In Darcliffe Homes Ltd v Glanville Consultants and another, the Technology and Construction Court (TCC) held that there was an insufficient link between negligent advice in a consultant’s ground condition report and a property developer’s loss.
Background
In 2014, Darcliffe Homes Ltd (“Darcliffe”) engaged Glanville Consultants (“Glanville”) to provide a desktop report investigating the ground conditions for an area of land at Stoneham Farm near Reading (the “Site”). Glanville provided an updated report in 2016, which was substantially the same as the 2014 report. Both reports indicated that there were no significant issues with ground conditions at the Site.
Darcliffe also asked Ground and Water Limited (GWL) to produce an intrusive site investigation for the proposed development at the Site. GWL issued a final report in respect of these investigations in 2018.
In November 2019, Darcliffe purchased the Site for around £5 million to build a housing development. After purchasing the Site, Darcliffe discovered that there was a high risk of ground dissolution (which can lead to collapse) due to the presence of chalk beneath the site.
Darcliffe incurred substantial remedial costs when constructing the development, which it alleged was the result of failures by Glanville and GWL to report the potential for ground dissolution at the Site. Darcliffe raised a court action claiming damages of approximately £7.5 million for negligence and breach of contract.
The claim against GWL was settled out of court, but the claim against Glanville proceeded to trial.
Decision
The court held that Glanville had acted negligently and in breach of its contractual duties to exercise reasonable skill and care by giving the Site a “clean bill of health” in both of its reports.
Glanville did not undertake proper analysis of information it cited, including ground condition data from a company called Envirocheck, which indicated that chalk dissolution features were present in five locations near the Site. The court found that “Glanville simply did not engage with the fact that the Site and its environs were underlain by chalk”.
However, despite Glanville’s clear breach of its duties, the court held that Darcliffe’s claim failed on grounds of causation. This was for three main reasons:
1. Glanville did not need to do much more in order not to be held negligent
The court was persuaded by expert evidence that all Glanville had to do to avoid breach of its duties was provide a “single simple warning about the potential for deep weathering and chalk dissolution”.
Importantly, Glanville did not suggest there was no risk at all; Glanville had indicated that the Site’s geology was at a “low risk” of ground dissolution, which the expert cited by Darcliffe accepted was “probably correct”.
The court noted this was potentially within the realm of non-negligent advice.
2. The Judge did not accept that Darcliffe’s corporate mind would have been much affected, if at all, if Glanville had given non-negligent advice
In cross-examination, one of Darcliffe’s principals indicated that he only skim-read Glanville’s report and was aware of the “low risk” conclusion.
The Judge stated it was likely that Darcliffe’s principal would either have not noticed an additional warning about chalk dissolution on a “skim read” or, at most, would have drawn it to the attention of GWL prior to its intrusive investigations.
3. Darcliffe would not have acted differently if it had been given non-negligent advice
Darcliffe argued that, if provided with non-negligent advice from Glanville, it would have re-briefed GWL prior to undertaking intrusive investigations. However, GWL had received the Envirocheck data that indicated a risk of ground dissolution alongside Glanville’s report.
Further, GWL noted that the site was underlain by chalk in its 2018 report. So, the court held that GWL and Darcliffe were in no different a position in 2017/18 than they would have been if Glanville had provided non-negligent advice.
The court held that Darcliffe failed to establish a sufficient link between its losses and Glanville’s breaches and dismissed the claim.
Key takeaways
This case provides the following lessons:
- Depending on the facts of the case, a desktop ground investigation may not give rise to liability where the ground conditions are not as stated. This is particularly so where:
- there is little evidence of reliance on the investigation report; and
- the desktop analysis precedes intrusive investigations.
- If the line between negligent and non-negligent advice rests upon failure to include a single sentence warning of possible risks, the court is less likely to find a causal link between negligent advice and loss suffered.
- Evidence suggesting that key personnel “skim-read” a report may indicate a lack of reliance on that report.
- For a claimant to recover loss in respect of negligent advice in a report, there must be evidence that the claimant relied on the report and would have acted differently had the report been non-negligent.
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This article was co-authored by Trainee Valentin Pyataev.