Farley v. Skinner [2001] UKHL 49 (11 October 2001)

Mr Farley employed a surveyor to investigate aircraft noise affecting a property before purchase. The surveyor negligently failed to discover the property was near an aircraft stacking area. Despite no diminution in property value, Mr Farley recovered £10,000 damages for the discomfort and loss of enjoyment caused by the noise.

Facts

Mr Farley, a successful businessman contemplating retirement, wished to purchase a country residence. He became interested in Riverside House in Sussex, situated approximately 15 miles from Gatwick Airport. Concerned that aircraft noise might affect his enjoyment of the property, Mr Farley specifically instructed the defendant surveyor, Mr Skinner, to investigate and report on whether the property would be affected by aircraft noise, in addition to the usual survey matters.

Mr Skinner reported that it was unlikely the property would suffer greatly from aircraft noise. In reliance upon this reassuring report, Mr Farley purchased the property for £420,000 and subsequently spent approximately £125,000 on modernisation and refurbishment. After moving in, Mr Farley discovered that the property was indeed significantly affected by aircraft noise from the nearby Mayfield Stack, where aircraft circled waiting to land at Gatwick. The noise interfered with his enjoyment of the property’s outdoor amenities.

The trial judge found that Mr Skinner had been negligent in failing to make adequate inquiries about aircraft noise and that Mr Farley would not have purchased the property had he been properly advised. However, the judge also found that the aircraft noise had not diminished the market value of the property.

Issues

Principal Issue

Whether a purchaser who employed a surveyor to investigate a specific matter (aircraft noise) important for his peace of mind may recover non-pecuniary damages against the surveyor for negligent failure to discover that the property was affected by such noise, where there was no diminution in the property’s market value.

Subsidiary Issues

1. Whether the exceptional category permitting recovery of non-pecuniary damages applies only where the very object of the entire contract is to provide pleasure, relaxation or peace of mind, or whether it extends to cases where this is a major or important part of the contract.

2. Whether the exception is limited to cases involving a contractual guarantee of a result, or whether it extends to obligations to exercise reasonable care.

3. Whether Mr Farley’s decision to remain in the property disentitled him from recovering non-pecuniary damages.

Judgment

The House of Lords unanimously allowed the appeal and restored the trial judge’s award of £10,000 damages.

Lord Steyn

Lord Steyn held that the obligation to investigate aircraft noise was a major or important part of the contract, not merely a minor aspect. He rejected the narrow interpretation that the exceptional category applies only where the very object of the entire contract is to provide pleasure. There is no principled justification for such a limitation.

Lord Steyn also rejected the distinction between contractual guarantees and obligations of reasonable care, stating that it would be a singularly unattractive result if a professional who undertakes a specific obligation to exercise reasonable care could escape liability simply because he did not guarantee a result.

On the question of whether Mr Farley forfeited his claim by remaining at the property, Lord Steyn held that the plaintiff had acted reasonably in making the best of a bad job, particularly given the substantial expenditure on improvements before he became aware of the noise problem.

Lord Clyde

Lord Clyde emphasised that the discomfort suffered by Mr Farley was real and substantial, not merely sentimental disappointment. He considered the case could succeed either as an ordinary case of inconvenience following breach of contract or as an exceptional case involving disappointment arising from breach of a contract for peace and quiet.

Lord Hutton

Lord Hutton applied principles from Ruxley Electronics and Construction Ltd v Forsyth, noting that where the value of the promise exceeds any financial enhancement, the law should recognise and compensate that loss. He proposed three conditions for recovery in such cases: the matter must be of importance to the claimant, this importance must be communicated to the other party, and it must be a specific term of the contract.

Lord Scott of Foscote

Lord Scott analysed the claim under two alternative bases: first, as compensation for deprivation of a contractual benefit (the Ruxley approach), and second, as consequential loss within the reasonable contemplation of the parties (the Watts v Morrow approach). He held that on either basis, Mr Farley was entitled to recover damages for the real discomfort he experienced.

Implications

This case significantly clarified and expanded the circumstances in which non-pecuniary damages may be recovered for breach of contract. The key principles established include:

1. Non-pecuniary damages may be recovered where a major or important object of the contract (not necessarily the sole or very object) is to provide pleasure, relaxation or peace of mind.

2. The distinction between obligations to achieve a result and obligations to exercise reasonable care is irrelevant to the recovery of non-pecuniary damages.

3. A claimant does not forfeit the right to non-pecuniary damages merely by deciding to remain with the consequences of the breach rather than seeking to undo the transaction.

4. Knott v Bolton was overruled insofar as it required the provision of pleasure to be the very object of the entire contract.

5. Awards for non-pecuniary damages in such cases should be restrained and modest.

The decision harmonised the principles from Watts v Morrow and Ruxley Electronics v Forsyth, providing a coherent framework for claims involving loss of amenity or enjoyment arising from breach of contract in professional negligence cases.

Verdict: Appeal allowed. The House of Lords restored the trial judge's award of £10,000 damages for non-pecuniary loss, holding that Mr Farley was entitled to recover damages for the discomfort and impairment of enjoyment caused by the surveyor's negligent failure to report on aircraft noise.

Source: Farley v. Skinner [2001] UKHL 49 (11 October 2001)