Farley v Skinner [2001] UKHL 49 is a landmark case in English contract law that addresses the issue of damages for distress, particularly in the context of breach of contract. The case centres around the question of whether damages could be awarded for non-pecuniary losses, such as distress and inconvenience, when a breach of contract does not result in direct financial loss.
The decision of the House of Lords in this case has had a significant impact on the development of contract law, particularly with regard to the scope of recoverable damages in circumstances where the primary harm is not economic but related to sensory or emotional experiences. This case brief will explore the facts, issues, decisions, and significance of Farley v Skinner, focusing on the judicial reasoning that led to the House of Lords’ final ruling.
Facts of Farley v Skinner
In Farley v Skinner, the claimant, Mr. Farley, purchased a large estate, Riverside House, located in Blackboys, Sussex. The property, which cost £420,000, was equipped with various amenities, including a croquet lawn, a tennis court, an orchard, a paddock, and a swimming pool. After completing the purchase in February 1991, Farley invested an additional £125,000 in improving the property.
Farley, who owned multiple properties, including a flat in London and houses in Brighton and overseas, hired Mr. Skinner, a surveyor, to conduct a survey of the property. Specifically, Farley instructed Skinner to assess whether the property would be affected by aircraft noise, as Farley was keen on purchasing a home that was not near a flight path.
Skinner reported that the noise levels were of an acceptable standard. However, after purchasing the property, Farley found that the noise from aircraft, particularly early in the morning, was unbearable. At 6 am, aircraft holding patterns directly above the property made the noise intolerable, significantly affecting Farley’s enjoyment of the property, particularly when spending time in his garden.
Issues Raised
The central issue in Farley v Skinner was whether Farley could claim damages for the distress and inconvenience caused by the noise, despite the fact that there was no direct financial loss. Farley argued that the surveyor had breached the contract by failing to adequately investigate the level of aircraft noise, as he had specifically requested.
Farley contended that this failure deprived him of the enjoyment of his property, which he valued highly, and that such losses were recoverable even in the absence of pecuniary damages.
Farley sought damages for the discomfort caused by the noise, claiming that it diminished his enjoyment of the property. On the other hand, Skinner argued that damages for mental distress were generally not recoverable for breach of contract unless the contract’s purpose was to prevent such distress.
Skinner asserted that a surveyor’s contract primarily involved providing information with reasonable skill and care, and it was not the surveyor’s responsibility to guarantee peace of mind or freedom from distress.
The case raised important questions regarding the measure of damages in contract law, particularly with respect to non-financial losses, such as emotional distress, inconvenience, and the loss of amenities that hold no direct economic value.
Decision at First Instance
At trial, the judge ruled in favour of Mr. Farley to an extent. The judge found that, although there had been no financial loss, Farley was entitled to damages for the distress caused by the noise. The trial judge awarded Farley £10,000 for the inconvenience and discomfort he had suffered. This decision marked a departure from the traditional approach in contract law, which typically limits damages to financial losses.
While the judge acknowledged that Farley had paid the same amount for the property as someone who knew of the aircraft noise, and thus had not suffered a pecuniary loss, he concluded that the distress caused by the breach was significant enough to warrant an award for non-pecuniary damages.
The judge found that Farley’s loss was not limited to financial detriment, but rather included a loss of enjoyment of the property, which was an important part of the contractual bargain.
Court of Appeal
The Court of Appeal, however, disagreed with the trial judge’s decision. The defendant, Mr. Skinner, challenged the ruling, arguing that damages for mere inconvenience or discomfort were not recoverable in contract law. The Court of Appeal held that damages for distress could not be awarded unless there was an element of physical discomfort or injury.
The court reasoned that the discomfort experienced by Farley, while unfortunate, did not meet the threshold required for the recovery of damages in the absence of a direct financial loss.
The Court of Appeal’s decision reinforced the traditional view that damages for breach of contract should generally be limited to those that are pecuniary in nature. This meant that, unless a contract specifically included terms relating to mental distress or loss of peace of mind, such damages could not be awarded.
House of Lords’ Decision in Farley v Skinner
The matter ultimately reached the House of Lords, where the judges reversed the decision of the Court of Appeal and restored the trial judge’s award of £10,000 for Farley. The House of Lords’ decision was grounded in the understanding that the loss of enjoyment of an amenity could constitute a recoverable damage, even if the amenity in question did not have direct economic value.
Lord Scott, in his judgement, held that the breach of contract deprived Mr. Farley of an important part of the contractual benefit: the peaceful enjoyment of his property. He emphasised that if Farley had known about the aircraft noise, he would not have purchased the property. Lord Scott noted that Farley could claim damages for being deprived of the benefit of the contract, citing the case of Ruxley Electronics Ltd v Forsyth, or alternatively, claim for consequential loss under Watts v Morrow.
Lord Scott also addressed the issue of double recovery. He stated that if there had been a reduction in the property’s market value due to the noise, Farley could not recover both the diminution in value and damages for distress. However, as no such reduction in value was established, the award for distress was justified.
Lord Scott further clarified that, while damages for mere disappointment were generally not recoverable in contract, damages for inconvenience or discomfort caused by a sensory experience (such as hearing) could be recovered. This ruling represented a significant shift in how non-pecuniary losses, such as distress, could be handled in contract cases.
Lord Clyde echoed similar sentiments, stating that the contract in question was not an ordinary surveyor’s contract. The specific provision regarding the peacefulness of the property, particularly in relation to the aircraft noise, was an important term that both parties had recognised as crucial. As a result, the breach of this term was considered a serious matter, and Farley was entitled to recover damages.
Conclusion
In conclusion, Farley v Skinner [2001] UKHL 49 is a pivotal case in English contract law, which expanded the boundaries of recoverable damages for breach of contract. By recognising the significance of non-pecuniary losses, particularly distress caused by the loss of amenities, the House of Lords reshaped the landscape of contract law.
The case established that damages for sensory discomfort could be awarded in cases where the breach of contract resulted in the loss of an important amenity, even if no financial loss occurred. It also demonstrated that contracts that specify particular amenities, such as peace and quiet, may give rise to claims for damages if those terms are breached.
