[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Rushton & Anor v Worcester City Council [2001] EWCA Civ 367 (16 March 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/367.html Cite as: [2002] HLR 9, [2001] 13 EGCS 149, [2001] EWCA Civ 367, [2003] RVR 129, [2001] NPC 65

[New search] [Printable RTF version] [Help]

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION) ON APPEAL
FROM THE COUNTY COURT AT WORCESTER
(MR RECORDER RUNDELL)

		Royal Courts of Justice Strand, London, WC2A 2LL Friday 16th March 2001

LORD JUSTICE POTTER:

INTRODUCTION

1. This is the judgment of the court. The appeal concerns the purchase by the first claimant and her son, the second claimant, of 33, Durham Road, Ronkswood, Worcester, ("the property") under the "Right to Buy" scheme contained in Part V of the Housing Act 1985 ("the 1985 Act"). The property was a three-bedroom semi-detached house in which the first claimant and her husband had lived for many years and which, following his death, she was anxious to purchase to secure the future of their son, the second claimant. Pursuant to s.126 of the 1985 Act, the first claimant was entitled to the maximum 60% discount upon the open market value of the house and consequently was offered it at what appeared to be a bargain price of £9,800. Unfortunately, it turned out to be a disastrous purchase. As a result of what the trial judge held to be both a breach of the council's statutory duty under s.125(4A) of the 1985 Act and an actionable misrepresentation under s.2(1) of the Misrepresentation Act 1967 ("the 1967 Act"), the council failed to disclose to the claimants at the time of sale certain defects in the property which rendered it valueless so far as any re-sale by the claimants was concerned.
2. The council now appeals from the judgment and order of Mr Recorder Rundell on 15^th February 2000, whereby he awarded to the claimants damages of £25,686 together with interest thereon, at the same time granting to the council permission to appeal. The council contends that the judge erred in various of the findings which he made on liability and in assessing the damages. In relation to damages, the council contends that the "costs floor" provisions in s.131 of the 1985 Act should have been applied in reduction of the claimants' damages and in that respect, the council makes application to rely upon two documents which were not relied upon or produced at trial, namely 'The Housing (Right to Buy) (Cost Floor) (England) Determination 1998' and a circular letter from the Housing Policy and Ownership division of the Department of the Environment dated 10^th September 1998 drawing attention to the Determination.

THE PROPERTY

3. The property was a system-built house of Orlit type, constructed in 1948 using pre-cast reinforced concrete (PRC) frames, joined by secondary pre-cast beams the whole frame being clad in pre-cast reinforced concrete panels with an inner block-work lining connected to the outer skin with metal cavity ties. At the time of the purchase such properties were well known to local authorities to suffer from potential defects, two of which are relevant in this case. The first and more common defect is that of "carbonation" of the concrete used in the construction of the house i.e. a chemical process causing the concrete to develop increased porosity so that moisture can penetrate the concrete over the years, causing eventual rusting and corrosion of the steel reinforcements which in turn reduce the tensile strength in the steel beams. This recognised defect had caused various system-built properties, including Orlit houses, to be designated as 'defective' under regulations made under the 1985 Act which set up a compensation scheme. Carbonation of the type described did not always occur, but, when it did, it was readily apparent by spalling of the concrete surrounding the reinforcements. Property owners could repair the damage, though in the case of the main structure such repair work was costly.
4. The second defect was one likely to be found in PRC houses which were built using high alumina cement (HAC). It did not fall within the statutory compensation scheme. This defect, or rather the process by which it might occur, was generally known as "conversion". Conversion is a process causing weakness in the compressive strength of concrete and was particularly important in the case of Orlit houses because of the manner in which they were built whereby the secondary beams were joined to the main frame of the house by "stitch joints" formed by intermeshing protruding steel reinforcement from the main frame and the secondary beam encased in the concrete. As a result of the process of conversion, the HAC could lose compressive strength to the extent that there might be total failure of a stitch joint or joints leading to possible collapse within the building. The process of conversion in relation to HAC is a defect discrete from the process of carbonation earlier described, but can contribute to it because conversion, as well as reducing the compressive strength of the HAC, increases the porosity of the concrete, thus exacerbating the process of carbonation and its corrosive effect upon the steel.

THE RELEVANT HISTORY

5. In 1972, British Standard 110 "Structural Use of Concrete" recommended against the use of HAC. In August 1974, the Estates Gazette reported three cases of building collapse in the previous eighteen months through failure of concrete beams incorporating HAC and stated:

"Any building where HAC concrete beams have been used must now be regarded as suspect"

6. In September 1982, the Department of Environment sent a letter to all local authorities including the council in relation to Orlit dwellings. It said that HAC had been used in some in situ joints in the structural frames of a number of these dwellings and that there was a small risk that failure of one of the joints, where no alternative means of support was available, could cause a beam to fall. The letter, which was addressed to all local authorities, stated:

"You are asked to bring this letter and annex to the attention of any of your tenants who may be in the process of buying an Orlit dwelling or who enquire about doing so in the future."

7. On 8^th February 1983 the Minister for Housing and Local Government made a statement to the effect that any prospective purchaser of a PRC dwelling built in the 1940s and 1950s should pay particular attention to the condition and durability of the structure before proceeding and that local authorities should certainly do so before valuing a house for sale. A circular letter from the Department of Environment followed, again addressed to all local authorities which stated:

"You will see from the Minister's statement that he wishes local authorities and other public owners of such houses to pay particular attention to the condition and durability of the structure on valuing such houses for sale …. . Structural components are very often concealed. Their present condition and future performance may be very variable and are capable of being assessed only by expert investigation. The Minister's statement should be drawn to the attention of all prospective purchasers of these dwellings immediately."

8. In 1983 the council instructed the Building Research Establishment to investigate three properties, one of which was an Orlit house at 21, Durham Road. The result showed a high level of carbonation in the beam stitches together with conversion of the HAC to an average extent of 65% plus or minus 5%. On 11^th October 1983 the Senior Housing Inspector wrote to the City Housing Manager saying:

".. the houses in Durham Road would appear to present quite a problem due to their HAC content in the stitch joints. The depth of carbonation would appear to be deeper than the depth of the steel with the result that higher risk of corrosion failure is to be expected … . I would not recommend that sales proceed with houses similarly constructed to those in Durham Road which have a High Alumina Cement stitch joint"

9. The council then instructed LG Mouchel & Partners, Consulting Engineers, to report on the council's Orlit houses, in relation to which Mouchel selected seven Orlit houses, including two in Durham Road. Their report dated August 1984 dealt largely with the general problem of carbonation. However, it included the observation:

"The concrete in the in situ stitches, however, was of a comparatively poor quality and easily cut out. It was fully carbonated and tests reveal that high alumina cement had been used and was 55% converted … . The concrete frame has in all instances been found to be in sound condition and unlikely to show serious defects in the near future. Nevertheless, the stitch joints have been found to be of poorer quality highly carbonated concrete containing high alumina cement…. . There is, therefore, every possibility that future deterioration will occur we suggest that the structure of a similar sample of these houses i.e. approximately 10% should be re-inspected after a period of ten years."

10. It is to be observed that, as the judge pointed out, Mouchel did not make clear that conversion of the HAC was a separate and distinct fault from carbonation, to which the main thrust of the report was directed. When on 12^th September 1984, the City Architect reported the matter to the council, his report essentially repeated the content of the Mouchel report. The topics of carbonation and the adverse state of the in situ stitch joints containing high alumina cement were thus not treated as distinct topics beyond what appeared in that report. However, the judge found that the city Architect understood the distinction, because of the earlier information provided to the council (see paragraphs 5-8 above) and because it was improbable that he would have tendered a report to member of the council if he had not understood its contents.
11. There were various cosmetic and cracking defects in the houses which did not threaten their structural safety and various options for repairs and remedial works were canvassed in the Mouchel report and other individual reports on the various types of houses which followed. On 11^th April 1985 the City Architect presented a further report to the council in which he stated:

"The general conclusion contained in these reports was that although no structurally unsafe conditions were found, the concrete will continue to deteriorate. Therefore, the way the concrete is used in the structure of the dwelling is a significant factor in determining whether it is practical and cost effective to consider a policy of extending the life of all the dwellings."

12. The Council decided to carry out repairs to the Orlit houses which did not extend to the structural frame or the stitch joints, considering that demolition and re-development would probably be the long term solution but was unlikely to take place for several years. The first claimant's house was the subject of such repairs in 1987.
13. In January 1991, the first plaintiff made application to purchase under the 'Right to Buy' legislation. Mr Hawkins of the council attended and valued the property for the purpose of establishing a market value to which the discount appropriate to the claimant's case would be applied. His valuation of £24,500 was one which suggested (as the judge found) that he was not aware of the presence of HAC in Orlit houses, not having looked at the Mouchel report for some years before carrying out the valuation. Prior to the valuation, the council had sent a letter to the first claimant on 31^st January 1991 informing her of the carbonation defect, but not of the use or presence of HAC and the additional hazards associated with it, contrary to the request of the advice contained in the departmental circulars referred to in paragraphs 6 and 7 above.
14. By a Landlord's Notice dated 17^th April 1991, pursuant to s.125(1) of the 1985 Act as amended, the council gave notice that:

"(1) the price of which, in the landlord's opinion, you are entitled to have the freehold conveyed to you is £9,8000

(2) This price has been arrived at as follows: -

Market value at 28th January 1991 £24,500

Less discount £14,700 60%

£9,800"

15. Section (3) of the notice read:

"The following structural defects are known to exist: -

Description of Defect

This property is defined as defective under the Housing Act 1985"

16. The offer notice gave no indication of the presence of HAC or its possible effects.
17. There was attached to the second page of the notice (though its form suggests that it should have been upon the front page above section (3)) a stapled slip which stated:

"No structural survey has been made in connection with the following valuation, nor have the services been tested. Moreover, those parts of the property which are covered, unexposed or inaccessible, including the roof space, have not been inspected and the Council's Valuer is, therefore unable to report that such parts of the property are free from insect infestation, rot, or any other defect, apart from those listed below. It is for the intending Purchaser of the above property to satisfy himself or herself as to the condition of the property. An intending purchaser is strongly advised to obtain a full survey of the property."

18. Mrs Rushton heeded that advice and arranged for a survey to be carried out by a Mr Moore, a friend of her family who was a retired quantity surveyor. He undertook the survey free of charge and reported to her orally. The judge held that it was a reasonably thorough survey which took two to three hours including use of ladders, torches and measuring tape, which would have spotted any obvious defect. He advised the first claimant that, while certain minor work should be carried out, otherwise the property was sound. The judge also held that, while Mr Moore was told it was an Orlit house, he did not appreciate the significance of that. He had past experience of HAC, but was not aware that there was an HAC problem in Orlit homes.
19. In July 1991, the council reminded the claimants' solicitors that the dwelling was designated as defective because of the ineffective protection of the embedded steel in the concrete load bearing parts (this is agreed to have been a reference to the problem of carbonation) but again no mention was made of the presence of HAC or the risk of deterioration in the stitch joints as a result. The purchase then proceeded and was effected by a transfer dated 16^th December 1991, the claimants taking advantage of a mortgage offered by the council in the sum of £7,500.
20. In 1995 the council instructed Mouchel to make a further inspection of the Orlit houses remaining in the ownership of the council. Mouchel found that conversion percentages had increased and that the concrete strength of the beam stitches was radically below the design strength. As a result of this report and the local interest created, the council resolved in early 1996 to demolish such Orlit houses as they continued to own, save where they owned one of a pair where the other half had already been sold off. The repair programme was likely to take 3 or 4 years to complete, the tenant to be re-housed at the council's cost during the period of repair to their houses.

THE STATUTORY PROVISIONS

21. The relevant statutory provisions are contained in Part V of the 1985 Act under the title 'The Right To Buy'.
22. By s.118(1):-

"A secure tenant has the right to buy, that is to say, the right, in the circumstances and subject to the conditions and exceptions stated in the following provisions of Part V.

(a) if the dwelling-house is a house and the landlord owns the freehold, to acquire the freehold of the dwelling-house"

23. The qualifying period for the right to buy is provided for in s.119 and Schedule 4. The first claimant was eligible under those provisions.
24. S.122 provides:

"(1) A secure tenant claims to exercise the right to buy by written notice to that effect served on the landlord.

………………

(3) The notice may be withdrawn at any time by notice in writing served on the landlord."

25. S.123 provides that the secure tenant may nominate other members of his or her family to share in the right to buy, initiated by notice under s.122 to which the landlord responds either permitting or denying the right (s.124).
26. By s.125, once the right to buy has been established, whether by the landlord's admission or otherwise, the landlord must serve on the tenant a notice of purchase price and certain other matters set out in the section. Sub-section (2) provides:-

"(2) The notice shall describe the dwelling-house shall state the price at which, in the opinion of the landlord, the tenant is entitled to have the freehold conveyed … and shall, for the purpose of showing how the price has been arrived at, state –

(a) the value a the relevant time

(b) the improvements disregarded in pursuance of section 127 (Improvements to be disregarded in determining value) and

(c) discount to which the tenant is entitled, stating the period to be taken into account under section 129 (Discount) …

(3) The notice shall state the provisions which, in the opinion of the landlord, should be contained in the conveyance or grant.

……

(4A) The notice shall contain a description of any structural defect known to the landlord affecting the dwelling-house or the building in which it is situated or any other building over which the tenant will have rights under the conveyance or lease.

(5) The notice shall also inform the tenant of –

(a) the effect of sections 125D and 125E(1) and (4) (Tenant's Notice of Intention, Landlord's Notice in Default and Effect of Failure to Comply)

(b) his right under section 128 to have the value of the dwelling house at the relevant time determined or re-determined by the District Valuer

(c) ………

(d) the effect of sections 140 and 141(1), (2) and (4), (Landlord's Notices to Complete and Effect of Failure to Comply),

(e) the effect of the Provisions of this part relating to the right to acquire or rent to mortgage terms …"

27. S.125D(1) provides that within a specified time of having received the landlord's notice under s.125, the tenant shall serve notice on the landlord stating whether he intends to pursue his right to buy or withdraws that claim. S.125E(1) provides that the landlord may at any time after the expiry of the period for the tenant's notice under 125D, since a notice requiring the tenant to serve such notice within twenty-eight days, informing him of the effect of sub-section (4) which provides, that, if he does not, his notice claiming to exercise the right to buy shall be deemed to be withdrawn.
28. S.126 provides that the price payable on conveyance is the amount which under s.127 is taken as its value at the relevant time, less the discount to which the purchaser is entitled.
29. S.127(1) provides that:

"The value of a dwelling-house at the relevant time shall be taken to be the price which at the time it would realise if sold on the open market by a willing vendor –

(a) on the assumptions stated for a conveyance in subsection (2)……."

30. The conveyance assumptions set out in sub-section (2) are that the vendor was selling with vacant possession, that neither the tenant nor a member of his family residing with him wanted to buy and that the dwelling-hose was to be conveyed with the same rights and subject to the same burdens as it would be in pursuance of Part V.
31. S.128 provides for any question arising under Part V as to the value of a dwelling house at the relevant time to be determined by the District Valuer if the tenant so requires in accordance with the procedures therein set out. S.129 provides for the calculation of the tenant's discount, subject to a maximum of 60% in the case of a house.
32. I shall turn to the provisions of s.131 of the 1985 Act later in this judgment.

THE JUDGE'S DECISION

Liability

33. The claimants asserted that the council was liable on two bases: breach of statutory duty and misrepresentation. As to the former, it was alleged that the failure of the council to draw attention to the HAC conversion defect and/or the suspect nature of the stitch joints was a breach of the council's statutory duty under s. 125(4A) of the 1985 Act. As to the latter, it was alleged that such failure also amounted to an actionable misrepresentation under s.2(1) of the Misrepresentation Act 1967 ("the 1967 Act") in two respects. First, the failure, in the face of the statutory duty to disclose, amounted to a representation that there was no such defect. Second, that such failure rendered the council's statement as to the market value of the property (£24,500) false on the basis that there was implied in that statement of value a representation that the council had reasonable grounds for its belief.
34. The judge found for the claimants upon both heads of their claim. As to the allegation of breach of statutory duty, it had been contended for the council that the conversion defect was not 'known to the council' as required by s.125(4A), in that it was not known to be a defect distinct from that of carbonation, as to which disclosure had been made by the statement in the landlord's notice that the property was 'defined as defective under the Housing Act 1985'. The judge rejected that defence. He stated:

"I find that in 1991, based on the documents to which I have already referred, [see paragraphs 6-8 above] the Worcester City Council did know that Orlit houses were built with HAC, that that rendered the houses at risk of failure of the stitch joints and, therefore, possible collapse; and that the conversion of the HAC in the stitch joints was continuing. In my judgment, therefore, that was a significant defect which required remedial work in the not too distant future.

The offer notice at page 725 made no mention of HAC, but only disclosed the fact that the property was defective under the statutory provisions and it is common ground that the statutory scheme did not include HAC in stitch joints. It therefore follows, in my judgment, that the City Council were in breach of their statutory duty in failing to disclose the presence of HAC in the stitch joints in 33, Durham Road."

35. The judge went on to hold that, if the landlord's offer notice had contained any such disclosure, Mr Moore would have advised the claimants not to proceed with the purchase and that such advice would have been followed.
36. So far as the misrepresentation claim was concerned, the judge held that the failure to draw attention to the stitch joints under section (3) of the landlord's notice amounted to a self-standing misrepresentation that the council was unaware of any such defect. He also held that the statement of market value amounted to a misrepresentation of fact rather than a mere statement of opinion. He stated that it carried the implication that there were good grounds for the council's opinion (in which respect he referred to Brown –v Raphael [1958] Ch. 636 and Chitty on Contracts (12th ed) Vol 1 at para 6-007).
37. In the context of deciding whether or not the representation as to market value was false, the judge went on to consider the value of the property as at 1991. Having considered the rival expert evidence, he found that the value of the property as at 1991 was in fact nil, having rejected the evidence of the council's expert that a recent sale of a 'comparable' property at a price of £22,500 demonstrated that in 1991 the claimant's property must have had substantial value. The judge stated that he preferred the evidence of the claimants' expert

"… that potential purchasers with knowledge of the use of HAC in the stitch joints would simply not have proceeded. It, therefore, follows, both on that view and the notional house in good repair less cost of repair approach, that the value in 1991 was nil or minimal. The cleared site value at the time is agreed between the experts at £1,150 and the cost of demolition is agreed at £11,000. In those circumstances, it seems to me that Mr Humphries is correct to say that in 1991 the house had a nil value."

Damages

38. In the claim as originally pleaded, the claimants' case on damages was put on two alternative bases. The first pleaded that, but for the purchase in 1991, the first claimant would have been entitled to require the council to repair the property, which the council would have done, the first claimant then being entitled to exercise her right to buy and that the value of her lost prospect in that respect was the cost of effecting the remedial work, said to be £35,000. A claim was also made for the costs of removal and alternative accommodation costs during the remedial work. The alternative formulation was on the basis of the sums expended by the first claimant upon her acquisition of a valueless asset, particularised as the loss of the purchase monies namely £9,800, and the loss of the value of the statutory discount which was pleaded as £14,700 (no doubt on the basis of the amount actually allowed by the council) with an additional claim for conveyancing costs, mortgage interest and the sum necessary to discharge the mortgage.
39. In opening the case the first of the alternative bases advanced was abandoned and the second alternative expanded. A written schedule of damage (as subsequently amended) set out the damages claimed as (i) the costs of buying the property: cash paid (£2,300) plus mortgage payments to date (£6,846.74) plus balance due on mortgage (£4,573.48) – Total £13,720.72. (ii) 'Loss of Right to Buy/loss of repairing covenant'. This was made up of the loss of discount on the value of the property with the covenant performed (i.e. the stitch joints fully repaired): 60% of £38,000 i.e. £22,800, plus accommodation and removal costs in respect of the notional period of disturbance while repairs were effected. Whereas the schedule made clear that the figure of £38,000 taken as the value of the fully repaired property to which the discount was applied was the value of the house as at 1991 (it had by then been so agreed between the experts), the claim was argued on the basis that, had the purchase not proceeded, the claimants would have been in the same position as other tenants who waited for the work to be done and then bought their house with the benefit of the discount applicable to the market value of a fully repaired house. In this respect it was acknowledged that the notional purchase would have been much later than 1991. [In the light of the 'costs floor' argument raised on this appeal, it is important to observe that, although the new methodology of assessing damages was not accepted as appropriate by Mr Hill-Smith for the council, no objection was made to its being advanced nor any amendment required or sought.]
40. The judge held that the measure of damages was different as between the two causes of action which he found established. In respect of the breach of statutory duty he said:

"I …. remind myself that that is in respect of defects only. In these circumstances it seems to me that the correct measure of damage is the difference between the price paid (£9,800) and the value of the item acquired (Nil); that is, £9,800 to which interest since the purchase on 16^th December 1991 must be added. The short-term investment account rate to date is 67.32%, which produces an interest figure £6,597.36, producing a total of £16,397.36"

41. He then went on to consider the measure of the damages under s.2(1) of the 1967 Act on the basis that "a claimant may recover all losses flowing from the misrepresentation even if they are not foreseeable": see Royscott Trust –v- Rogerson [1991] 2 QB 297. He accepted the claimants' contention that, but for misrepresentation, the claimants would not have purchased the property, the council would then have put the property into repair and the claimants would then have purchased a fully repaired property pursuant to their right to buy. On the basis of certain evidence contained in the minutes of the council's housing sub-committee relating to the phases of their renovation programme for similar houses which had remained in the ownership of the council, the judge found that the works of repair would have been completed by the council, and the claimants' right to buy exercised, in the year 2000. He stated that, as he had no evidence before him of present day values, he would (as counsel for the claimants accepted) have to work on 1991 figures.
42. The judge then proceeded to award damages under the two heads put forward by the claimants. First he awarded them their wasted costs of acquisition of a property with nil value, as to which the figures put forward by the claimant had been agreed in the sum of £13,720.22 (see paragraph 39 above). So far as the loss of the benefit of the alternative transaction was concerned, he described such transaction as:

"A purchase in 2000 of a fully repaired house, the value of which is not known but it is agreed in 1991 would have been £38,000 so no doubt significantly greater now."

43. He then awarded the claimants the loss of the appropriate discount (namely 60%) on a purchase at such value, namely £22,800. [For reasons to which I shall turn in detail below, the judge ignored any potential 'cost floor' which might have been imposed by reason of the provisions of s.131 of the 1985 Act, thus reducing the amount of the discount.] He also awarded the additional sum claimed on the basis that the claimants would have to move out to alternative accommodation when having the property repaired themselves (£2,700) together with removal costs at either end of such period (£600) and a sum for inconvenience and disruption (£1,500). He gave no credit for the value of the house in 1999, as he was satisfied that it had a nil value. However, he required the claimants to give credit for the rent they would otherwise have had to pay as tenants if they had not purchased the property in 1991 so that it remained in the council's hands until their notional later purchase. That sum was agreed at £15,659.36. Having thus reached a figure of £25,670.86 which, as he rightly stated, subsumed the £16,000 – odd he would have awarded for breach of statutory duty, the judge went on to make an award of interest on the wasted costs of purchase in 1991, in the sum of £4,116.07. That all produced a total of £29,786.93, which the judge rounded up to £30,000, and he gave judgment for the claimants in that sum, inclusive of interest.

Contributory Negligence

44. It was the case for the council that the first claimant had been guilty of contributory negligence in failing to commission or have carried out a full structural survey, thus ignoring the warning attached to the landlord's notice quoted at paragraph 17 above. The judge dealt with that issue shortly. He stated:

"The defendants contend that Mrs Rushton failed to act reasonably in failing to have a proper structural survey or taking proper advice prior to the purchase. In fact, the evidence shows that some 80% of purchasers fail to have a proper survey and I find in those circumstances it is difficult to brand them all as acting unreasonably. But Mrs Rushton did have a survey. She instructed Mr Moore, a qualified surveyor, albeit a quantity surveyor, and in doing so I find that she took a reasonably prudent course. I am also inclined to the view that as a council tenant she is entitled to place considerable reliance on the duties of the City Council, her longstanding landlord to disclose any serious defects, that being a statutory duty. I unhesitatingly, therefore, acquit her of any contributory negligence."

THE GROUNDS OF APPEAL

Liability

The Knowledge of the Council

45. Mr Hill-Smith for the council has argued that the judge's finding that the council knew of the HAC/conversion defect was not justified upon the evidence. In this respect, he relied upon the observation of the judge that the main defect of the Mouchel report did not make it clear that the conversion of the HAC in the stitch joints was a separate and different problem from that of carbonation generally and that, in giving evidence, Mr O'Grady of the City Architect's Department, who prepared the department's report to the council (see paragraph 10 above), said that he did not know what was meant by the word conversion when he quoted the Mouchel report, as to which evidence he was not challenged.
46. It does not seem to us that there is any substance in Mr Hill-Smith's submission. It was the City Architect who actually presented the report to the council and carried the responsibility for his department and for such measures of repair as were recommended in respect of the Orlit houses. If he was ignorant of the DOE Circular of September 1982 (paragraph 6 above) and the findings of the BRE Inspector communicated to the council's Housing Manager in October 1983 (paragraph 8 above), and if he was reliant upon the contents of the Mouchel report for his state of knowledge and/or had failed to appreciate the import of the reference it contained to HAC and 55% conversion of the stitch joints, it was for him to say so. However, he was not called as a witness. In these circumstances, the judge inferred, as in our view he was entitled to do, that the City Architect was in fact aware of those matters and did understand the nature and significance of the HAC/conversion defect. What it seems he (or others in the council) failed to appreciate was simply that such defect was one which required to be identified in section 3 of the landlord's notice. Ignorance of that matter could not in itself amount to a defence to the claim for breach of statutory duty or innocent misrepresentation.

Misrepresentation

47. By their notice of appeal and in the skeleton argument of Mr Hill-Smith, the council attacked the judge's award of damages for misrepresentation in two principal respects. First, it was contended that the judge was wrong to find that the statement of market value in the notice amounted to a representation of fact, when in truth it was no more than a statement of opinion. Second, it was pointed out that the judge made no finding as to whether the council was negligent in failing to mention the HAC/conversion defect in section 3 of the notice, and therefore there was no finding on which to base an award under s.2(1) of the 1967 Act.
48. We shall deal with those two heads briefly because, in the event, we consider that the appeal in relation to the claim in misrepresentation turns, and indeed the council is entitled to succeed, upon a more fundamental point which was first raised by Mr Hill-Smith in argument before this court (see paragraphs 51-57 below). We nonetheless gave leave for it to be argued because it depends solely on arguments of statutory construction and is plainly of wide importance in cases of this kind.
49. Before turning to it, and for the sake of completeness, we should say that we would not have found for the council upon either of the points mentioned in paragraph 47 above. In relation to market value, we consider that Mr Hill-Smith was right to submit that, considered as a bare proposition, a statement as to market value, honestly made, is no more than a statement of opinion and involves no implied representation of fact. That is particularly so in the context of the 'Right to Buy' procedure, under which the council as landlord is required by s.125(2) to state the 'value' at the relevant time as a constituent of 'the price at which in the opinion of the landlord the tenant is entitled to have the freehold conveyed to him'. Thus, when the judge stated at one point in his judgment that in this context market value is a fact, he was in error. However, a thorough reading of his judgment makes it clear that his finding that the statement of market value amounted to a representation of fact in this case was based on his view that, while prima facie no more than a statement of opinion, bearing in mind the council's duty to disclose defects within its knowledge, it also carried the implication that the council knew of nothing which rendered its statement of value substantially inaccurate and/or that the council had reasonable grounds for its opinion. Indeed, that is the way the matter had been argued before him for the claimants. On the assumption that the remedy of damages for misrepresentation under the 1967 Act was available (which assumption was never challenged before the judge), we consider that the judge was correct in his view.
50. Nor do we attach importance to the fact that the judge made no finding of negligence on the part of the council in failing to mention the HAC/conversion defect. We observe at once that a finding in terms of tortious 'negligence' would have been inapposite. The judge accepted (as indeed did the claimants) that a claim in common law negligence did not lie: see Blake –v- Barking and Dagenham LBC [1997] 30 HLR 963, approved by the court of appeal in Payne –v- Barnet LBC [1997] 30 HLR 295. In the context of the claim under s.2(1) of the 1967 Act, the issue was whether the council had proved that it had reasonable grounds to believe (and did believe) that the facts represented were true. While the judge made no specific finding in those terms, it was implicit in his judgment and his finding as to the council's state of knowledge (see paragraphs 5-10 above) that the council had not discharged the burden of proof upon them.

Is a remedy under s.2 of the 1967 Act available?

51. Mr Hill-Smith's primary submission before us was that, in any event, no claim could lie against the council for misrepresentation under s.2 of the 1967 Act, because the remedy of damages for misrepresentation is one which is dependent upon the claimant demonstrating that he has 'entered into a contract after [the] representation has been made to him': see the opening words of sub-sections (1) and (2). He submitted that in this case, as in any purchase under the 'Right to Buy' provisions generally, no contract was entered into between the claimants and the council, the claimants' right to eventual transfer of the freehold being created by, and solely derived from, the 1985 Act. In this connection he relied upon the decisions of the Court of Appeal in Colin –v- Duke of Westminster [1985] 2 WLR 553 (a case under the Leasehold Reform Act 1967) and Norweb plc –v- Dixon [1995] 3 All ER 952 (a case relating to the terms of supply of electricity).
52. In support of this submission, Mr Hill-Smith pointed out that once the existence of the right to buy is established, the landlord is obliged to convey the freehold (or, as the case may be, grant a lease), to the tenant at the value but subject to the discount provided by the 1985 Act. The Act makes comprehensive provision for the terms upon which the conveyance must be made without reference to any prior or intervening contract. So far as the value is concerned, s.127 provides how that value is determined and s.128(2) gives the tenant the right to require that any question arising as to the value shall be determined by the District Valuer. Similarly, the amount of the discount is determined in accordance with ss.129-131. Mr Hill-Smith also points out that there is no requirement, or indeed any room for the existence, of a binding contract prior to conveyance. Under s.122(3), the tenant may withdraw his notice claiming to exercise his right to buy 'at any time' whereas the landlord has no right of withdrawal. The most the landlord can do is to serve notice on the tenant requiring the tenant to complete within a specified time and, if the tenant fails to comply with that notice, or with a second similar notice which the landlord may serve, then the tenant's notice claiming to exercise the right to buy is deemed to be withdrawn: see s.141(4). However, in that event, there is nothing to prevent the tenant serving a fresh notice.
53. We have also been referred to the provisions of the 1985 Act relating to 'completion of purchase in pursuance of right to buy' (ss.138-142). The landlord's obligation to convey the freehold or grant a lease is to be found in S.138(1), which provides that the conveyance or grant is to be made 'in accordance with the following provisions of this Part'. It is noteworthy in this context that the duty of the landlord to convey is enforceable by injunction under s.38(3) rather than by proceedings for specific performance. S.139(1) provides that a conveyance of a freehold 'executed in pursuance of the right to buy shall conform with Parts I and II of Schedule 6', and that a grant of a lease shall conform with Parts I and III of that Schedule. Part I of Schedule 6 contains detailed provisions as to what rights are to be included in the conveyance or lease. Paragraphs 4 and 5 of Part I of Schedule 6 provide for the inclusion of covenants and conditions. Paragraph 4 relates to restrictive covenants affecting the property; paragraph 5 provides that, subject to certain qualifications, the conveyance or lease may include 'such other covenants as are reasonable in the circumstances'. However, it is to be noted that s.181 confers jurisdiction on the County Court to determine any question arising under Part V, save for questions relating to value (which, as noted earlier, are to be determined by the District Valuer).
54. In Colin –v Duke of Westminster, the issue before the court was whether a tenant's claim to be entitled to enfranchisement was statute-barred under s.2 of the Limitation act 1980 on the ground that it was a 'simple contract'. The Court of Appeal held that it was not a simple contract but a 'specialty' in the sense that the obligation which the tenant was seeking to enforce was an obligation imposed by statute. In the course of his judgment Oliver LJ said (at page 567B):

"It seems to me to be quite clear that in the instant case any cause of action which the applicant has derived from statute and from the statute alone. Apart from the statutory provisions, he could have no claim and it is only by virtue of the statute and of the regulations made thereunder that there can be ascertained the amount of the price to be paid under the statutory contract, the terms of which can be gathered only from the sections of the Act and Schedules."

55. Mr Hill-Smith submitted that the instant case is on all fours with Colin –v- Duke of Westminster. He also relies upon Norweb –v- Dixon in which the Court of Appeal concluded that the relationship between a public electricity supplier and a tariff customer for the supply of electricity pursuant to the Electricity Act 1989 was not a contractual relationship, because:

".. the legal compulsion both as to the creation of the relationship and the fixing of its terms is inconsistent with the existence of a contract" (per Dyson J at 959f).

56. Mr Harrison-Hall has submitted that, although the statutory provisions are comprehensive as to what interest is to be transferred and on what terms, nevertheless there is scope (albeit limited scope) for the parties to agree on the inclusion of additional terms. He submits that that is sufficient to enable the court to characterise the exercise of the right to buy as being, or as involving, a contract.
57. We do not find that argument persuasive and we accept Mr Hill-Smith's submission. In our judgment, having regard to the provisions of Part V of the 1985 Act, the conclusion is inescapable that, as in the case of Colin –v- Duke of Westminster, the obligation of a landlord faced with the exercise by a secure tenant of the right to buy derives solely from the 1985 Act, the provisions of which lay down a prescriptive procedure in terms of notice of claim by the tenant (ss.122-123), admission or denial of the tenant's right to buy by the landlord (s.124) and landlord's notice of purchase price and other matters (s.125). Thereafter, the price and terms upon which the property is to be conveyed are all provided for, with a machinery for resolution in the case of any disputed matter. The language of contract is entirely absent from the 1985 Act save to the extent that statutory 'covenants' are provided for in the eventual conveyance. Nor can we find in s.2 of the 1967 Act any context for giving the word 'contract' other than its ordinary meaning, that is to say a consensual agreement arising on the acceptance by one party of the terms of an offer made by the other. We find it impossible to characterise the exercise of the tenant's right to buy as a consensual agreement. Accordingly, while the council had an obligation to include in its landlord's notice a description of the relevant structural defect in the claimants' property, omission of which gives the claimants a remedy for breach of statutory duty, we conclude that the additional remedy of an action for misrepresentation under s.2 of the 1967 Act is not available.

Contributory Negligence

58. Mr Hill-Smith has attacked the refusal of the judge to make a finding of contributory negligence on the part of the claimants (see paragraph 44 above) upon two broad grounds. He submitted, first, that the judge was wrong to base his findings substantially upon the fact that (as emerged in evidence) some 80% of 'Right to Buy' purchasers do not have an independent survey done before exercising their right; second, that the claimants effectively failed to follow the advice of the council to have a full survey of the property, as advised by the council, in that they appointed a retired quantity surveyor who had no knowledge of Orlit houses and reported orally, having failed to contact the council to obtain clarification of the nature of the defect, as it is said he should have done.
59. As to the first submission it is not clear to us that, in referring to the general position, the judge was doing more than making a preliminary observation by way of background to his consideration of the individual facts in this case. It certainly does not appear from his judgment that he treated his 80% statistic as in any way decisive of the allegation of contributory negligence which depended, and was treated by him as dependent, on the particular allegations made. These concerned the expertise of Mr Moore as a surveyor, and the nature extent and adequacy of his inspection in the light of the council's warning as to the need for a structural survey (without, however, mentioning the use of HAC). In this respect, the first claimant and Mr Moore had been the subject of extensive cross-examination as a result of which the judge was satisfied that there had been no contributory negligence. In these circumstances, nothing which we have heard in the argument on this appeal persuades us that the judge was wrong in the decision which he reached.

DAMAGES

60. In the light of that conclusion, we consider that the judge's finding of liability for misrepresentation on the part of the council should be set aside, whilst preserving the entitlement of the claimants to judgment for an appropriate award of damages in respect of the council's breach of statutory duty resulting from its failure to disclose the defect of HAC/conversion under section 3 of the landlords' notice. In that respect, as already indicated, the judge limited his award to the sum of £16,397.36, being the difference in value between the property as purchased (£9,800) and its actual value as found by the judge (nil), plus an appropriate award of interest to the date of trial (see paragraph 40 above). However, pursuant to their respondents' notice, the claimants have argued that the judge's award of damages should not be so limited and that the additional heads of loss awarded by the judge are recoverable in respect of the breach of statutory duty.
61. The council, on the other hand, have submitted that, not only was the judge right to limit his award of damages for the breach of statutory duty to the loss in value of the property itself, but that he should have found that the value of the house was at least £20,000 in 1991 and £22,500 in 2000, and thus that no damage had been suffered by the claimants. We deal with that last submission first. It is based on the evidence of the council's expert, Mr Saggers, that in December 1999, an Orlit house at 10, Ripon Road, quite near to the claimants' property classed as 'defective' had been sold for £22,500. This alleged 'comparable' had been explored in evidence. The judge ignored it on the basis that it was:

"… a speculative purchase carried out without a survey and, therefore, it is not known whether HAC was used nor, if it was used, whether the purchaser knew of that fact. It is of some significance that prior to the sale, the selling agent, Mr Rozier offered the property back to the City Council who were not interested. I find Mr Saggers places an unrealistic reliance on this sale, given that it is a single market transaction whose details are unknown and no survey was carried out. It is probable, indeed almost certain, that the presence of HAC was not known to the purchaser. Mr Saggers accepted that if there were no valid comparables the only sensible method of valuation is to take the value of a notional house in good condition and then deduct from that value the cost of repair. It is the approach set out on page 108B of the bundle. If that is applied to 33, Durham Road, on the agreed figures contained in page 377 the property had a negative value in 1991.

… I accept Mr Humphries' view that potential purchasers with knowledge of the use of HAC in the stitch joints would simply not have proceeded. It therefore, follows both on that view and the notional house in good repair less the cost of repair approach, that the value in 1991 was nil or minimal. The cleared site value at the time is agreed between the experts at £1,150 and the cost of demolition is agreed at £11,000. In those circumstances, it seems to me that Mr Humphries is correct to say that in 1991 the house had a nil value."

62. We find that reasoning convincing. Mr Hill-Smith has pressed upon us the fact that, bearing in mind the notoriety of problems in Orlit homes, the 'comparable' spoken to (i.e. a speculative purchase without a mortgage), indicated that there was at least a speculative market in which, regardless of whether the property had HAC or not, the claimants might have found a purchaser who intended to effect short term lets at a high rental in relation to the purchase price. He elaborated by suggesting that the value of the claimants' house should be assessed on the basis of that it could be put on the market by the claimants without disclosure of the defects, alternatively that there was a reasonable prospect of finding a purchaser who would disregard them. Like the judge, we reject that approach. The case had been dealt with throughout by the experts on the basis of assessing the market value of the property with defects known and taken into account; Mr Hill-Smith's argument was developed in an attempt to cope with the position which had emerged in cross-examination that, in relation to a property advanced as comparable by Mr Saggers, it was not clear whether HAC had been used, let alone whether the purchaser was aware of it, having had no survey. We find no fault in the conclusion of the judge on this aspect. Accordingly we turn to the detail of the judge's assessment.
63. This was a case where, at the time of purchase, the council was aware that the claimants were not in a position to finance their own purchase and were reliant upon obtaining a mortgage from the council for that purpose. It was also foreseeable that, if a defect of the seriousness of the HAC/conversion defect existed but was not disclosed, the adverse affect on the value of the property would be such that the claimants would not have purchased then, but would have waited for the repairs to be effected and then exercised the first claimant's right to buy. That being so, the foreseeable measure of damage as at the date of the council's breach in 1991 was (i) the purchase costs wasted on a valueless asset with the aid of the council's mortgage, agreed at £13,720, plus (ii) the loss of the value of the claimant's right to purchase the property in the future. As a valuation exercise, the loss in (ii) required assumptions to be made as to the value of the property once repaired, as at an uncertain but assumed future date by which the repairs would be completed, and an assumption as to the percentage discount applicable. In the event, the experts had jointly eschewed speculation on those lines. They were unable to agree the life expectancy of the house unrepaired as at that date, the claimants' expert putting it at three years, based on the Mouchel report and the council's expert at at least nine years on the basis that the property was still standing. They simply agreed the valuation of the property as if repaired in 1991 in the sum of £38,000 and assumed a discount figure of 60%.
64. However, the judge, when assessing damages for misrepresentation, approached the matter with the benefit of hindsight, as he was invited by the claimant and entitled to do. He said:

"… the loss of the benefit of the alternative transaction .. is a purchase in 2000 of a fully repaired house, the value of which is not known but it is agreed in 1991 would have been £38,000, so no doubt significantly greater now … . The loss of the alternative transaction comes about in the circumstances where Mrs Rushton would have waited for demolition and exercised her right to buy., she would have acquired a house worth at least £38,000, probably significantly more, but, of course, it would have cost her more. I am satisfied on the limited evidence available that she would probably, with the help of her son, have been able to afford such a purchase at an increased price …

What has she lost? Firstly, she has lost the discount which on a £38,000 house at 60% would be some £22,800. The Defendants urge upon me the provisions of section 131 of the Act which imposes a cost floor. Mr Waring in re-examination explained very briefly but did not go into detail and no one has produced the Secretary of State's Determination under section 131 and, therefore, I am completely in the dark as to what the cost floor was and when it would bite. I am not prepared to speculate in the absence of any evidence and, therefore, I have to ignore any potential cost floor that might have been imposed."

65. Accordingly, under head (ii) the judge awarded £22,800 as the value of the lost discount, before going on to award certain additional sums to which we shall return after consideration of the 'cost floor' point.

The Cost Floor

66. S.131 of the 1985 Act provides:

"(1) Except where the Secretary of State so determines, the discount shall not reduce the price below the amount which, in accordance with a determination made by him, is to be taken as representing so much of the costs incurred in respect of the dwelling-house as, in accordance with the determination –

(a) is to be treated as incurred at or after the beginning of that period of account of the landlord in which falls the date which is eight years, or such other period of time as may be specified in an order made by the Secretary of State, earlier than the relevant time, and

(b) is to be treated as relevant for the purposes of this sub-section; and if the price before discount is below that amount, there shall be no discount.

(2) The discount shall not in any case reduce the price by more than such sum as the Secretary of State may by order prescribe."

67. By the Housing (Right to Buy) (Cost Floor) (England) Determination 1998 made on 10 December 1998 ("the 1998 Determination") the Secretary of State issued a determination applying on the face of it to any case in England where a tenant's notice under s.122 of the 1985 Act claiming a right to buy is served on or after 11 February 1999. Paragraph 3 of the 1998 Determination provides that the cost floor for a dwelling house shall be equal to the aggregate of the costs attributable to the dwelling house which are, in accordance with paragraph 5 of the determination to be treated as relevant costs for the purposes of section 131(1). By paragraph 5 the relevant costs include the aggregate of the costs incurred by the landlord in respect of works of repair or maintenance or works to deal with any defect affecting the dwelling house (except works initially required following acquisition by the landlord to put the house in good repair or deal with any defect affecting it), where the aggregate of the cost of such works exceeds the sum of £5,500.
68. It has been freely admitted by both counsel in this appeal that, at no time up to and including the opening of the claimants' case and the council's short statement of its case at the outset of the trial, was either aware (nor apparently were those instructing them aware) of the existence or applicability of the 1998 Determination. Nor was it mentioned, let alone debated by the experts. In this connection, it is surprisingly the position that no reference to it appears in the updated annotations of the 1985 Act in Halsbury's Statutes (1997 Re-issue), nor in the Housing Encyclopaedia or Woodfall on Landlord and Tenant. However, a copy of the 1998 Determination, together with a Ministry Circular dated 10 December 1998 and sent to all local authorities including the council resided, undisclosed, in the offices of the council.
69. The first reference to the existence of a 'cost floor' being relevant to this case was made in passing by the council's witness, Mr Waring, in the course of his cross-examination. He stated that, in the case of another couple who had wished to exercise their right to buy in the late 1990's, the discount available would have been "greatly diminished, because you have to take into account the amount of money we would have spent on the property. This is a thing called the cost floor, so they wouldn't have got a substantial discount, because you can't go below that". Re-examined by Mr Hill-Smith in relation to the case of that same couple, Mr Waring, still without identifying the determination or its applicability to the case of the claimants stated that, if major works of modernisation were carried out, "that has to be taken into account when the calculation of the discount comes in. So if, for example, you were entitled to a 60% discount it would reduce the discount by the value of the investment … I think it is over eight years". The matter was not further pursued.
70. On the basis of that evidence, however, in his final submissions, Mr Hill-Smith, again without identifying or producing the 1998 Determination, submitted that the cost of repair would have been such as to exceed the value of the discount of 60% on £38,000. Counsel for the claimants asserted in his final speech that it was not sufficient for the council to seek to rely upon the provisions of a determination said to be applicable to the claimant's case which had not been identified or disclosed, which was not referred to in the current annotated edition of Halbury's Statutes, and as to the terms of which there had been no evidence. Mr Hill-Smith made no further application or observation and the case was concluded without any request for an adjournment or any suggestion of the need for further evidence or submissions. Hence the terms of the judge's reserved judgment (see paragraph 64 above).
71. Upon this appeal, Mr Hill-Smith has applied to adduce in evidence the 1998 Determination, together with the circular to which we have also referred. He has urged upon us that we should admit those documents and apply them to the claimants' case so as to reduce the damages awarded under head (ii) to nil, on the basis that there was evidence before the judge that the cost of demolition and re-building (which was the solution adopted by the council in the case of other Orlit houses remaining in their ownership) exceeded the 1991 valuation of £38,000. Mr Hill-Smith has argued, first, that Mr Waring's evidence was sufficient to put the claimants and the court on notice that, at the date of trial, the cost floor provisions of s.131 were operative in some way in relation to the claimants' claim. He points out that the onus was upon the claimants to plead and prove their damage and that, in the light of the fact that they only articulated the final basis of their claim for damages in opening, the council should not be blamed for its failure to disclose the 1998 Determination or to refer to it in the council's pleadings or evidence as relevant to the claimants' claim for damages. He submits that, if the judge proposed to find for the claimants in the absence of detailed information as to the existence and effect of any cost floor in respect of the claimants' case, he should have asked to be supplied with a copy of the 1998 Determination before coming to his decision. Finally, Mr Hill-Smith submits there can be no prejudice to the claimants (save in respect of costs) if this court acts upon the 1998 Determination so as to correct an award of damages made upon a false basis.
72. The hurdle for Mr Hill-Smith to surmount in this respect, as he was obliged to concede in argument, is that the value of the property to which the cost floor must be applied is its notional value in the year 2000, as to which no material was or is before the court and without which the effect of the cost floor cannot be assessed. Nor has the council made any application to adduce further factual or valuation evidence in that respect, to show what the effect on the judge's calculations would be.
73. Mr Harrison-Hall for the claimants has pressed that point upon us in argument. He submits that the application to rely upon the 1998 Determination is in any event too late, the claim for damages having been properly determined by the judge on the basis of the information before him. He resists Mr Hill-Smith's argument that no prejudice can result by pointing out that, because of the way in which the expert evidence was dealt with, and because the case proceeded in ignorance of the 1998 Determination on both sides, the claimants were content to conduct the case on the basis of the agreed valuation of the house in full repair as at 1991, whereas, if the 1998 Determination was to be taken into account, both logic and fairness would have required that it be applied to the value of a house in full repair in the year 2000 which (as the judge observed) would have been a substantially higher figure. Mr Harrison-Hall also submits that, both on the basis of the legal information accessible to the claimants and the way in which the claimants put their case, the existence and relevance of the 1998 Determination was a matter peculiarly in the knowledge of the council and yet was not disclosed. In this connection, he correctly points out that the claimants' pleading from the outset asserted the right to be compensated for the lost prospect of the first claimant exercising her right to buy, once the house had been repaired: see paragraph 38 above. It was thus incorrect to suggest (as Mr Hill-Smith submitted) that the council had no reason to foresee the way the claim was put and to produce and rely on the 1998 Determination.
74. We accept Mr Harrison-Hall's submission. We also accept that there were various respects in which, upon the facts, he would have explored the applicability of the 1998 Determination on the claimants' behalf, had it been disclosed prior to trial, including the question of whether the repairs to the claimants' property and the service of their right to buy notice might have been effected before the coming into effect of the 1998 Determination. In the light of the omission of any reference to the 1998 Determination in the various practitioners' texts to which we have been referred, we exonerate the claimants from the blame which would normally attach to a claimant who overlooks a legal or administrative provision relevant to his claim for damages; we consider that any error of omission or oversight was principally that of the council, for reasons which we have explained.
75. Nonetheless, we do consider that the judge was in error when he awarded to the claimants not only the value of their discount but also the sums totalling £4,800 claimed for alternative accommodation, removal costs and the inconvenience and disruption which would have been suffered by them in the course of notional repairs to their property by the council, had the exercise of their right to buy been deferred to the year 2000. Such sums were not relevant to any valuation exercise in respect of the lost benefit of the discount. The claimants' entitlement to such sums would only have arisen had they actually incurred the expense and suffered the inconvenience for which the sums in question were designed to compensate them. In the event, that did not happen. Accordingly, it does not seem to us that they represent a recoverable category of loss.
76. Finally, Mr Hill-Smith has submitted, and Mr Harrison-Hall has effectively conceded, that the judge was wrong, when making his damages calculations to award to the claimants interest upon their mortgage payments made since 1991, without crediting to the council equivalent interest upon the rental payments it would otherwise have received on the hypothesis that the claimants had occupied the property simply as tenants between 1991 and 2000. It is accepted that for practical purposes payments of mortgage interest on the one hand and rent on the other should be treated as self-cancelling and therefore that the sum of £4,116.07 should be deducted from the damages awarded.

CONCLUSION

77. The judge's award of damages should therefore be reduced by the amounts of £4,800 (referred to in paragraph 75 above) and £4,116.07 (referred to in paragraph 76 above). Subject to final agreement or argument upon matters of arithmetic, and subject to the question of costs, the appeal will be allowed to that extent.
ORDER: Appeal allowed to the extent indicated in the Judgment. Judgment figure of £30,000 to be deleted; sum of £21, 083.93to be substituted; local authority to pay half the costs of the appeal; public funding assessment. (Order does not form part of approved Judgment)