Assessing damages – diminution v repair

A Court has recently held that whilst the usual approach is diminution in value, there are circumstances which justify awarding repair costs in order to recompense the claimants. The court considered the parties’ differing expert views and highlighted the importance of presenting the court with two figures rather than simply dismissing one as incorrect.

In the case of Martin Moore & Camilla Hegelund v National Westminster Bank, the claimants instructed Natwest to produce a home buyer’s report which they never saw. Following completion the claimants discovered the property required substantial repairs. They argued it was a ‘no transaction’ case, Natwest argued it was in line with ‘negligent surveyor’ cases. The claimants alleged the repair costs were £115,000 whereas Natwest argued the correct damages was diminution in value at £15,000. Natwest’s expert did not offer any alternative repair costs.

At first instance the court awarded repair costs and Natwest appealed. The appeal court considered the correct approach and said it was to determine the value of the property with the defects and compare it to the purchase price. Whilst the cost of repair may be the difference in value, the home owner still have an asset they can sell (for someone else to do the work). The appeal court however, ruled in the Claimants’ favour as to award them diminution in value would undercompensate them.

See Martin Moore & Camilla Hegelund v National Westminster Bank for further information.