, issues of quantum of damage do not fall for decision. However, I shall set out briefly the conclusions I would have reached if it had been necessary to do so.

97. As to value, I do not accept that the value of the Property would have been enhanced if the Garage had been either a BODCL or a Border Oak style structure.

98. As to costings, it has not been proved to my satisfaction that it would have been cheaper to construct either a BODCL garage or a custom-built garage in the Border Oak style.

99. The starting-point is the actual cost of the Garage. Mr Troup proposed three possible figures:

(i) The agreed figure in the joint statement: £48,977 plus VAT

(ii) Certificate No. 8 (Garage): £73,756.51 plus VAT

(iii) Mr Prosser’s modification of the agreed figure, to take account of further items that were referable to the Garage: £52,456.31 plus VAT.

Mr Troup suggested that the defendant could not complain about the choice of the figure in Certificate No. 8 (Garage), because it had prepared the certificate which showed all items as referable to the Garage. That is clearly not a proper basis on which to proceed, when it is clear that many of the costs included within that certificate relate to the Annexe or other matters and not to the Garage. The choice between options (i) and (iii), the agreed figure or the modification of the agreed figure, is in my view a matter of complete indifference, provided that the comparison of costs is done on a like-for-like basis.

100. Mr Troup submitted that the cost of a BODCL garage would have been £42,500 or £49,300, depending on whether Model 1.3 or Model 2.3 was used: in each case, this represents the cost of two units in 2006 together with an allowance of £19,000 for fitting, modification, services etc. I reject the submission that loss has been established on this basis.

101. So far as concerns the alternative of a Border Oak style garage (that is, a custom-built version, tailored to the claimants’ requirements), the case is put on the basis of Mr Alcock’s two examples. Mr Troup submits, on the basis of the figures in paragraph (2) (c) (ix) of the joint statement, that the construction costs would have been between £28,475 and £32,300. I make the following observations.

Two additional defences

102. I shall deal only briefly with two specific defences that were raised by the defendant: in the light of the decisions that I have made, they do not fall for decision; and, although Mr Lixenberg mentioned them in his written opening submissions and declined to abandon them, he chose not to respond to Mr Troup’s detailed oral and written submissions in answer to them. I shall, however, say rather more about the second of the defences, namely limitation, because the questions to which it gives rise supplement what I have said above regarding the defendant’s duties to the claimants.

The “no loss in law” defence

103. The first defence is set out in paragraph 16(a) of the Amended Defence: “Even if (which is denied) the defendant acted negligently, it is denied that the claimants have suffered any loss or damage. Even on the claimants’ own case, they were not the owners of the Property at the relevant time.” The matters referred to in this defence are those set out in paragraph 9, above. The argument was that at all times until after the Garage had been designed and planning permission had been granted for it, the claimants had no interest in the Property; any loss was suffered by Mrs Kelly and was wiped out upon transfer of the Property to the claimants: see paragraph 51 of Mr Lixenberg’s opening submissions.

104. I would have rejected this argument for the reasons advanced by Mr Troup in his written and oral submissions. No difficulty at all arises in respect of the second head of loss advanced by the claimants, namely the increased costs of construction, because they were the contracting party and were paying for the Garage. As regards the first head of loss, namely the difference in value of the Property, the defendant was contracting solely with the claimants, not with Mrs Kelly, and Mr Wheatley knew that they were selling their properties and investing the proceeds into the Property and moving into the Barn. In those circumstances it was entirely foreseeable that they would suffer loss by reason of any breach of contract or negligence, and the courts lean heavily against allowing any disjunction between contractual privity on the one hand and property ownership on the other to result in a “black hole”, in which the party that suffers loss is without a claim and the party that has a claim cannot recover for the loss. See Linden Gardens Trust Limited v Lenesta Sludge Disposals Limited [1994] 1 AC 85; Darlington Borough Council v Wiltshier Northern Limited [1995] 1 W.L.R. 68; and Alfred McAlpine Construction Limited v Panatown Limited [2001] 1 A.C. 518.

The limitation defence

105. The amended defence avers that the claim is statute-barred. Insofar as it is brought in contract, it is said to be barred by section 5 of the Limitation Act 1980, because the alleged breach of contract (namely the giving of negligent advice) occurred on 19 February 2014, which was more than six years before the issue of the claim form on 9 July 2010. Insofar as the claim is brought in tort, it is said to be barred by section 2 of the Act, because, if the claimants suffered any damage at all by reason of the advice they received, they first did so at the time when the advice was given.

106. As regards contract, it is correct that the pleaded date for the alleged breach of duty, namely the giving wrong advice, is 19 February 2004, which is more than six years before the commencement of the proceedings. However, the amended particulars of claim also state that planning permission for the Garage, in accordance with the defendant’s design, was granted on 25 May 2005, that building regulations approval was obtained on 20 June 2005, that the works to the Garage commenced on 30 November 2005, and that the last of the monthly certificates issued by the defendant under the building contract was dated 24 November 2006 and related to the Garage. Those dates are not contentious.

107. Mr Troup submitted that the defendant remained under a continuing duty to review its design of the Garage until that design was incorporated into the works. He referred to New Islington and Hackney Housing Association Ltd v Pollard Thomas and Edwards Ltd [2000] EWHC 43 (TCC), [2001] Lloyd’s Rep PN 243, where Dyson J had to consider the extent of an architect’s continuing duty to review his design. The relevant part of the judgment is in paras [14] to [20] and is, I think, so clear as to be worth setting out fully.

“14. I accept the proposition that, although it is necessary to look at the circumstances of each engagement, a designer who also supervises or inspects work will generally be obliged to review that design up until that design has been included in the work: see Jackson and Powell on Professional Negligence 4th Edition para 2-17. In a number of cases, it has been held that this duty continues until practical completion: see Chelmsford DC v T J Evers [1983] 25 BLR 99,106, Equitable Debenture Assets Corporation Ltd v William Moss Group Ltd [1984] 2 Con L R 1, 24 and Victoria University of Manchester v Hugh Wilson [1984] 2 Con L R 43, 73.

15. But it is necessary to consider the scope of that duty in a little more detail. What does the duty to review the design entail? In what circumstances will an architect be in breach of that duty? I find it convenient to consider an example. Let us suppose that an architect is engaged on the standard RIBA Conditions of Engagement to provide the full service (as PTE were in the present case), including administering a building contract in a standard JCT form of contract. Suppose that he designs the foundations of a building (a large office block), the foundations are constructed in accordance with his design, and several years later, practical completion is achieved. Let us further suppose that the design of the foundations is defective and one which no reasonably competent architect would have produced: in other words, the architect was negligent. There can be no doubt that the architect commits a breach of contract when he completes the design and gives instructions to the contractor to construct the foundations in accordance with it. But in what sense and to what extent is the architect under a duty to review his negligent design once the foundations have been designed and constructed?

16. In my view, in the absence of an express term or express instructions, he is not under a duty specifically to review the design of the foundations, unless something occurs to make it necessary, or at least prudent, for a reasonably competent architect to do so. For example, a specific duty might arise if, before completion, the inadequacy of the foundations causes the building to show signs of distress; or if the architect reads an article which shows that the materials that he has specified for the foundations are not fit for their purpose; or if he learns from some other source that the design is dangerous. In such circumstances, I am in no doubt that the architect would be under a duty to review the design, and, if necessary, issue variation instructions to the contractor to remedy the problem. But in the absence of some reason such as this, I do not think that an architect who has designed and supervised the construction of foundations is thereafter under an obligation to review his design.

17. I do not accept that in every case where an architect has negligently introduced a defective design into a building, he is also by the same token in breach of a continuing breach of a contractual obligation to review his design. In Midland Bank v Hett, Stubbs & Kemp [1979] Ch 384, 403C, Oliver J said:

‘It is not seriously arguable that a solicitor who or whose firm has acted negligently comes under a continuing duty to take care to remind himself of the negligence of which, ex hypothesi, he is unaware.’

18. In my view, that observation is as apt to apply to an architect as it is to a solicitor. The position is quite different where the architect (or solicitor) knows, or ought to know, of his earlier negligence. When that occurs, then he may well be under a contractual obligation to review his earlier performance, and advise his client honestly and competently of his opinion. Whether he is in fact under such a duty when he has actual or constructive knowledge of his earlier breach of contract will depend on whether the contract is still being performed. If the contract has been discharged (for whatever reason), then the professional person may be under a duty in tort to advise his client of his earlier breach of contract, but it is difficult to see how he can be under any contractual duty to do so.

19. The foundation for the statement in the cases that an architect is under a continuing duty to review his design is the dictum of Sachs LJ in Brickfield Properties v Newton [1971] 1 WLR 862, 973F:

‘The architect is under a continuing duty to check that his design will work in practice and to correct any errors which may emerge. It savours of the ridiculous for the architect to be able to say, as it was here suggested that he could say: “true, my design was faulty, but, of course, I saw to it that the contractors followed it faithfully” and be enabled on that ground to succeed in the action.’

20. But Sachs LJ was not concerned to explore the scope of an architect’s continuing duty to review his design. In my judgment, the duty does not require the architect to review any particular aspect of the design that he has already completed unless he has good reason for so doing. What is a good reason must be determined objectively, and the standard is set by reference to what a reasonably competent architect would do in the circumstances.”

108. Mr Troup pointed out that only after Mr Wheatley’s letter of 23 August 2004 did the defendant begin to work on the design of the Garage and that the incorporation of the design into the works took place in 2005 and 2006 (see above). I accept his submission that in the circumstances the defendant was under a continuing duty to review its design until well after 9 July 2004. Although a strict reading of the amended particulars of claim might construe them as limiting the moment of negligence and breach of contract to the original giving of the advice, which was said to be 19 February 2004, the wider facts and particulars of negligence there pleaded are in my judgment clearly sufficient to make the argument based on continuing duty available to the claimants; indeed, Mr Lixenberg did not suggest the contrary.

109. The conclusion that the claim is wide enough to encompass an allegation of negligent failure to give appropriate advice after 9 July 2004 is also sufficient to dispose of the limitation defence in respect of the tortious claim. Even if the defendant were correct to allege that the claimants suffered actionable damage at the moment when the original advice was given, the main damage would not have been suffered before the formal design of the Garage commenced and would be referable to the failure to discharge the continuing duty to review the design. In these circumstances it is unnecessary for me to enter into a discussion of the vexed question when actionable damage occurs for the purpose of a claim in tort; see generally on this the discussion in chapter 5 of Jackson & Powell on Professional Liability. However, the defendant has not identified the economic loss that was suffered by the claimants upon the giving of the incorrect advice on 19 February 2004 (if such advice were given), and I cannot see that they suffered any at all at that point.

110. Accordingly, I would have rejected the defence of limitation.

Conclusion

111. For the reasons set out above, the claim fails.

112. This judgment is to be handed down at a hearing in the absence of the parties. As they have not been able to agree the appropriate terms of order in respect of outstanding matters, I shall adjourn those matters for consideration at a further hearing and extend the time for applying for permission to appeal.

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