Stringfellow v Blyth

A contractor is not liable for diminution in value where an agreed expert report establishes that the alleged defect makes no practical difference to the property’s value. Where construction drawings inadequately specify the works and the parties agree an alternative solution, that agreement may constitute a variation of the contract, even if the employer assents reluctantly. In a claim and counterclaim arising from the same transaction, judgment should ordinarily be entered for the net balance. Costs may be adjusted to reflect the parties’ relative success and the work undertaken, independently of inaccurate Part 36 offers.

The claimant builder appealed from a judgment of His Honour Judge MacKay in the Liverpool Technology and Construction Court. The judge had awarded the defendant £9,046.50 on his counterclaim, together with additional interest and costs, after finding breaches concerning the kitchen extension and a proposed turning area.

The appeal concerned whether the judge had wrongly departed from an agreed experts’ report and awarded damages for diminution in value, whether the construction of a retaining wall and patio amounted to a contractual breach or an agreed variation, and what order should be made concerning the resulting balance and costs.

1. Appeal allowed. The judge erred in permitting the defendant to adduce evidence of diminution in value contrary to the agreed experts’ report. The report established that the original kitchen was already out of square and that relocating the slightly non-right-angled corner would make no difference to the value of the property. No damages were therefore recoverable on that issue.
2. The plans showed a notional turning area but made no provision for grading the ground between the garage and the house. The necessary earth-moving work was not included in the contract and the claimant was unwilling to undertake it without payment. The parties agreed, albeit reluctantly on the defendant’s part, that a retaining wall and patio should be constructed instead. That agreement varied the contract and meant that the claimant was not in breach by failing to provide the turning area.
3. The counterclaim was reduced by £9,900. After allowing the claimant £390 for the cost of the retaining wall and patio, judgment was entered for the claimant for £1,243.50.
4. Applying the principle in Hanak v Green [1958] 2 QB at 9, the proper approach was to give judgment for the net balance arising from the claim and counterclaim. The inaccurate Part 36 offers were disregarded. The defendant was ordered to pay 80 per cent of the claimant’s costs below, and the claimant received the costs of the appeal.

• Court of Appeal (Civil Division): Appeal from the judgment of His Honour Judge MacKay in the Liverpool Technology and Construction Court, given on 11 May 2000. The appeal was allowed and judgment was entered for the claimant for £1,243.50.