Watts v Morrow is a significant decision of the Court of Appeal concerning the measure of damages for breach of contract, specifically in the context of a negligently prepared surveyor’s report. The case addresses two important questions: first, how contractual damages should be calculated where a professional report induces a purchaser to overpay for property, and secondly, whether damages for distress are recoverable in such circumstances.
The ruling in Watts v Morrow has become an important authority on the limits of financial compensation and the narrow circumstances in which damages for distress may be awarded in contract law.
Court and Citations
Watts v Morrow was decided by the Court of Appeal. The case is reported at [1991] 1 WLR 1421 and [1991] 4 All ER 937. The judgement examined established principles of contractual damages and applied them to the specific facts surrounding a negligent property survey.
Facts of Watts v Morrow Case
In Watts v Morrow, the claimant, Mr Watts, was seeking to purchase a house. Before completing the purchase, he instructed the defendant, Mr Morrow, a surveyor, to carry out a survey of the property. Mr Watts engaged Mr Morrow specifically to perform a full and competent survey, upon which he intended to rely when deciding whether to proceed with the purchase.
The surveyor’s report assured Mr Watts that the property was sound, stable, and in good condition. The report indicated that any minor defects present could be dealt with as part of normal, routine maintenance and repair. Based on this report, Mr Watts proceeded to buy the property.
After completing the purchase, Mr Watts discovered that the property suffered from serious and substantial defects. These defects had not been identified or mentioned in the surveyor’s report. The cost of correcting these defects exceeded £33,000.
During the period in which repair works were undertaken, the house was described as being constantly cold, dusty, and dirty. Mr Watts was required to live in the house while these repairs were carried out.
As a result of these circumstances, Mr Watts brought proceedings against Mr Morrow for breach of contract. He alleged that the survey had been negligently prepared and failed to meet the standard required under the contract.
Claimant’s Arguments
In Watts v Morrow, the claimant argued that the survey provided by the defendant was sub-standard and amounted to a breach of contract. It was contended that Mr Morrow had failed to identify serious defects which materially affected the value and condition of the property.
Mr Watts sought to recover two main heads of damage. First, he claimed the full cost of repairing the defects, which amounted to over £33,000. He argued that he had purchased the house in reliance on the surveyor’s report and that the property was not in the condition described within that report. On that basis, he asserted that the correct measure of damages was the sum required to restore the property to the condition represented.
Secondly, Mr Watts sought damages for the distress and inconvenience he had suffered. He argued that living in a property undergoing extensive repairs caused significant discomfort and distress over several months. He submitted that this distress flowed directly from the defendant’s breach of contract.
Defendant’s Arguments
The defendant in Watts v Morrow disputed the claimant’s entitlement to both heads of damage. Mr Morrow accepted neither liability for the repair costs nor the claim for distress.
It was argued on behalf of the defendant that the appropriate measure of damages was not the cost of repairing the property. Instead, Mr Morrow contended that damages should be limited to the difference between the price paid for the house and what Mr Watts would have paid had the defects been known at the time of purchase.
In relation to the claim for distress, the defendant argued that damages for distress were generally irrecoverable in contract law and should not be awarded in the present case.
Issues Before the Court
The Court of Appeal in Watts v Morrow was required to consider two principal issues:
- What was the correct measure of damages for breach of contract arising from a negligently prepared survey?
- Whether damages for distress arising from the inconvenience of living in the property during repairs were recoverable.
These issues required the court to examine established principles governing contractual damages and their application to professional negligence within a contractual framework.
Watts v Morrow Judgement
The Court of Appeal held that Mr Watts was not entitled to recover the cost of repairing the defects. In Watts v Morrow, the court emphasised that the fundamental purpose of contractual damages is to place the injured party in the position they would have been in had the contract been properly performed.
Applying this principle, the court found that Mr Watts’s true loss was economic in nature. The breach did not entitle him to have the property upgraded or repaired at the defendant’s expense. Instead, the loss arose because Mr Watts had paid too much for the property due to reliance on an inaccurate survey report.
Accordingly, the correct measure of damages was the difference between the value of the property as it was represented in the surveyor’s report and its true value in its actual, defective condition at the time of purchase. The court therefore awarded damages representing the excess purchase price paid by Mr Watts.
Damages for Distress
Although the Court of Appeal rejected the claim for the full cost of repairs, it took a different approach to the issue of distress. In Watts v Morrow, the court recognised that damages for mental distress are generally not recoverable for breach of contract.
However, the court identified a limited exception. Where distress arises from physical inconvenience or discomfort caused by a breach of contract, a modest award may be appropriate. In this case, the negligent survey resulted in Mr Watts having to live for an extended period in a property undergoing extensive and disruptive repairs.
The court concluded that the defendant’s breach was responsible for the physical discomfort and inconvenience suffered by Mr Watts. As a result, he was entitled to a modest sum to reflect the distress he experienced while the repairs were carried out. This award was not intended to compensate for disappointment alone, but for the tangible discomfort associated with the living conditions.
Conclusion
Watts v Morrow provides a structured and principled approach to assessing damages following a negligent survey. The Court of Appeal reaffirmed that contractual damages aim to correct economic loss caused by breach, not to fund repairs beyond that loss.
At the same time, the court accepted that modest compensation for distress may be available where breach results in physical inconvenience. As such, Watts v Morrow remains a key case in understanding the measure of damages and the narrow scope of recovery for distress in contract law.
