Deosaran  & Anor v. Barrow & Anor  (Trinidad and Tobago) [2006] UKPC 33 (27 June 2006)

Privy Council Appeal No 68 of 2004

(1) Michael Joseph Deosaran
(2) Housing and Investments (Trinidad) Ltd				Appellants
v.
(1) Winston Barrow
(2) Judith Barrow	Respondents

FROM

THE COURT OF APPEAL OF
TRINIDAD AND TOBAGO
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JUDGMENT OF THE LORDS OF THE JUDICIAL 
COMMITTEE OF THE PRIVY COUNCIL

Delivered the 27th June 2006

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Present at the hearing:-

	Lord Hoffmann
	Lord Hope of Craighead
	Lord Hutton
	Lord Brown of Eaton-under-Heywood
	Sir Peter Gibson
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		[Delivered by Lord Hoffmann]		

1.	In January 1979 the appellants Mr Deosaran and his company Housing & Investments (Trinidad) Ltd (hereafter “the builder”) agreed to build a house on a plot of land at Diego Martin and to convey the house and land to the respondents Mr and Mrs Barrow (hereafter “the owners”) for the sum of $225,000. Completion took place in June 1980.  Soon afterwards, cracks in the walls and roof began to appear.  In 1983 an engineer reported that the cracks were caused by subsidence due to the inadequacy of the foundations. The house was built upon quarry fill lying over a deep layer of vegetable matter which expanded when it became saturated with water and caused differential movement in the building above.  In the opinion of the engineer, the vegetable matter should have been removed before the site was used for building.  

2.	The owners did not at that stage make any claim upon the builder.  They claimed instead upon their insurance company, which settled their claim for $51,482.  With this money they did remedial work to repair the cracks and strengthen the foundations which was completed in 1985. In the course of these repairs they discovered culverts under the land which carried water from a spring towards the house. It is suggested that this water may have contributed to the saturation of the vegetable matter under the house.

3.	The strengthening of the foundations proved inadequate and fresh cracks began to appear in 1988.  The state of the house deteriorated rapidly and in September 1989 the owners sold it for $130,000.   On 26 May 1988 the owners issued proceedings against the builder, claiming damages for breach of contract and negligence.  The damages were quantified in the amended statement of claim at $95,000, being the $225,000 paid in 1979 less the $130,000 realised in 1989.  The defence denied breach of contract and negligence.

4.	The action was tried by Mendonca J in April 2002.  He held that the builder owed the owners a duty in tort to take reasonable care to ensure that the land was not susceptible to foundation movement and that the house would be fit for human habitation. He found on the facts that building directly upon vegetable matter which was being fed by a stream of water was a breach of that duty. 

5.	The Limitation Ordinance had not been pleaded but the builder was allowed, apparently without objection, to rely upon it.  The owners did not press the claim in contract, which the judge considered to be statute-barred because the breach of contract had occurred at the time of completion in 1980 and the limitation period of four years therefore expired well before proceedings were commenced.  But the cause of action in tort (for which the limitation period is also four years) arose only when damage was suffered (or the owners became aware of it) and although the original damage had occurred and become known to the owners in 1983, the judge found as a fact that the builder’s negligence was the cause of separate and distinct damage in 1988.  It was therefore not statute barred.

6.	Although the pleadings had quantified the claim at $95,000, the owners sought at the trial to increase the damages by reference to a 1983 valuation of the house and land at $400,000.  The owners claimed that but for the builder’s negligence, they would in 1989 have had a house worth $400,000 and instead had to sell it for $130,000.   The judge rejected this valuation on the ground that house prices in Trinidad had declined between 1983 and 1989.  He thought that it was more appropriate to use the £225,000 purchase price as “some evidence” of what the value of the premises should have been.  He therefore awarded the owners the $95,000 which they had originally claimed.

7.	The builder appealed against the finding of liability and the owners cross-appealed on quantum of damages. There was no appeal on the question of limitation. The Court of Appeal dismissed the appeal on liability but upheld the appeal on quantum. Warner JA said that there was no evidence to support the judge’s finding that house prices had declined after 1983.  But the valuation described the building as being “in good sound condition” (the judgment says “in good solid condition” or “in good solid foundation”) and Warner JA said that in view of the evidence about the lamentable condition of the house in 1983, she could not accept this statement as true.  She therefore reduced the valuation to £250,000 and added $25,000 to the damages.

8.	Both sides appealed to the Privy Council: the builder against the finding of liability and the owners against the award of damages. Before the Board, Mr Wooding, for the builder, said that he was no longer pursuing the appeal on duty of care and negligence. But he sought leave to argue that the claim had been statute-barred.

9.	Their Lordships did not grant leave. The limitation point depends partly upon the judge’s findings of fact about the damage suffered in 1988 being separate and distinct from the damage suffered in 1983 and partly upon a question of law on which varying opinions have been expressed by courts in the Commonwealth: see, for example, Invercargill City Council v Hamlin [1996]  AC 624.  If the limitation point had been raised in the Court of Appeal and that Court had agreed with the judge’s findings of fact, their Lordships’ practice would be not to disturb concurrent findings. As for the question of law, their Lordships are reluctant to express a view without the assistance of judgments of the Court of Appeal of Trinidad and Tobago: see United Marketing Co v Kara [1963]  1 WLR 523.

10.	 That leaves the appeal and cross-appeal on the award of damages.  Their Lordships consider that both the judge and the Court of Appeal were handicapped by lack of evidence.  There simply was no evidence of what the house with proper foundations would have been worth in 1988 (when the action was begun) or 1989 (when it was sold).  The Court of Appeal considered that there was no evidence to support the judge’s view that house prices had declined between 1983 and 1988, although the Board thinks that this is a matter of which in general a judge might properly have taken judicial notice.  On the other hand, their Lordships would accept that evidence would have been required to show that the value had declined to precisely the figure paid in 1979.  But the Court of Appeal’s decision to discount the specific valuation of $400,000 to $250,000 on the ground that the latter was the bottom of the bracket given by the valuer for houses in the area is also hard to justify. It seems to have been on the ground that the building should have been valued as it was with the cracks which emerged in 1983. On the other hand, the judge’s decision on the limitation issue assumes that the earlier defects had been remedied and that a fresh tort was committed in 1988. He was therefore considering what would then have been the value of a properly restored house. One also has no idea of the size, condition or anything else of the other houses which the valuer had in mind.

11.	Their Lordships consider that the burden was upon the owners to adduce evidence to prove their damages.  However shaky the judge’s estimate might have been, there was in their Lordships’ opinion no evidence to justify a higher figure and therefore no reason for the Court of Appeal to allow the owners’ appeal on this point. On the other hand, the builder does not argue for an award lower than $95,000. Their Lordships would therefore allow the builder’s appeal to the extent of reducing the damages to that figure. The parties are invited to make written submissions on costs within six weeks of the publication of this judgment.