Gilruth v Harding

Contractual damages calculated by reference to an increase in an asset’s value must be assessed by reference to the price achievable on a putative sale at the valuation date. The court must determine, on the evidence, whether a defect would probably have been discovered in that sale and apply the valuation evidence accordingly. Where a jointly instructed expert’s opinion is unchallenged, a dissatisfied party cannot contradict it on appeal. The proper course is to seek permission under the Civil Procedure Rules 1998 to adduce evidence from another expert. Material appended to questions to an expert does not thereby become evidence of the truth of its contents.

The respondent, a professional eventing rider, claimed under an oral contract entitling her to 25% of any increase in a horse’s value if the owner replaced her without consent. The Chester County Court found breach and awarded £42,500, based on a valuation of £200,000 at 23 September 2009 and a base value of £30,000. The defendant appealed only on quantum, arguing that a spinal defect would have been discovered on sale and reduced the value to £150,000, or nil. The central issue was whether the judge had been entitled to find that a purchaser would probably not have sought X-rays of the horse’s back.

1. Appeal dismissed. The award of £42,500 with interest was upheld. Tomlinson LJ gave the leading judgment, with McFarlane LJ and Sullivan LJ agreeing.
2. The relevant value was the price that would have been achieved on a putative sale on 23 September 2009. It was not an abstract or artificial valuation. The judge therefore had to decide, on the balance of probabilities, whether the back defect would have been discovered during such a sale.
3. The judge was entitled to conclude that the defect would probably not have been discovered. The horse had shown no symptoms of back pain, had a successful competition record, and it was not common practice to X-ray a horse’s back in a pre-purchase examination. There was no sufficient evidence that a purchaser would have taken that unusual step. The subsequent discovery and treatment of the defect did not establish what a purchaser would probably have done at the valuation date.
4. The veterinary report relied on by the defendant was inadmissible as evidence of the truth of its contents. It had not been introduced in accordance with the Civil Evidence Act 1995 and CPR 33.2, and the author was not called as a witness. Its consideration by the jointly instructed valuation expert did not change its evidential status. Under CPR 35.6 and CPR 35.6(3), answers to questions form part of the expert’s report, but questions and material appended to them do not become evidence of the truth of their contents.
5. The jointly instructed expert’s evidence that discovery of the defect would have reduced the sale price by 25% was unchallenged. A party dissatisfied with a single joint expert must seek permission under CPR 35.7, as described in paragraph 35.7.6 of the relevant notes, to adduce its own expert evidence. No such application was made, and the defendant could not challenge that valuation on appeal. The only alternative supported by the evidence was an award of £30,000, not nil.

• Court of Appeal (Civil Division) — On 21 July 2015, the appeal against the quantum of damages was dismissed and the award of £42,500 with interest upheld: [2015] EWCA Civ 1085.
• Chester County Court — His Honour Judge Halbert, after a three-day trial, found breach of contract and awarded the claimant £42,500 with interest on 2 October 2014.