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Property Price Fall Was Foreseeable

PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.

When a firm of consulting engineers created an ‘egregious delay’ in the commencement of a building project, they found themselves liable for the losses suffered by the landowner as a result.

The firm had been appointed to design a road for the entrance to a building site in Cornwall and to arrange for it to be adopted by the local council. Planning permission had been obtained for house building on the site in 2006.

The consulting engineers were contracted to complete their work by March 2007 but delayed, not for days or weeks but for more than a year. In April 2008, the landowner instructed another firm of consulting engineers to carry out the work and the road was approved by the council shortly afterwards.

The court found that had the original firm of consulting engineers not failed to complete their work, the project would have been completed by June 2008. It was actually completed in July 2009. By that time, the value of the property had fallen by nearly £400,000.

The landowner sought compensation for the loss in value of the property, the return of the £20,000 he had paid to the consulting engineers and the cancellation of a further invoice for £2,900 they had later raised.

The Court of Appeal accepted the argument that the delay was negligent and that the fall in property prices was ‘reasonably foreseeable’. Accordingly, the landowner could bring an action for compensation against the consulting engineers.

Causing unreasonable delay in the completion of a contract can have unwelcome consequences and many contracts do contain clauses specifically providing for compensation in the event of a delay. If you are negotiating a contract, especially one in which ‘time is of the essence’, contact us for advice.

 

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