|Judgments - Farley v. Skinner
47. It is clearly established as a general rule that where there has been a breach of contract damages cannot be awarded for the vexation or anxiety or aggravation or similar states of mind resulting from the breach. The principle was stated by Bingham LJ in Watts v Morrow  1 WLR 1421, 1445:
This general principle has recently been approved by this House in Johnson v Gore Wood & Co  2 WLR 72 . The principle has particular application to commercial cases and in Johnson v Gore Wood & Co Lord Cooke of Thorndon observed, at p 108, that :
But the principle is not applicable in every case and in Watts v Morrow  1 WLR 1421 Bingham LJ went on to state, at p 1445, that there was an exceptional category of cases which he described as follows:
Bingham LJ. then stated:
Cases such as Jarvis v Swans Tours Ltd  QB 233 where a travel company in breach of contract fails to provide the holiday for which the plaintiff has paid and damages are awarded for mental distress, inconvenience, upset, disappointment and frustration are examples of this exception to the general principle.
48. In addition, the speeches of Lord Mustill and Lord Lloyd of Berwick (with which Lord Keith of Kinkel and Lord Bridge of Harwich agreed) in Ruxley Electronics and Construction Ltd v Forsyth  AC 344 established that in some cases the plaintiff, notwithstanding that he suffers no financial loss, should be compensated where the defendant is in breach of a contractual obligation. In that case a contractor contracted to build a swimming pool for a householder in his garden. The contract specified that the pool should have a maximum depth of 7 feet 6 inches but, as built, the maximum depth was only 6 feet. The trial judge found that the pool as constructed was perfectly safe to dive into and that the shortfall in depth had not decreased the value of the pool. The judge held that the householder was entitled to damages of £2,500 for loss of amenity and rejected his claim for the cost of reinstatement which would have involved demolition of the existing pool and the reconstruction of a new one, on the ground that the cost of reinstatement was an unreasonable claim in the circumstances. The Court of Appeal held that the householder was entitled to recover the cost of reinstatement amounting to £21,560. This House held that reinstatement would be unreasonable and the expense of the work involved would be out of all proportion to the benefit to be obtained. But the speeches of Lord Mustill and Lord Lloyd of Berwick are important in relation to the present case because they considered the entitlement of a party to a building contract to recover damages for breach of contract where he was not entitled to the cost of reinstatement and where the breach had not caused diminution in the market value of the property. Their conclusion was that in such a case justice required that reasonable damages should be awarded. Lord Mustill stated, at p 360:
And he stated, at pp 360-361, that in some cases:
49. In his speech Lord Lloyd referred, at p 374, to the general rule that in claims for breach of contract the plaintiff cannot recover damages for his injured feelings and referred to the exception to this rule, as exemplified in the holiday cases, that a plaintiff may recover damages for his disappointment where the object of a contract is to afford pleasure. He stated that this was the principle which the trial judge had applied and he held that the judge had been entitled to award £2,500 to the householder on the ground that the contract was one "for the provision of a pleasurable amenity", and in the event the householder's pleasure was not as great as it would have been if the pool had been 7 feet 6 inches deep. He then stated:
50. Whilst Ruxley Electronics and Construction Ltd v Forsyth  AC 344 was concerned with the proper measure of damages for breach of a construction contract, I consider that the principle stated in it can be of more general application and that, as Lord Mustill stated, at p 360, there are some occasions "where the value of the promise to the promisee exceeds the financial enhancement of his position which full performance will secure" and for which the law must provide a remedy. In my opinion the present case falls within the ambit of this principle as the defendant in breach of contract failed to alert the plaintiff to the presence of aircraft noise with the result that the plaintiff bought a house which he would not have bought if he had been made aware of the true position.
51. Counsel for the defendant submitted that even if it were right to extend the exception as exemplified by the holiday cases to other cases, nevertheless the exception must be confined to cases where, in the words of Bingham LJ in Watts v Morrow  1 WLR 1421, 1445, "the very object of a contract" is to provide the benefit which the promisee regards as being of particular importance to him. This argument was accepted by Hale LJ in the first hearing before the Court of Appeal and by Stuart Smith and Mummery LLJ in the second hearing. I am unable to accept this submission because I can see no reason in principle why, if a plaintiff who has suffered no financial loss can recover damages in some cases if there has been a breach of the principal obligation of the contract, he should be denied damages for breach of an obligation which, whilst not the principal obligation of the contract, is nevertheless one which he has made clear to the other party is of importance to him. It is clear from the speech of Lord Mustill in Ruxley Electronics and Construction Ltd v Forsyth  AC 344, 360 that he considered that a householder may obtain damages for comparatively minor deviations from specification or sound workmanship which do not cause any diminution in the value of the house. And it is clear that in that case the obligation to build a pool 7 feet 6 inches deep as opposed to 6 feet deep could not be regarded as the principal obligation or the very object of the contract.
52. In Knott v Bolton (1995) 11 Const LJ 375 the defendant architect was given instructions to include in his design of a house a wide staircase with a gallery area and an imposing and impressive entrance hall and he failed to carry out these instructions. The plaintiff sought to recover general damages for the disappointment and distress they suffered by reason of this failure, but their claim was rejected by the trial judge and the Court of Appeal. In a judgment delivered some months before the decision of the House in Ruxley Electronics and Construction Ltd v Forsyth, Russell LJ laid emphasis, at p 376, on the words "the very object of [the] contract" in Bingham LJ's judgment in Watts v Morrow  1 WLR 1421, 1445 and stated:
I consider, with respect, that in that case the Court of Appeal was led into error by concentrating too much on the concept of the provision of pleasure - the correct approach would have been to have taken the view later expressed by Lord Mustill in his speech in Ruxley Electronics and Construction Ltd v Forsyth  AC 344, 360B and to have held that the plaintiffs were entitled to recover some reasonable damages because they were entitled to say that they chose to obtain from the architect a promise to produce a particular design in order to make the house conform to their own particular tastes and wishes. Accordingly I consider that the decision of the Court of Appeal in Knott v Bolton 11 Const LJ 375 should not be followed.
53. I further consider that there is no valid distinction between a case where a party promises to achieve a result and a case where a party is under a contractual obligation to take reasonable care to achieve a result. Suppose a case where a householder's enjoyment of his garden is spoilt by an unpleasant smell from a septic tank at the bottom of the garden and he employs a company to clean out the tank. If the contract constituted a promise by the company to clean out the tank and it failed to do so, with the result that the smell continued, I think that in accordance with the principle stated by Lord Mustill in Ruxley Electronics and Construction Ltd v Forsyth  AC 344, 360-361 the householder would be entitled to recover a modest sum of damages for the annoyance caused by the continuation of the smell. But if the contract provided that the company would exercise reasonable care and skill to clean out the tank and due to its negligence the tank was not cleaned out, I consider that the householder would also be entitled to damages.
54. Whilst I do not accept the submission advanced on behalf of the defendant that, where there is no pecuniary loss, damages can only be recovered where the claim is for breach of an obligation which is the very object of the contract, I think that (other than in building contract cases where the principle stated by Lord Mustill in Ruxley Electronics and Construction Ltd v Forsyth, at p 360, gives direct guidance) there is a need for a test which the courts can apply in practice in order to preserve the fundamental principle that general damages are not recoverable for anxiety and aggravation and similar states of mind caused by a breach of contract and to prevent the exception expanding to swallow up, or to diminish unjustifiably, the principle itself. It will be for the courts, in the differing circumstances of individual cases, to apply the principles stated in your Lordships' speeches in this case, and the matter is not one where any precise test or verbal formula can be applied but, adopting the helpful submissions of counsel for the plaintiff, I consider that as a general approach it would be appropriate to treat as cases falling within the exception and calling for an award of damages those where:
1. the matter in respect of which the individual claimant seeks damages is of importance to him, and
2. the individual claimant has made clear to the other party that the matter is of importance to him, and
3. the action to be taken in relation to the matter is made a specific term of the contract.
If these three conditions are satisfied, as they are in the present case, then I consider that the claim for damages should not be rejected on the ground that the fulfilment of that obligation is not the principal object of the contract or on the ground that the other party does not receive special and specific remuneration in respect of the performance of that obligation.
55. Counsel for the defendant submitted that the award of damages of £10,000 was manifestly excessive as it constituted compensation for the inconvenience and annoyance from the aircraft noise which the plaintiff would continue to suffer for an indefinite period in the future. In support of this submission counsel relied on the observation of Bingham LJ in Watts v Morrow  1 WLR 1421, 1445:
Therefore counsel submitted that the damages should have been restricted to compensation for inconvenience and annoyance suffered for one year, that being a reasonable time during which the plaintiff could have moved house; after the period of a year, the inconvenience and annoyance suffered by the plaintiff could not be regarded as caused by default of the defendant.
56. I am unable to accept that submission. I consider that in the circumstance of this case where the plaintiff had expended a considerable sum of money in improving the house before he was aware of the defendant's failure to inform him of aircraft noise, and where he would have had to incur very considerable expense in selling and buying a new house and moving to it, it was reasonable for him to decide to stay in the house, even though that involved putting up with the noise, and I think that the trial judge was right to reject the defendant's argument on this point.
Physical inconvenience and discomfort
57. The second principal issue which arises on this appeal is whether, as a separate ground, the plaintiff is entitled to recover damages because the aircraft noise constituted physical inconvenience and discomfort which he suffered as a consequence of the defendant's breach of contract. The authorities cited and analysed by Clarke LJ in his judgment make it clear, as he observes  Lloyd's Rep 516, 527, that damages are recoverable for physical inconvenience and that it is not necessary to establish any kind of physical injury or loss. Thus in Hobbs v London and South Western Railway Co (1875) LR 10 QB 111, Cockburn CJ stated, at p 117:
Mellor J stated, at pp 122-123:
And Archibald J stated, at p 124:
58. I also consider that Barry J. in Bailey v Bullock  2 All ER 1167, 1170-1171 and Beldam LJ in Wapshott v Davis Donovan & Co  PNLR 361, 378 were right to emphasise that there is a distinction between mere annoyance or disappointment at the failure of the other party to carry out his contractual obligation and actual physical inconvenience and discomfort caused by the breach. Therefore the judge was entitled to award damages to the plaintiff for the annoyance caused to him by the aircraft noise if the noise constituted physical inconvenience and discomfort.
59. In his careful judgment the judge expressly referred to one head of damages discussed in Watts v Morrow  1 WLR 1421 and cited part of the headnote which states:
Therefore the judge clearly had in mind that damages could only be awarded for physical inconvenience and discomfort. He subsequently stated at page 17 of his judgment that the plaintiff had sustained "real discomfort". The fact that the judge also stated that the plaintiff found the noise "a confounded nuisance" does not, in my opinion, mean that the noise could not be regarded as a physical inconvenience and discomfort. No doubt as Mr Hobbs walked home after midnight with his wife and children the four or five miles from Esher station through the drizzling rain he thought that the walk was a confounded nuisance, but that did not disentitle him from recovering damages for physical inconvenience and discomfort.
60. The aircraft noise was something which affected the plaintiff through his hearing and can be regarded as having a physical effect upon him, and on the evidence which was before him I consider that it was open to the judge to find that the plaintiff suffered physical inconvenience and discomfort.
61. I agree with Judge and Clarke LLJ that on first impression the award of £10,000 damages appears to be a very high one, but I also agree with them that this is a very unusual case where the inconvenience and discomfort caused to the plaintiff will continue, and on further consideration I do not consider that it would be right for an appellate court to set aside the award as being excessive. Therefore I would allow the appeal and restore the order of the judge.
LORD SCOTT OF FOSCOTE
62. This is a case with simple facts, a short question and, in my respectful opinion, a simple answer.
63. The plaintiff, Mr Farley, wanted to purchase a house in the country. Riverside House at Blackboys, Sussex was on the market. It seemed to fit the bill. It was, however, 15 miles or so from Gatwick Airport. Mr Farley was anxious that his rural retreat should not be affected by aircraft noise. He instructed Mr Skinner, the defendant, who is a chartered surveyor, to inspect the property and report on its general and structural condition. He asked Mr Skinner, also, to report on whether, in view of the proximity of the property to Gatwick Airport, the property would be affected by aircraft noise. Mr Skinner accepted these instructions. On 17 December 1990 Mr Skinner provided Mr Farley with a detailed 38-page report. The report contained, on p 35, a paragraph about aircraft noise. The paragraph indicted Mr Skinner's opinion that it was "unlikely that the property will suffer greatly from such noise . . ."
64. Unfortunately, Mr Skinner had made inadequate inquiries about aircraft noise and, in particular, had not discovered that within a few miles from the property was the Mayfield Stack, an area where aircraft waiting to land at Gatwick were directed to circle until the airport was ready to receive them and from where their route to the airport frequently passed over or near to Blackboys.
65. It was found by the trial judge, and is accepted before your Lordships, that Mr Skinner's failure to find out about the Mayfield Stack and to draw its implications to Mr Farley's attention was an inadequate contractual response to his instructions about aircraft noise.
66. In short, Mr Skinner was in breach of contract. His client, Mr Farley, is entitled in principle to be compensated in damages for the breach.
67. Mr Farley gave evidence that if he had received from Mr Skinner the information about aircraft noise to which he, Mr Farley, was contractually entitled, he would not have purchased Riverside House. This evidence was accepted by the judge. But, in the event, in reliance on the contractually inadequate information about aircraft noise that he had received from Mr Skinner, Mr Farley purchased the property.
68. Having purchased the property, Mr Farley put in hand fairly extensive works of modernisation and renovation. It was only after these had been carried out that he moved in and took up residence. It was then that he discovered that the property was affected by aircraft noise. The degree of discomfort caused by noise is always to some extent subjective. There was evidence that many, perhaps most, of the residents in the area were not troubled by the noise. But Mr Farley was.
69. He gave evidence that it interfered with his enjoyment of a quiet, reflective breakfast, a morning stroll in his garden or pre-dinner drinks. The trial judge having heard the evidence, concluded that "real discomfort . . . has been sustained by Mr Farley in this case".
70. It is accepted by Mr Simpson, counsel for Mr Skinner, that if Mr Farley, on becoming aware of the extent of the aircraft noise, had decided to re-sell, Mr Skinner would have been liable to compensate him at least for the costs of re-selling. But, having had the house modernised and renovated to his taste, and no doubt having become attached to the house, Mr Farley decided not to sell. But nonetheless, feeling that he ought to be compensated for Mr Skinner's breach of contract, he commenced an action for damages.
71. He claimed damages on the footing that the true value of the property, affected by the aircraft noise, was substantially less than the price he had paid. On this issue, however, the judge concluded that the aircraft noise that upset Mr Farley did not result in any diminution in the value of the property.
72. Mr Farley claimed damages on the footing, also, that:
The judge held that Mr Farley was entitled to damages for impairment of use and enjoyment and awarded him £10,000.
73. Mr Skinner appealed. The issue on appeal was whether, in law, Mr Farley was entitled to contractual damages for impairment of his enjoyment of Riverside House. My noble and learned friend, Lord Steyn, has described the course of proceedings in the Court of Appeal and it suffices for me to say that two Lords Justices held that he was, three held that he was not, and it is now for your Lordships to resolve the issue.
74. The reason why such an apparently straightforward issue has caused such division of opinion is because it has been represented as raising the question whether and when contractual damages for mental distress are available. It is highly desirable that your Lordships should resolve the present angst on this subject and avoid the need in the future for relatively simple claims, such as Mr Farley's, to have to travel to the appellate courts for a ruling.