Darcliffe Homes Limited v Glanville Consultants & Anor

A professional adviser’s contractual and tortious duty is determined objectively by the scope and purpose of the engagement. A planning-related purpose does not narrow an obligation to perform the professional assessment commissioned with reasonable skill and care.

For a Phase 1 geo-environmental assessment, reasonable competence required analysis of the available ground information and an appropriate warning about chalk dissolution risks. Causation still requires proof that competent advice would probably have altered the claimant’s conduct and avoided the loss. Damages may be assessed by the difference in value caused by a negligent report, but gains are deducted only where they arise from the consequences of the breach.

Darcliffe Homes claimed approximately £7.5 million from Glanville Consultants for professional negligence and breach of contract arising from reports concerning ground conditions at a proposed residential development site. Claims against Ground and Water Limited were settled before trial.

Darcliffe alleged that Glanville failed to identify or warn about the risk of chalk dissolution. The issues included the scope of Glanville’s obligations, breach, reliance, causation, contributory negligence, limitation and the appropriate measure of loss.

1. Scope of duty. Glanville’s obligation was to carry out a Phase 1 Geo-Environmental Assessment, as that term was understood in the construction industry, with reasonable skill and care. The assessment required analysis of ground conditions on a preliminary desktop basis and was not confined to the purpose of supporting planning promotion. The six-stage framework in Manchester Building Society v Grant Thornton UK LLP [2022] AC 783 was not to be applied mechanically to a standard professional duty; the observations in Rushbond Plc v JS Design Partnership LLP [2021] EWCA Civ 1889 and URS Corp Ltd v BDW Trading Ltd [2023] EWCA Civ 772 supported that approach.
2. Breach. Glanville failed to analyse the available information adequately. A reasonably competent assessment should have engaged with the chalk geology and warned that dissolution features should be assumed until proved otherwise, or at least warned of the associated hazards. The reports’ clean bill of health therefore fell below the required standard.
3. Reliance and causation. Darcliffe did not establish that competent advice would probably have caused it to withdraw from the purchase or act differently. At most, it might have given Ground and Water more focused instructions. Ground and Water already had access to the relevant information and should themselves have understood the implications of building on chalk. The necessary causal nexus was therefore absent.
4. Loss. Had causation been established, damages in principle could have been assessed under Perry v Sidney Phillips & Son [1982] 1 WLR 1297 by reference to the difference between the price paid and the value with the defects properly reported. The primary claim based on all remediation costs was not sustainable as framed.
5. Collateral benefits and other issues. The net-loss rule, reflected in British Westinghouse Co v Underground Ry [1912] AC 673 and Stanford International Bank Ltd (in liquidation) v HSBC Bank plc [2023] AC 761, did not require deduction of profits from the later sale of houses because those sales did not arise from the breach. The pleaded contributory negligence case failed. The claim was dismissed for failure to prove causation.