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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Murnaghan v. Markland Holdings Ltd. & Anor [2004] IEHC 432 (1 December 2004) URL: http://www.bailii.org/ie/cases/IEHC/2004/432.html Cite as: [2004] IEHC 432

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[2004] IEHC 432

THE HIGH COURT

2003 No. 6781 P

BETWEEN/

DENIS MURNAGHAN

PLAINTIFF

AND MARKLAND HOLDINGS LIMITED AND CANTIER CONSTRUCTION LIMITED

DEFENDANTS

Judgment of Miss Justice Laffoy delivered on the 1st day of December, 2004.

The parties and the factual background

From the mid 1970s until the middle of July, 2004 the plaintiff was the owner of a mews residence at 5 Pembroke Place, Dublin 2 (No. 5). The house had been constructed in 1976 and covered the entire site. At the material time, through 2002 and during the first half of 2003, in fact until 19^th July, 2003, the plaintiff resided in the house with his wife and son, who was eight years of age in 2002.

The first defendant was at all material times and still is the owner of No. 70 Leeson Close, Dublin 2 (No. 70). In the late 1990s No. 70, which abuts No. 5 and lies to the south-east of it, was used as a surface car park. In the year 2000 the first defendant applied for planning permission to develop No. 70 for commercial and residential purposes. The plaintiff objected to the application. The planning authority refused to grant permission. Subsequently, prior to June, 2002, the first defendant obtained planning permission for the erection of three apartments in a three-storey building to be built "side on" to the rear of No. 5 and its boundary to No. 70, by which I mean that the gable wall of No. 70 would be parallel to the rear wall of No. 5.

In June, 2002 the first defendant apprised the plaintiff of the existence of the planning permission and of its intention to construct to the boundary of its own site, the effect of which would be that any openings from No. 5 to No. 70 (i.e. in the rear wall of No. 5) would be effectively "blanked". It was indicated that the first defendant might try to accommodate the plaintiff's services in the interest of good neighbourliness, provided there was not significant cost. Subsequently, discussions took place between the plaintiff's architect, Peter Roberts, and the architects for the first defendant, P & A Lavin Associates. The architects for the first defendant carried out a photographic survey of No. 5 both internally and externally in August, 2002. I am satisfied on the evidence that at that juncture the plaintiff's primary concerns were the impact of the second floor of the proposed structure on the use and enjoyment of his roof terrace at second floor level in No. 5 and the access of light through a roof light in the centre of the roof terrace to the living accommodation at first floor level in No. 5. I am further satisfied on the evidence that before the construction work commenced on the site of No. 70 in November, 2002 the first defendant, through its architects, had agreed that the floor plan at second floor level of the building on No. 70 would be set back by 1.5 metres approximately from the roof terrace on No. 5 to meet the plaintiff's concerns and that the building on No. 70 would be constructed at a distance of between 100 mm and 150 mm from the rear of No. 5 so as to prevent the two buildings touching and to accommodate ventilation of No. 5 and a rainwater pipe attached to its rear wall. There was also an understanding that no work would commence on the site of No. 70 before 8 a.m. and that, if it was necessary to work on the site at weekends, the plaintiff would be notified in advance.

The second defendant was the contractor retained by the first defendant to construct the building on the site of No. 70. The construction work commenced in late November, 2002 and continued until these proceedings were initiated on 5^th June, 2003.

The proceedings

These proceedings were initiated by a plenary summons which issued on 5^th June, 2003. On the same day, the plaintiff applied for and was granted an interim injunction restraining the defendants from carrying out any further works on No. 70, the building on which at that stage was substantially constructed, it being common case that 80% of the dead weight of the structure was in place. At the trial of the action both defendants launched what can only be described as a vituperative attack on the credibility of the plaintiff. The attack was grounded in part on assertions that the plaintiff failed to make proper disclosure to the court when applying for the interim injunction (the assertion of the second defendant) and that the plaintiff's application was an abuse of the process of the court (the assertion of the first defendant).

In his affidavit grounding the application for the interim injunction, which was sworn on 5^th June, 2003, on which he was cross-examined at length, the plaintiff averred that, while he had occasion to complain about noise and vibrations at various times as the works progressed on No. 70 from November, 2002 to May, 2003, in general he was not dissatisfied with the works. However, he was concerned "over the possibility of damage" to his house during the piling operations on No. 70 and the work he observed "where [the defendants] have excavated material from the wall dividing the properties that is material beneath the foundations of my house". He went on to outline various problems on his premises which he ascribed to the defendants: that the rainwater hopper, which drained his roof terrace, had become blocked in early May, 2003; that there was ingress of water into his premises at various locations in the living room and garage areas on 20^th May, 2003, resulting in water staining to the living room ceiling and walls which worsened with time; that the cistern of a toilet in the ground floor bathroom was broken resulting in flooding of the ground floor level of the plaintiff's premises on 29^th May, 2003; that there were cracks in various parts of the premises; that the building on No. 70 had been built up to the boundary of No. 5 despite the agreement of the first defendant to maintain a gap; that the rainwater hopper and down pipe on the plaintiff's premises appeared to have been destroyed; and that water damage was evident in various parts of his house.

The application for the interim injunction was also grounded on the affidavit of Brendan Molloy, a consulting engineer, who had been retained by the plaintiff on 4^th June, 2003. Mr. Molloy averred in his affidavit, which was also sworn on 5^th June, 2003, that he had visited the plaintiff's premises on 4^th June, 2003 and that he observed significant water stains at various areas in No. 5, cracks both externally and internally, significant damage to the rainwater hopper rendering it ineffective, water dripping into the living room at first floor level and the bathroom, cloakroom and garage at ground floor level and the absence of a gap between the two buildings. Mr. Molloy expressed the opinion that the damage which he outlined was caused by works being undertaken on No. 70. He averred that he was satisfied that the structure and fabric of No. 5 had been damaged but that the extent of the damage was not capable of quantification until such time as a comprehensive survey could be undertaken. He expressed the opinion that the continuation of the works would in all probability result in further damage to the structure and fabric of the plaintiff's premises.

The plaintiff's application for an interlocutory injunction in the terms of the interim injunction was returnable for 11^th June, 2003. Although the application was strenuously resisted by the first defendant, as is recited in an order of the Court (Finnegan P.) of that day, there was agreement between the plaintiff and the first defendant "to arrange to have their respective engineers and/or architects to meet to agree a schedule of investigations to be conducted with a view to ascertaining the cause and extent of any damage to the plaintiff's premises". On that basis the interim injunction against the first defendant was vacated. While the injunction against the second defendant was to continue, the reality of the situation was that the second defendant was out of the picture by then and did not become an active player in the proceedings until May, 2004, having gone into voluntary liquidation on 3^rd July, 2003.

The first defendant continued to resist the application for an interlocutory injunction and issued a motion to be discharged from the agreement or undertaking recited in the order of 11^th June, 2004 on the ground that the plaintiff had been misled by the defendant as a to material fact. Eventually, agreement was reached on 25^th July, 2003 between the plaintiff and the first defendant, which resulted in that motion and the plaintiff's motion for an interlocutory injunction being struck out. In the agreement the first defendant undertook to complete the building at No. 70 in such a way as not to cause damage to No. 5. Further, the first defendant agreed "to facilitate an inspection by means of bore holes at locations (to be agreed by the engineers) of the foundations of both buildings", the inspection to be a joint inspection, the results to be shared between the parties and to take place as soon as possible but no later than 23^rd August, 2003. The parties also agreed a timetable for the procedural aspects of the proceedings with a view to securing an early trial. The agreement was expressed to be "without prejudice to the position of the plaintiff that he was at all times candid and honest in his evidence to the Court".

Events after the commencement of the proceedings

Just as the focus on the interim and interlocutory applications at the trial of the action was unusual, so too was the degree of focus on events which occurred after the proceedings were initiated.

While the interlocutory applications were still running their course, on 1^st July, 2003 Mr. Molloy advised that the plaintiff and his family should vacate No. 5 as soon as possible for a number of reasons. The primary reason was the continuing substantial and major water leak into No. 5. Mr. Molloy reported as follows:

"This water ingress has been absorbed by the block work walls, plaster to walls, dry lining to walls, concrete ceiling/floor slabs, plaster to ceilings, timber floors, timber skirtings, other timbers, furniture including beds, soft furnishings, personal belongings including clothes, etc. Mould has developed on plasterwork. Mould is likely to develop behind dry lining to walls. Mould will develop on and damage clothes. The extensive damp and mould growths have created the situation where No. 5 is not at present suitable for habitation. When all leaks are permanently sealed, it will be a considerable time before the house has dried out sufficiently to be reoccupied."

The other reasons were that the investigative and remedial works to the structure would result in excessive noise, dust and further moisture from wet plaster and a further drying out period would be necessary when the works were completed; the ventilation to the bathrooms had not been restored; and there were no agreements in place as to the methods of investigations, the required remedial works and work procedures. A copy of Mr. Molloy's advice was sent to the solicitors for the first defendant on 7^th July, 2003. Following Mr. Molloy's advice the plaintiff and his family vacated No. 5 and took a one-year lease of a house in Wellington Road, Dublin 4, at a monthly rent of €5,000. Subsequently, the lease was extended for a further six months at the same monthly rent. The plaintiff and his family never re-occupied No. 5 and were still in the house at Wellington Road at the time of the trial of the action.

The first defendant has always contended that the application for the interim injunction was unnecessary, a contention to which I will return. However, during the early stages of the dispute it was agreeable that the respective architects or engineers of the plaintiff and the first defendants should enter into discussions and inspect No. 70 with a view to resolving the dispute by agreement. This crystallised into the agreement recited in the order of Finnegan P. dated 11^th June, 2003. One of a number of on-site meetings took place on 20^th June, 2003 at which the plaintiff was represented by Mr. Roberts and Mr. Molloy. The first defendant was represented by Tim Lavin of P.A. Lavin Associates and Jack O'Regan of McElroy Associates, Consulting Engineers. John Terry, the builder retained by the first defendant in place of the second defendant to complete No. 70, was also present. On 27^th June the first defendant, through its solicitors, offered to undertake "further investigations and works", eight items in all, to No. 5 and No. 70. This offer was made in the context of a complaint by the first defendant that it had suffered serious delay in finalising its building project on No. 70; that the offer was being made to avoid further "burdensome and oppressive" delay; that there was no evidence to suggest that the construction of the building on No. 70 had caused any damage to No. 5 to date or that the carrying out of the proposed works was necessary to avoid damage to No. 5, with the exception of the replacement of the rainwater hopper head, which at the site inspection on 20^th June had been found to be filled with concrete; and that there was no necessity to address the foundations of both or either buildings, as had been suggested by Mr. Molloy.

On 4^th July, 2003 the plaintiff effectively made a counter offer by submitting a schedule of works of that date prepared by Mr. Molloy to the solicitors for the first defendant. Mr. Molloy's schedule was substantially the same as the first defendant's list of items but with two additional items: (1) to open up the base of the wall at No. 70 adjoining the No. 5 rear wall to check if the buildings were touching at that level and to examine the underside of the concrete raft (i.e. the raft foundation) to No. 5 to see if the raft had been undermined in the course of the site works; and (2) to carry out all such works as would be deemed necessary as a result of the inspections at the opened up areas. On 9^th July the solicitors for the first defendant signified that the first defendant was amenable to immediately carrying out the works specified in Mr. Molloy's schedule, with the exception of the two additional items, but without admitting that it had caused damage to No. 5. Both Mr. Roberts and Mr. Molloy were of the view that the additional investigations suggested by Mr. Molloy should be undertaken. The plaintiff's solicitors apprised the solicitors for the first defendant on 11^th July that, so long as the first defendant refused to deal with Mr. Molloy's additional items, the plaintiff was not disposed to consent to the remainder of the works being undertaken, as they might require to be undone following the additional investigations suggested by Mr. Molloy.

There was a stalemate until the agreement of 25^th July was entered into. By 25^th July it had become apparent that, while there was a cavity between the rear of No. 5 and the gable of No. 70, the two buildings touched at a number of points in that the floor slabs of the first and second floor balconies of No. 70 and the parapet wall of the second floor balcony had been cast against the rear wall of No. 5. The offer of the first defendant of 27^th June included the saw cutting and removal of a 50 mm wide section of each of these features and the installation of a soft joint between the buildings at those points. More controversially, arising out of the evidence put before the court by the first defendant on the application for the interlocutory injunction, it had become apparent that the ground beam of No. 70, which carried the gable wall of No. 70, was cast to the side of the foundations of No. 5, giving rise to a concern on the part of Mr. Roberts and Mr. Molloy that the foundations of the two buildings were touching and that pressure was being applied from No. 70 to the foundations of No. 5.

The works listed in Mr. Molloy's schedule of 4^th July, other than the additional items, were carried out by the first defendant. With the exception of the works to the rainwater hopper, the works were carried out by the end of August. While a temporary rainwater hopper and drainage system had been in place from the end of June, it was not until mid-October that the work on replacing the hopper head and the related works were completed.

The inspections by means of bore holes at locations of the foundations of both buildings, which were the subject of the agreement of 25^th July, did not take place by 23^rd August as had been agreed. There were various reasons for the delay: the builders' annual holiday period; obtaining confirmation of the insurance cover held by the builder retained by the plaintiff; and accommodating the time schedules of the many professionals involved. In any event, the work commenced on 11^th September and continued through 12^th and 15^th September. In the overall scheme of things, I do not think that the delay is of any significance. Mr. Roberts and Mr. Molloy represented the plaintiff in connection with the works and inspections and Mr. O'Regan represented the first defendant and Paschal Lavin of P & A Lavin Associates attended on occasion on behalf of the first defendant.

Mr. Molloy prepared a report of 29^th September on the result of the inspections and that was furnished to the solicitors for the first defendant on 10^th October. Mr. O'Regan was not called to give evidence and the report of McElroy's has not been put before the court. Apart from the points of contact between the two buildings which had already been identified and, indeed, addressed in the letter of 27^th June from the solicitors for the first defendant, Mr. Molloy's report revealed that the ground beam and gable wall of No. 70 touched and in part rested on the full length of the raft foundation of No. 5. It was his opinion that the cracks he observed in No. 5 had been caused by the pressure exerted on No. 5 by the building on No. 70. The latter building was substantially heavier, more rigid and more robust (the gable wall being a 215 mm solid block wall) than No. 5 (the rear wall being a 215 mm hollow block wall), so that No. 5 had yielded to the pressure and had suffered damage at various locations. As I understand it, Mr. Molloy's opinion was that the pressure had been exerted through all of the points of contact. He expressed the view that No. 5 had also suffered damage as a result of the imposed load on the edge of the raft and as a result of "the undermining of the edge of the raft during the construction" of No. 70. In consequence the edge of the raft dropped and the rear wall of No. 5 moved towards No. 70, thereby, in Mr. Molloy's opinion, adding to the pressure exerted at the contact points between the two buildings. Mr. Molloy's conclusion that the edge of the raft was undermined during the construction of No. 70 was based on the evidence of the plaintiff of what he had observed during the course of the piling operations on No. 70, which I have quoted earlier.

In his report of 29^th September, 2003 Mr. Molloy advised that No. 5 and No. 70 should be fully separated at all points of contact to ensure that no further damage would be caused to No. 5. He elaborated on this advice in a report to the plaintiff's solicitors of 10^th October, 2003. He reiterated that it was imperative that the two buildings be immediately fully separated to prevent further damage to No. 5. He outlined a number of ways in which this could be done. He discounted the first two. The first was to open up the gable wall of No. 70 to gain access to the cavity between the two buildings, so that the edge of the gable wall and the ground beam could be cut back a minimum of 50 mm from the raft of No. 5. He was of the view that, because of the depths of the ground beam, the gable wall and the adjoining raft and the narrowness of the cavity, this would be difficult to achieve. He also opined that the cutting back of the ground beam might weaken the structure of No. 70 and cause it to lean further towards No. 5. The second was to open up sections in the rear wall of No. 5 to gain access to the cavity for the cutting back works, but he considered that it would be equally difficult to achieve full separation for the same reasons. Moreover, he was of the view that it would be virtually impossible to replace the gable wall without subsequent uncontrolled cracks appearing in the structure of No. 5. The third option would achieve full separation. That would involve the demolition of No. 5, cutting back the ground beam and gable wall of No. 70 and then rebuilding No. 5. It is implicit that the fourth option was to demolish and rebuild No. 70, but Mr. Molloy's opinion was that it would be substantially cheaper to demolish and rebuild No. 5 because No. 70 was about four times the size of No. 5. Mr. Molloy pointed out that the third option would require full architectural and engineering drawings and specifications and that planning permission would have to be obtained for demolition and reconstruction. He also pointed out that the plaintiff would be subject to the vagaries of the planning process: the possibility of a third party objection or an appeal and the possibility of a grant of permission being subject to conditions.

On the basis of Mr. Molloy's advice, in furnishing additional particulars of damage alleged to have been caused to the plaintiff's premises on 17^th October, 2003, the plaintiff's solicitors stipulated that the areas of contact between the buildings at raft foundation and ground beam level required to be cut back to provide a 50 mm minimum separation gap. However, it was not indicated how this was to be done. On the evidence, it would appear that there was no response, positive or otherwise, from the first defendant as to whether this was a necessary or appropriate engineering solution. On the evidence it would appear that it was only when further particulars of special damage were delivered to the solicitors for the first defendant on 4^th May 2004 that a claim for special damages based on the necessity to demolish and reconstruct No. 5 was put forward.

After 17^th October, 2003 the plaintiff and the first defendant concentrated their efforts on preparing for an early hearing of the action, which was first scheduled for February, 2004, but was adjourned, and was then scheduled for hearing on 17^th May, 2004 but was also adjourned, because the second defendant had come back into the proceedings.

The next significant event is that at the beginning of May, 2004 the plaintiff decided to sell No. 5. On 4^th June, 2004 he entered into a contract to sell No. 5 to James Staunton and another person at a price of €830,000, the closing date to be 14^th July, 2004. The sale was duly completed, whereupon the plaintiff ceased to be the owner of No. 5.

Following the agreement of 25^th July, 2003 the building on No. 70 was completed.

The plaintiff's claim at the hearing

Having regard to the events which had occurred since the proceedings were initiated, the only relief which the plaintiff could pursue at the hearing of the action was damages. The plaintiff sought damages for breach of agreement, negligence and breach of duty, and for trespass and nuisance. The plaintiff presented his claim for special damages on two alternative bases: on the basis of demolishing and rebuilding No. 5; and on the basis of acquiring an alternative house to No. 5. Aside from a claim for expenditure incurred by the plaintiff up to the date of trial, the quantum of the claim on the first basis was in excess of €1,000,000. While a Bill of Quantities prepared by David J. Turner & Associates, Chartered Quantity Surveyors, was put before the court, which estimated the cost of the rebuilding work (inclusive of Value Added Tax) at almost €700,000, the Bill of Quantities was not proved nor was it admitted in evidence by agreement of the parties. Its only significance is that it was one of the components of one of the plaintiff's alternative bases of claim. Aside from the claim for expenditure by the plaintiff to the date of the trial, the quantum of the claim on the second basis was €1,187,687, which was quantified on the basis that the plaintiff would incur a shortfall of €920,000 on the acquisition of a comparable house to No. 5 after giving allowance for the sum of €830,000 which he received on the sale of No. 5, which put the open market value of a comparable house in good condition at €1,750,000. The balance was made up of the following:

•    Estate agent's fees and solicitors' fees on the disposal of No. 5.

•    Stamp duty and solicitors' fees on the acquisition of the alternative property.

•    The cost of alternative accommodation for three months for works and fit out.

•    The cost of soft furnishings and white goods.

•    The cost of installation of a t.v. system, automatic watering system, remote-controlled garage doors and light fittings.

•    Removal costs to the alternative property.

In relation to each basis of quantification, the plaintiff also claimed expenditure incurred to the commencement of the trial, which included fifteen months' rent at €5,000 per month and stamp duty on the lease, as well as removal expenses to the

rented accommodation and the cost of works to No. 5, including the opening up works which were carried out on 11^th September, 2003 and on subsequent dates.

In his statement of claim, the plaintiff also claimed aggravated damages for trespass and nuisance against both the defendants. No basis to support a claim for aggravated damages was outlined in the statement of claim and no evidence was adduced which would support such a claim. The claim for aggravated damages was forgone in the plaintiff's final submissions.

The stance adopted by the first defendant

The defence of the first defendant was delivered on 9^th September, 2003, before the opening up and joint inspection pursuant to the agreement of 25^th July occurred. In essence the first defendant fully traversed every allegation and claim made by the plaintiff and did not resile from that position prior to the commencement of the hearing. In particular, the first defendant denied that there was an enforceable agreement arising out of the discussions between Mr. Roberts and Mr. Lavin in the autumn of 2002 and pleaded that the requests of the plaintiff were performed without any consideration being extended by the plaintiff and in a spirit of good neighbourliness. It was pleaded that there was a gap of 100 mm to 150 mm between the two buildings, but it was denied that the maintenance of a gap was necessary to preserve the structural integrity of No. 5. It was denied that No. 5 had suffered or sustained any damage. Further, it was pleaded that, if it had, the first defendant would rely on deficiencies in the condition of the premises or "innate vice in its design or construction" as constituting the operative cause. The first defendant reserved its right to establish that any damage occurred by acts of omissions of third parties or by the failure of the plaintiff to adequately rectify or address deficiencies so caused. The first defendant denied nuisance, trespass, breach of agreement, breach of undertaking, negligence, breach of duty and every particular thereof pleaded, as well as denying that the plaintiff incurred any loss or damage. Specifically the first defendant denied that noise and vibration was caused by its works and, if it was, that such constituted a nuisance or extended beyond reasonable user of No. 70. The first defendant also specifically denied causing water ingress to No. 5. It was further pleaded that the plaintiff had failed to mitigate any loss he had suffered by acting in an unreasonable and excessive fashion.

At the close of the opening of the plaintiff's case by his counsel, counsel for the first defendant confirmed that the first defendant was relying on its defence, that it disputed any liability for damage caused to No. 5 and, if the first defendant had any liability, the plaintiff's claim was grossly overstated. Certain concessions, however, were made on liability when the first defendant went into evidence at the end of the ninth day of the trial.

The stance adopted by the second defendant

The plaintiff obtained judgment in default of defence against the second defendant and by order of the court (Carroll J.) made on 15^th December, 2003 it was directed that the damages to which the plaintiff is entitled should be assessed. Subsequently, on 6^th May, 2004 the second defendant, as I understand it on disclosure to the court that it was defending through an indemnifier, was given liberty to deliver a defence. In its defence, which was delivered on 10^th May, 2004, the second defendant denied that the plaintiff suffered any loss, damage, inconvenience or expense and further pleaded that the plaintiff was guilty of contributory negligence in failing to minimise his loss. While the order of 15^th December, 2003, following the statement of claim, gave judgment to the plaintiff against the second defendant for, inter alia, breach of agreement and/or undertaking, I am satisfied that no breach of agreement or undertaking was pleaded by the plaintiff against the second defendant and that no evidence has been adduced of a breach of agreement by the second defendant. Accordingly, I am satisfied that, as between the plaintiff and the second defendant, there is an error in the order of 15^th December, 2003 and that the second defendant is liable to the plaintiff only for loss occasioned by its negligence, breach of duty, trespass or nuisance.

The position of the defendants inter se

The first defendant has served on the second defendant a notice that it is entitled to claim a contribution or indemnity from the second defendant. It was agreed by the defendants that the issues between the defendants should be left in abeyance until the issues between the plaintiff and the defendants were determined.

Measurement of damages: the law

The largest element in the plaintiff's claim is for the damage allegedly occasioned to No. 5 as a result of the wrongful acts and omissions of the defendants. Both defendants submitted that the court should follow Munnelly v. Calcon Ltd. [1978] I.R. 387, in which the Supreme Court considered the measure of damages which should be applied when a plaintiff's building has been negligently damaged or destroyed by a defendant. In considering that issue, Henchy J., in his judgment, queried whether it was to be the cost of reinstatement or the amount by which the property had been diminished in value. He answered the questions as follows:

"I do not consider that reinstatement damages, which may vastly exceed damages based on diminished value, are to be awarded as a prima facie right or, even if they are, that the plaintiff's intentions as to reinstatement should be the determining factor. I do not think the authorities establish that there is a prima facie right to this measure of damages in any given case. In my view, the particular measure of damages allowed should be objectively chosen by the court as being that which is best calculated, in all the circumstances of the particular case, to put the plaintiff fairly and reasonably in the position in which he was before the damage occurred, so far as a pecuniary award can do so."

Having accepted two principles identified by May J. in C.R. Taylor Ltd. v. Hepworths Ltd. [1977] 1 W.L.R. 659 –

"… first, that whenever damages are to be awarded against a tortfeasor or against a man who has broken a contract, then those damages shall be such as will, so far as money can, put the plaintiff in the same position as he would have been had the tort or breach of contract not occurred … secondly, the damages to be awarded are to be reasonable, reasonable that is as between the plaintiff on the one hand and the defendant on the other …"

as being basic to, although not necessarily exhaustive of, the concept of restitutio in integrum on which the law of damages rests in cases involving damage to or destruction of a building, Henchy J. went on to say:

"It is in the application of those principles that difficulty may arise, for a court, in endeavouring to award a sum which will be both compensatory and reasonable, will be called on to give consideration, with emphasis varying from case to case, to matters such as the nature of the property, the plaintiff's relation to it, the nature of the wrongful act causing the damage, the conduct of the parties subsequent to the wrongful act, and the pecuniary, economic or other relevant implications or consequences of reinstatement damages as compared with diminished value damages. The reported cases, therefore, require to be viewed primarily as exemplifications of the application to special facts of the two principles to which I have referred."

In this case, there can be no question of the plaintiff being awarded damages commensurate with the cost of demolishing and rebuilding No. 5. The plaintiff has ceased to be the owner of No. 5 and is not in a position to effect reinstatement. Therefore, if the plaintiff has established that No. 5 was damaged by reason of the wrongful acts or omissions of the defendants, as was conceded in the closing submissions of counsel for the plaintiff, the measure of the plaintiff's damages is the resulting diminution in the value of No. 5. To put it another way, the measure of damages is the difference between the value of No. 5 undamaged and the value of No. 5 damaged in consequence of the defendants' wrongdoing. As the evidence has unfolded in this case, if No. 5 is damaged, the only basis on which the damaged value can be deduced is by reference to what a prospective purchaser would consider to be the impact on the value of the damage, having regard to its nature and extent and the cost of remedying it.

On the central question in this case, and noting that the second defendant has been found liable by default, the issues which fall to be considered are:

(1) the nature and the extent of the damage, if any, to No. 5 caused or likely to result in future from the wrongful acts of the defendants or either of them; and

(2) if such damage is established, the diminution in the value of No. 5 resulting from it.

Nature and extent of damage caused or likely to be caused to No. 5

This issue falls to be determined primarily on the expert evidence adduced by the plaintiff and the first defendant at the trial. Mr. Roberts, who, on behalf of the plaintiff, had been involved in discussions with P & A Lavin and Associates in the autumn of 2002 testified on behalf of the plaintiff. He was present at the site inspection on 20^th June, 2003 and an earlier site meeting held on 10^th June, 2003 which involved the architects and engineers of the first defendant, as well as personnel from the first defendant and personnel from the second defendant, and Mr. Molloy. However, he had not advised the plaintiff specifically in connection with the application for the interim injunction. Mr. Roberts had been advising the plaintiff since 1997 in connection with the remedying of damage to No. 5 allegedly caused as a result of vibration in the course of building works on adjoining property at Kingram Lane, Dublin 2 owned and occupied by Siemens Nixdorf Information Systems Ltd. (Siemens) in 1995, which is the subject of Circuit Court proceedings against Siemens which were initiated in 1996 and are still pending. Mr. Roberts was also involved in advising the plaintiff in connection with litigation against McMenamin & Co. Ltd., the first builder retained by the plaintiff to remedy the damage allegedly due to the works on the Siemens' property, which litigation was resolved earlier this year. I am satisfied, on the basis of Mr. Roberts' evidence, that the damage to No. 5, including cracking, which dated from 1995 was repaired and made good by 1999.

Mr. Molloy also testified on behalf of the plaintiff, as did Mr. Patrick Murphy, a consulting engineer with Thomas Garland and Partners, Consulting Civil and Structural Engineers, who was retained by the plaintiff in April, 2004 to give a second opinion on the engineering aspects of the case.

Mr. Patrick Delahanty of Larsen Foundations Ltd., the piling contractor retained by the first defendant in relation to No. 70, was called by the plaintiff to prove the piling records, which the first defendant was not prepared to admit, and to testify as to the implementation of the piling works at No. 70.

None of the professionals who had been retained by the first defendant in connection with the development of No. 70, the personnel in P & A Lavin Associates and McElroy Associates, were called to give evidence on behalf of the first defendant nor were any of the first defendant's in-house professionals who were involved in the development. Apart from valuation evidence to which I will refer later, the only evidence adduced by the first defendant was that of John Moylan of Moylan, Consulting Engineers and Project Managers, who received instructions from the solicitors for the first defendant in February 2004 in connection with these proceedings. Mr. Moylan's report, which was dated 4^th June 2004, was furnished to the plaintiff's legal advisors after the second day of the hearing. It was admitted in evidence by agreement. An assessment of the estimated cost of remedial works prepared by O'Malley Associates, Chartered Quantity Surveyors, based on Mr. Moylan's evidence, was admitted in evidence and agreed by the plaintiff as to the cost of the works to which it related, on the following bases:

(a) that the first defendant did not accept that all of the works to which it related are necessary, and

(b) that the plaintiff did not accept that those works represent an engineering solution to the damage to No. 5.

I propose considering the nature and extent of the damage caused to No. 5 by the works on No. 70 under four headings: cracking; damage resulting from water ingress; damage resulting from points of contact between the two buildings other than the foundations; and damage resulting from the contact at foundation level.

Cracking

It was not disputed that there was extensive cracking in No. 5 from June 2003 onwards – in ceilings, in floors, and in and between walls and partitions. There was a serious dispute as to whether the cracking was mainly superficial, which was Mr. Moylan's opinion, or was structurally significant, which was Mr. Molloy's opinion. This dispute was reflected in a conflict as to the proper method of measuring cracks, whether using callipers, as advocated by Mr. Molloy, or a crack width gauge, as advocated by Mr. Moylan. It was also reflected in a serious conflict as to the measurement of cracks which were itemised, on the basis of inspections carried out by Mr. Molloy in September or October 2003, in the particulars delivered by the plaintiff on 17^th October 2003. These were subsequently inspected and assessed by Mr. Moylan on 4^th May 2004. Mr. Moylan ascribed the cracking he observed to a number of causes: possibly damage by vibration when the foundation of No. 70 was being piled; the original method of construction of No. 5; vibration caused by construction work on another adjoining property, the Siemens property; and the effect of the passage of time, in other words, wear and tear. Although not resiling from his opinion that the cracking which existed in the building when he carried out his main inspection was relatively minor in terms of structural and foundation implications, and that the only possible cause of the cracking attributable to No. 70 was some vibration, in his evidence Mr. Moylan adopted a pragmatic approach. Given the existence of the pre-works photographic survey carried out by the architects for the first defendant in August 2002, and given that the only change which had taken place in the environment of No. 5 in the interim was the construction work on No. 70, he accepted that the cracking probably had been caused by vibration in the course of the construction works on No. 70. He also accepted that the cracking should be repaired and made good by the defendants.

I think it was proper for Mr. Moylan to adopt that approach. I am satisfied on the evidence that, as a matter of probability, the cracking which became manifest in No. 5 in 2003 was a consequence of the construction works being carried out on No. 70. Therefore, whether the mechanism which gave rise to the cracking was vibration set up during the construction works or pressure resulting from the contact between the two buildings, the defendants are responsible for the existence of the cracks.

Water ingress damage

In his report of 4^th June 2003 Mr. Moylan recorded that No. 5 had suffered significant localised water damage. He referred in particular to the damage in the vicinity of the rainwater pipe which was located on the rear wall of No. 5. In his report he suggested that, based on the photographic survey carried out in August 2002, it might prove very difficult to successfully argue that the dampness was not caused by the construction works on No. 70. The question of water ingress damage was not addressed in Mr. Moylan's oral evidence.

Again, in my view, Mr. Moylan was correct to adopt the approach he adopted. I am satisfied, on the evidence, that the ingress of water into No. 5 and the consequential damage was a result of the building operations on No. 70. In the closing submissions of counsel for the first defendant it was conceded that the defendants must accept responsibility for the initial incursion of water. Curiously, however, it was submitted that there is no evidence to link the breaking of the cistern on 29^th May 2003 with the activities of either of the defendants. Noting that it was not put to the plaintiff that there was another cause for the breakage, I consider that the proper inference to be drawn from the evidence of the plaintiff is that the damage to the cistern and the consequent release of water is attributable to construction activity on No. 70.

Accordingly, subject to the issue of mitigation of damage insofar as it is relevant, I consider that the defendants are responsible for the damage occasioned by the ingress and release of water into No. 5 and for repairing and making it good.

Points of contact other than the foundations

The work of eliminating the contact points, other than at foundation level, was carried out at the expense of the first defendant and was completed by the end of August, 2003. This was acknowledged by the plaintiff in the additional particulars furnished on 17^th October, 2003 subject to one qualification, which was stipulated by Mr. Molloy, that the separation joint to the second floor balcony slab and wall should be opened up for inspection. The circumstances in which Mr. Molloy was prevented from checking this joint at the end of August, 2003 – that the mastic was already in place when he arrived for his inspection and that it would have been a messy operation to interfere with it – were the subject of considerable debate at the hearing and, in my view, are understandable. It is surprising, however, given that in his report of 4^th June 2004 Mr. Moylan stated that it might be necessary to carry out further investigations to confirm that the required separation had been achieved, that the plaintiff's engineers were not facilitated subsequently. Moreover, it was recognised during the course of the cross-examination of Mr. Murphy that "detective work" required to be carried out to the building.

Subject to whatever the "detective work" would reveal, I am satisfied that the damage resulting from the contact of the two buildings, other than at foundation level, was arrested in August 2003 and that no further damage is likely. On the evidence, I think it is improbable that the "detective work" would disclose anything adverse to the interest of the owner of No. 5, which would not be revealed when addressing contact at foundation level, but I am at loss to understand why this element of uncertainty was not eliminated from the case over a year ago.

Contact at foundation level

The crucial issues in assessing the nature and extent of the damage to No. 5 occasioned by the construction works carried on in No. 70 are twofold: whether it is probable that contact between the two buildings at foundation level has already given rise to structural damage in No. 5 and will give rise to such damage in the future; and, if so, how the consequences can be satisfactorily addressed. Aside from the conflict in relation to the extent and significance of existing cracking, which is a key element of the first of these issues, in the light of what I have said in the next three preceding sections, these are the real issues in the case.

On the evidence certain facts are not in dispute. The foundation on which No. 5 was built in 1976 was a raft foundation. The foundation of No. 70 is a piled foundation. Good building practice requires that, where a new building is being constructed alongside an existing building, there should be a joint between the two, in other words, there should be a separation at every level, including foundation level to allow for differential settlements, thermal movements, shrinkage in the new buildings works and such like. The requirement for separation applies particularly at foundation level where, as here, the foundation types are different. The plans in accordance with which No. 70 was to be constructed provided that there would be a joint. However, as No. 70 has been constructed there is no joint present. The ground beam which supports the rear wall of No. 70 has been cast tight up against the edge of the raft foundation of No. 5. That this is the case has been observable since the openings were made in accordance with the agreement of 25^th July, 2003 in the following September. This fact was observed by Mr. Moylan and reported on by Mr. Moylan in his report of 4^th June 2004, although he expressed the opinion that up to then the absence of a joint had not caused any structural problems to No. 5.

Accordingly, as the first defendant failed to observe normal good building practice in installing the foundation of the building on No. 70, it breached the duty of care owed to the plaintiff as the adjoining property owner. The agreement between the respective architects as to the maintenance of a gap was not implemented. Notwithstanding that the defence of the first defendant, as pleaded, indicated that it was not the intention of the parties that there would be a legally binding agreement, in its closing submission the first defendant accepted that there was an agreement, which I assume to mean an agreement enforceable against it.

As to whether the contact at foundation level had already resulted, or would be likely to result, in structural damage to No. 5 and, if so, how the consequences should be addressed, at the hearing these issues largely evolved into a clash of opinion between two experienced consulting engineers, Mr. Murphy and Mr. Moylan.

As has been stated, Mr. Murphy was retained in April of this year to give a second opinion on the damage to No. 5 from an engineering perspective. His inspection was visual only, but he had the benefit of some of Mr. Molloy's reports.

In his report of 4^th May, 2004 Mr. Murphy specifically addressed the cause of the horizontal cracking in a reinforced concrete edge beam located at second floor level over the stairs in No. 5, which he was informed had first manifested itself in October, 2003. In his view, the crack resulted in the release of stresses built up from the pre-cast floor units supported by the beam. He concluded that the stresses could have been caused either by the pressure on the structure of No. 5 from No. 70 at the points of contact which had previously existed (other than the contact at foundation level) or could have been due to shock from vibrations transmitted through the points of contact or the combination of both. Mr. Moylan's opinion was that this horizontal feature was not a crack at all but was a joint between two different concrete members which were cast at different times. Mr. Molloy's evidence was that, if it was a joint, it was a joint that opened up, and that was a crack, and it had been caused by the release of latent stresses. Both Mr. Molloy and Mr. Murphy used this feature to illustrate the point that cracking may occur in concrete due to the release at a later date of stresses which have built up earlier in time. That is its principal relevance to the issues I am considering now, because Mr. Murphy acknowledged that the forces which in his opinion had caused the cracking had ceased to exist.

Mr. Murphy, on the basis of information he had, expressed the view in his report that it was likely that the lower part of the ground beam of No. 70 alongside the raft had become a supporting ledge to the edge of the raft, with the effect that one edge of a floating structure had become rigidly supported giving rise to the possibility of differential deflections in the raft with consequent stresses in the structure over it, which could cause ongoing cracking. The information on the basis of which Mr. Murphy formed this view was a statement in the earliest report furnished by Mr. Molloy, his report of 9^th June, 2003, that he had been informed by the plaintiff that "the raft to No. 5 was undermined during the piling operations". That statement, in turn, was based on the plaintiff's averment in his affidavit grounding the application for the interim injunction in relation to the excavation of material from beneath the foundations of No. 5. The plaintiff was subjected to strenuous cross-examination by counsel for the first defendant as to whether this event occurred and it was suggested that, if it had, he would have consulted Mr. Roberts, which he had not done. I accept the plaintiff's evidence that during the initial stage of the construction works on the site of No. 70 he observed a digger scooping earth at his rear wall and perceived that it was removing material from under his wall, because it seems to me highly probable that such an event occurred having regard to the manner in which the building on No. 70 has been constructed. However, I am not prepared to conclude that this resulted in an undermining of the raft to No. 5 in the sense suggested by Mr. Molloy and acted on by Mr. Murphy.

While in his report Mr. Murphy agreed with the conclusion of Mr. Molloy that pressure resulting from the contact between the two buildings contributed to the cracking in No. 5, he expressed the view that vibration set up during construction and transmitted through the points of contact was a major factor in causing the cracking. In this regard, it appears to me that he adopted a stance not at variance with that ultimately adopted by Mr. Moylan. In relation to Mr. Molloy's requirement that the areas of contact at foundation level must be cut back, as communicated in the additional particulars delivered on 17^th October, 2003, Mr. Murphy made the following observations in his report:

"It should be noted that this requirement, while desirable, will be very difficult to achieve in practice at this stage. The carrying out of this work will involve major disruption to either No. 5 or No. 70, or both from an access point of view, and from the point of view of generating noise, dust and vibration. Depending on the methods employed to cut back the concrete vibration could be transmitted to the fabric of No. 5 … causing further cracking and damage."

In his evidence Mr. Murphy expressed the view that there could be a total of

7 mm to 8 mm settlement or movement in No. 70, of which 3mm would represent settlement of the piles. In cross-examination Mr. Murphy acknowledged that some of the elements, apart from the settlement of piles, involved in his overall projection of movement are virtually impossible to calculate and he accepted the characterisation by counsel for the first defendant of his projection as a "guesstimate" doing the best he could. He emphasised that the factors he had outlined take considerable time to develop and to become fully effective.

As to the effect on No. 5 of such settlement or movement, Mr. Murphy outlined what he believed has already happened and what is likely to happen. He expressed the view that some initial settlement has occurred on the edge of the raft, which he considers explains some of the cracking, in particular, the parting between cross walls and the rear wall of No. 5. Secondly, it is his view that with the setting of the concrete there has been a small shrinkage in the width of the ground beam of No. 70, which has allowed some release on the wedging of the ground beam to the edge of the raft. This mechanism he suggested explains the discrepancy between the assessment of crack widths by Mr. Molloy and later by Mr. Moylan, the explanation being that some of the cracks have closed up. As to possible future events, he posited four scenarios: over time because of abrasion of one surface against the other, there could be a release and the raft could spring back; the ledge of the raft could break away; the gross overloading could induce bending stresses in the raft itself generating a longitudinal crack in the raft; and a hard bearing could develop within the span of the raft resulting in the raft tilting. Mr. Murphy acknowledged that the first two scenarios were the least likely to occur, and that the third, the cracking of the raft, was the most likely. He expressed the view that one or other of the four scenarios would happen in the future but acknowledged that it was impossible to say that any one of them was probable.

Mr. Moylan adopted a consistent approach both in his report of 4^th June, 2004 and in his evidence as to the likelihood of structural movement as a result of settlement on No. 70. His view was that any significant settlement which was going to occur at No. 70 would have occurred shortly after the building was completed, at which stage the full dead weight would have been carried on the piles. The dead weight would have represented 85% of the total design load. Mr. Moylan's experience was that the settlement of piles in the type of soil present at Leeson Close usually occurs within a short period after the piles are loaded. His opinion was that there was no evidence to suggest that the settlement up to June 2004 had been in any way significant and he concluded that the addition of the remaining 15% of the design load which would occur when the premises were occupied would not cause any settlement to occur.

In the course of Mr. Murphy's evidence there was some controversy in relation to a statement contained in Mr. Moylan's report in which Mr. Moylan disagreed with an opinion expressed in a report dated February 2004 from McElroy Associates, which has not been put before the court. The opinion of McElroy, as recorded by Mr. Moylan, was that the maximum settlement of the piles given the ground conditions and the loads involved would be 3mm to 4mm, which it was suggested Larsen Foundations Limited had indicated, but that this would not have any adverse effect on the raft foundation at No. 5. My understanding of Mr. Moylan's comment is that, in his view, a settlement of that order would have potential to cause significant structural cracking in No. 5, but, in his view, for the reasons I have outlined, he believed no significant settlement of the piles had occurred or was likely to occur at No. 70. Mr. Moylan's evidence was consistent with his report in that regard.

Mr. Moylan's evidence was in conflict with that of Mr. Murphy in that he expressed the opinion that neither the individual cracks nor the pattern of cracking suggested to him that the cause was foundation movement. Moreover, he did not discern any progression of cracking. This conflicts with evidence to the contrary of both Mr. Roberts and Mr. Molloy. He did not accept the explanation proffered by Mr. Murphy as to the discrepancy between his measurements and Mr. Molloy's measurements; in his view, a reverse movement would not have closed all of the cracks and would probably have generated new cracks. Moreover he did not accept that there would have been a sufficient shrinkage of the ground beam to release the interlocking of the two foundations. Mr. Moylan did not foresee any of the possible scenarios predicted by Mr. Murphy. On the contrary, he quantified the risk of there being any further adverse impact on No. 5 from No. 70 at 5%.

Mr. Moylan did, however, suggest a means whereby that risk might be eliminated. He produced a method statement which envisaged two discrete operations being undertaken. The first was to drive piles into the raft foundation of No. 5, obviously from within No. 5. The objective of the piling would be to support the raft, if the need arose. However, he did not envisage that it would arise, given that the raft has been in situ for almost 30 years. The other element was the separation of the two buildings at foundation level by cutting a 25 mm wide joint between the edge of the raft and the edge of the ground beam of No. 70. This work would be done through No. 5 and the approach would be what Mr. Moylan described as "vibrationless". Access to the cavity between the two buildings would be achieved by saw cutting out sections of the rear wall at No. 5 and the joint would be achieved by cutting off an area 25 mm in width from the edge of the raft with a concrete saw. Mr. Moylan emphasised that, in his view, neither piling nor separating the two buildings at foundation level is necessary to prevent future damage to No. 5. The works he outlined were works which could be undertaken if the owner of No. 5 wanted to be 100% sure that No. 5 was, and would remain, structurally sound, although, in incurring the cost of the works, the owner might not be getting value for money. Separation alone would not be a viable option at this stage, but in Mr. Moylan's view piling alone would. No. 5 would be uninhabitable for four months at the outside, if these works were undertaken.

Mr. Moylan's suggestions in relation to piling and separation were put to Mr. Murphy. He did not agree that piling the foundations of No. 5 alone would resolve the problems which, in his opinion, No. 5 presents, nor did he agree that both piling and separation were the solution. His view was that the very procedures envisaged by Mr. Moylan could generate stresses upon and vibration in No. 5 which could become manifest later. In essence, like Mr. Molloy, he was of the view that the only remedy was the demolition and reconstruction of No. 5.

Mr. Moylan testified that he had inspected No. 5 on two occasions since it was acquired by the new owners, the most recent inspection having taken place on 13^th October last. I do not think it appropriate to give any weight to the works being carried out by the new owners, as described by Mr. Moylan, not having heard the new owners and, in particular, their reasons for adopting the approach which Mr. Moylan testified to.

The estimate of the cost of repair and reinstatement work prepared by O'Malley Associates, which was agreed by the plaintiff, costs Mr. Moylan's proposals as follows:

€

A. Minor repairs and redecoration 38,100.00

B. Separation works, minor repairs and

redecoration 89,148.00

C. Piling, minor repairs and redecoration 123,143.00

D. Piling, separation works, minor repairs

and redecoration. 157,334.00

The first defendant acknowledged that minor repairs and decoration which would cost €38,100 are necessary but contended that the piling and separation works are not. Of course, it must be emphasised that all of the evidence as to how, and at what cost, damage caused or likely to be caused to No. 5 should be remedied is wholly hypothetical in the circumstances now prevailing, that the plaintiff is no longer the owner of No. 5. Nonetheless, it has significance to the extent that it is indicative of the value of No. 5 in its damaged condition.

There is a stark conflict between the two experts, two very experienced consulting engineers, on the implications of the failure to maintain separation at foundation level in the construction of No. 70. At one extreme Mr. Murphy's opinion, which is shared by Mr. Molloy, is that demolition and rebuilding is the only solution, whereas, at the other extreme, Mr. Moylan's opinion, expressed with a degree of conviction just short of certitude, is that no remedial action at all is necessary. In order to adjudicate on the plaintiff's claim, I must endeavour to resolve this conflict to the extent of –

(a) determining whether, as a matter of probability, the only manner in which the house on No. 5 can be rendered structurally sound is by demolition and reconstruction, and

(b) assessing how prospective purchasers would be influenced by the nature and extent of the damage to No. 5 and the likely cost of remedying that damage in fixing the price they would be prepared to pay for it in its damaged condition in the marketplace.

I have come to the conclusion on the evidence that No. 5 could be rendered structurally sound without recourse to the extreme remedy of demolition and reconstruction. On the other hand, I think it improbable that the impact on No. 5 of the works carried out on No. 70 is of an order of significance such as requires only repair and decoration to restore No. 5 to its undamaged state. In reaching this latter conclusion, I have had regard to a number of factors. First, the normal good practice of keeping the foundations of buildings separate exists for good reason. Secondly, there was good reason why the plans for the construction of No. 70 observed the normal good practice in this regard. Thirdly, it is clear from the evidence that facts which may be material, particularly in relation to the raft foundation of No. 5, may be unknown. There was implicit in the cross-examination of the plaintiff's expert witnesses criticism of the failure of the plaintiff to have the raft investigated, to procure a soil survey, to monitor the cracks by the use of "telltales" and to carryout similar investigative works. However, this criticism has to be viewed in the context that it is the defendants who are the wrong doers and against the reluctance of the first defendant to agree to the opening up of the foundations for inspection and its reluctance until the action was at hearing to acknowledge that there was a failure to observe normal good building practice in the construction of No. 70.

In general, I think that a person objectively assessing the value of No. 5 as it stands, on the basis of the relevant knowledge deducible from the evidence, would, as a matter of probability, factor into the assessment that the works of piling and separating the foundations outlined by Mr. Moylan would be required to render the building on No. 5 sound. I do not think that an objective assessor would, on the basis of such knowledge, regard No. 5 merely as a building site subject to clearance. I think he would conclude that the problem of access to the foundations to effect the separation and the risk of further damage in the course of the works would be surmountable and that, on completion of the works, No. 5 would have stable foundations separate from the foundations of No. 70.

The allegation that the plaintiff failed to mitigate his loss in maintaining No. 5 after he moved out is irrelevant in the light of the finding as to the nature and extent of the remedial action which an objective assessor of the value of No. 5 would consider necessary.

Quantification of diminution of value of No. 5

There are two elements in this measurement: the current value of No. 5 if it had not suffered the damage which is attributable to the defendants' breach; and its value as so damaged. Both elements must be assessed objectively which, in accordance with the normal valuation principles, means ascertaining what is usually referred to as "market value" or "open market value", which envisages a sale transaction at arms' length involving a willing seller and a willing buyer each of whom acts reasonably, which, in the case of the seller involves properly marketing the property.

In relation to the current market value, Denis K. Bergin of Bergins, Valuers, Estate Agents and Auctioneers, who carry on business in the Dublin 2 and Dublin 4 areas, who was called by the plaintiff, valued No. 5 at €1.75m on the assumption that it was in a very good state of decorative repair and maintenance and free from structural or other latent defect. Mr. Bergin testified that he bore in mind eleven comparisons which he thought were relevant in arriving at that value. Those comparisons were not identified. There was evidence that the plaintiff has provisionally offered a sum of €1.7m for a mews house in Dublin 4 and was advised by Mr. Bergin in connection with the proposed transaction. The prospective vendor is a client of the plaintiff's solicitor's practice. In my view, this negotiation cannot be regarded as an appropriate comparator for the purposes of an objective valuation of No. 5.

Simon Ensor of Sherry Fitzgerald, Property Advisors, who was called by the second defendant, put a current value of €1.15m on No. 5, assuming no serious structural defects. Mr. Ensor put forward a number of comparators in his evidence. However, his valuation was on the basis of the actual condition of No. 5 when he inspected it in July, 2004, at a time when it had been unoccupied for just over a year. He also discounted the value of the space at second floor level because, when constructed in 1976, the rooms at this level did not comply with the requirements of the building byelaws then in force in relation to habitable rooms. In doing so, in my view, he failed to take sufficient account of the provisions of s. 22(7) of the Building Control Act, 1990, which effectively granted an amnesty in the case of works carried out prior to 13^th December, 1989 where the requirements of the byelaws had not been complied with.

On the basis of the evidence before the court, in my view, the open market value of No. 5 in its undamaged state would be somewhere in the range of €1.3m to €1.4m.

What was proffered by the plaintiff as evidence of the value of No. 5 in its damaged state was the price achieved by the plaintiff on the sale earlier this year, €830,000. The circumstances of that sale are pertinent to the consideration of the status of the price as representing market value or not. The plaintiff intimated his decision to sell to Mr. Bergin on 10^th May, 2004. By then Mr. Bergin had already valued No. 5 on the basis that it would be necessary to demolish and reconstruct the house at €900,000. Broadly, he arrived at this figure by deducting from his figure for open market value undamaged (€1.75m) the cost of rebuilding as advised by David J. Turner & Associates (€700,000) and the cost of demolition, which he estimated at €100,000.

When giving Mr. Bergin instructions to sell by letter dated 7^th May 2004, which appears to have been despatched by fax on 10^th May, the plaintiff gave Mr. Bergin two pieces of information. First, he had received an approach from an estate agent some weeks previously offering an introduction to a potential purchaser, but that came to nothing because the potential purchaser wanted the transaction to be subject to planning permission, to which the plaintiff was not agreeable. The plaintiff also furnished Mr. Bergin with a copy of a letter he had received that day from one of the ultimate purchasers, James Staunton, making an open offer (i.e. an offer which was not subject to contract) of €810,000 for No. 5 and indicating that contracts should be sent to his solicitor, who was identified. Mr. Staunton was a next door neighbour of the plaintiff in Pembroke Place. He was well known to the plaintiff, even to the extent that years previously the plaintiff had promised Mr. Staunton to let him know if he was ever selling No. 5. The plaintiff told Mr. Bergin that he had been advised, obviously in the context of these proceedings, that it would be imprudent to sell to Mr. Staunton without testing the market. The plaintiff asked Mr. Bergin to take such steps as were appropriate to test the market. On the same day, 10^th May, the plaintiff wrote separately to Mr. Bergin effectively confirming his instructions to Mr. Bergin to sell. In this letter the plaintiff outlined the difficulty created by the construction of No. 70 and told Mr. Bergin that he had been advised that No. 5 was incapable of proper repair unless full separation between the two buildings was effected. The plaintiff wrote a further letter to Mr. Bergin on 10^th May, again confirming the instructions to sell and indicating that Mr. Bergin should endeavour to obtain €900,000.

Mr. Bergin's approach, on the basis of his instructions, was that he was effectively selling a site. He contacted eight individuals who were known to him whom he considered might be interested in the property. He was able to identify four of those individuals, one of whom was an architect and all of whom were involved in property development. None of them expressed an interest in No. 5. On 19^th May, Mr. Staunton increased his offer to €830,000 and on the same day the plaintiff accepted the offer and instructed the solicitors acting for him in the sale to send contracts to Mr. Staunton's solicitors. He also instructed that the fees of Mr. Bergin at 2% plus VAT should be discharged on closing. Mr. Bergin's fees and the VAT effectively absorbed the additional €20,000 paid by Mr. Staunton and his co-purchaser.

In my view, the price paid by Mr. Staunton and his co-purchaser cannot be accepted as representing the open market value of No. 5 damaged. It has not been established that the assumption underlying the transaction, which was that No. 5 could only be sold as a site requiring clearance, was correct. The property could not be regarded as having been properly marketed. It was given to one agent only. The campaign, if it can be called that, was conducted over nine days and only contacts known to the agent were apprised of the fact that the property was on the market. The fact that the property was for sale was not advertised in any of the many ways in which that can be done: by putting a "for sale" sign, a board, on the property; by advertising in the daily and Sunday newspapers and, in particular, in the specialised property sections; by advertising on the internet. In the context of these proceedings the plaintiff did not act reasonably in the manner in which he disposed of No. 5. The price achieved, €830,000, cannot be regarded as the proper reflection of the market value of No. 5 in its damaged condition.

Mr. Ensor was not asked to express a view on the market value of No. 5 in its damaged condition. However, he did explain the approach he would adopt in marketing No. 5, if he was asked to do so on the basis that there were serious structural defects in the premises. His evidence was that he would market it as a property requiring extensive refurbishment, or possible redevelopment. He would expose the property to the maximum market and let the market decide who was prepared to pay the most for the property. That, in my view, would have been a reasonable approach.

The only evidence before the court on which an objective assessment can be made of what No. 5 is worth in its damaged condition is the evidence as to the nature and extent of the damage occasioned by the construction of No. 70 which has occurred, or is likely, to occur and the cost of remedying that damage. If No. 5 had been properly marketed, on the basis of the knowledge which is available to the court, it would probably have fetched somewhere in the range of €150,000 to €200,000 less than what I believe to be the market value in its undamaged condition. The mid point of that range would fairly represent the diminution in value of the property, in my view.

It follows that the measure of the value of No. 5 in its damaged condition considerably exceeds the price achieved by the plaintiff on the sale at the price of €830,000. The plaintiff must bear this loss. To use the terminology used by Henchy J. in Munnelly v. Calcon Ltd., to impose this loss on the defendants would mulct the defendants unreasonably. For whatever reason, the plaintiff chose to sell the property when he did. I did not find his evidence that the reason he decided to sell at the beginning of May this year was because the first defendant in its defence some seven months earlier had pleaded that he had failed to mitigate his loss convincing. More importantly, the plaintiff chose the manner of sale, which I have already found was unreasonable given that these proceedings were pending and that he clearly intended using the purchase price as mirroring the market value of No. 5 as it was at the time of the sale.

On the same basis, in my view, it would not be reasonable to impose on the defendants the costs of the sale of No. 5 (estate agent's and solicitor's fees and VAT) or the costs of the acquisition of an alternative property (stamp duty and solicitor's fees and VAT), or additional expenditure on works on, and fitting out, the alternative premises. As is clear from the finding I have made as to the nature and extent of the damage occasioned by the works carried out on No. 70 to No. 5, I do not consider that it was a consequence of the wrongdoing of the defendants that the plaintiff would have to relocate permanently. To put it another way, the choice which the plaintiff made to dispose of No. 5 and acquire an alternative property would have been reasonable if, as a matter of probability, in order to be structurally sound and habitable the building on No. 5 would have to be demolished and reconstructed. On the evidence I have found that that is not the case. Therefore, as between the plaintiff and the defendants, the plaintiff must bear the consequences of that choice.

Credibility of the plaintiff

Both defendants challenged the credibility of the plaintiff in very trenchant terms. In its written submission, the first defendant submitted that the plaintiff had not just misled the court from the commencement of the proceedings but had actively deceived the court (or attempted to do so) on a number of occasions. The second defendant in its written submission submitted that misrepresentation, non-disclosure and untruthful and unreliable evidence by the plaintiff undermined the credibility of his evidence in relation to those parts of his claim which depended upon credibility. The court was referred to the observations of Hardiman J. when delivering his judgment in the Supreme Court in Shelly Morris v. Bus Atha Clíath [2003] 1 IR 232 and, in particular, following observations at p. 258.

"But it appears to me that a plaintiff who is found to have engaged in deliberate falsehood must face the fact that a number of corollaries arise from such finding:-

(a) the plaintiff's credibility in general, and not simply on a particular issue, is undermined to a greater or lesser degree;

(b) in a case, or an aspect of a case, heavily dependent on the plaintiff's own account, the combined effects of the falsehoods and the consequent diminution in credibility means that the plaintiff may have failed to discharge the onus on him or her either generally or in relation to a particular aspect of the case;

(c) if this occurs, it is not appropriate for a court to engage in speculation or benevolent guess work in an attempt to rescue the claim, or a particular aspect of it, from the unsatisfactory state in which the plaintiff's falsehoods have left it."

A particular complaint was that on 23^rd June, 2004 the plaintiff's solicitors furnished replies to a notice for particulars served by the solicitors for the second defendant in which the second defendant was informed that the plaintiff had reluctantly entered into negotiations for the sale of No. 5 and that, in the event of a binding contract being entered into, there would be two alternative methods of calculating damages, which were set out. The solicitors for the second defendant were not informed that a formal binding agreement had been entered into on 4^th June, 2004 with a closing date of 14^th July, 2004. Having regard to the evidence, I cannot construe this episode as representing an attempt by the plaintiff to mislead or deceive. In any event, subject to one qualification which will be addressed later, no prejudice accrued to either defendant because, when the action came on for hearing on the scheduled day, 13^th July, 2004, the hearing was adjourned until 19^th October, 2004 to enable the parties address the issues to which the sale of No. 5 gave rise.

I have already alluded to one other aspect of the plaintiff's evidence which was questioned – the plaintiff's evidence of seeing material being excavated from beneath the foundations of his house at the time the site of No. 7 was being piled. It was submitted on behalf of the first defendant that that evidence was so utterly unlikely that it could not be believed. I have already found that it is probable that the plaintiff did observe something which he perceived was the removal of earth from under the foundations, although, as I have indicated, I am not prepared to make a finding that the activity in question undermined the foundations of No. 5. I think it highly unlikely that the degree of interlocking between the two buildings at foundation level which Mr. Moylan described could have taken place without some such activity having occurred.

In general, I found the plaintiff to be a very poor historian. To a large extent this was avoidable because, as is to be expected from an experienced solicitor, in the past he had been careful in documenting issues which had arisen in relation to his property. He would have served his cause better if he had familiarised himself with the relevant documentation before giving evidence. I am also satisfied that, in the context of his dispute with the defendants and of these proceedings, the plaintiff made decisions which were manifestly unreasonable and which cannot be rationalised or justified by reliance on professional advice. On the basis of the decisions, he advanced claims which are transparently unreasonable and cannot be reflected in the award of damages in this case. Subject to those observations, I consider that the attack launched on the plaintiff's credibility was excessive and not sustainable on the evidence.

Requirement of reasonableness on the part of the defendants

In a case in which the court is measuring damages for injury to property, in applying the fundamental rubric that the damages to be awarded are to be reasonable, the court must consider not only whether the claim advanced by the plaintiff is reasonable but also whether in seeking to minimise its liability the defendant is acting reasonably. In this connection the editors of McGregor on Damages (16^th Edition, 1997) refer to the decision of the House of Lords in Lodge Holes Colliery Co. v. Wednesbury Corporation [1908] AC 323 and comment as follows at para. 1480:

"Lord Loreburn L.C., delivering the leading speech, pointed out that a court should be 'very slow in countenancing any attempt by a wrongdoer to make captious objections to the methods by which those whom he has injured have sought to repair the injury', and that 'in judging whether they [i.e. the plaintiffs] have acted reasonably, I think a court should be very indulgent and always bear in mind who was to blame'".

The editors of McGregor also quote the further comment of Lord Loreburn that "even those who have been wronged must act reasonably, however wide the latitude of discretion that is allowed to them within the bounds of reason …".

The development of No. 70 was inevitably going to be difficult because of the size and location of the site and the proximity of adjoining buildings. Given that the plaintiff had objected to the first defendant's first planning application and that the first defendant intended to build to the boundary of its own site, it is surprising that the in-house professionals and the advisors of the first defendant did not consult with the plaintiff before submitting the second planning application. Even though an accommodation was reached before the building works commenced in November, 2002, I think it is understandable that the plaintiff harboured resentment that he was not consulted. It is clear on the evidence that the plaintiff was not the only adjoining property owner to complain when the construction work commenced. Ironically, Siemens complained in relation to vibration damage during the course of the piling of the foundation.

There is undoubtedly substance in many of the complaints made by the first defendant as to the manner in which the plaintiff conducted himself from the time these proceedings were initiated. The plaintiff could have, but did not, try to resolve the problems which arose in late May and early June, 2003 without resorting to the remedy of an interim injunction. However, I do not accept that the plaintiff abused the process of the court in obtaining an interim injunction. The plaintiff could have, but did not, agree immediately to the works suggested by the solicitors for the first defendant in their letter of 27^th June, 2003. Even though those works were ultimately carried out at the expense of the first defendant, the issues between the parties were not resolved. It is true that the steps which the plaintiff took to preserve No. 5 from the time he moved out in July, 2003 until the property was finally disposed of a year later were minimal. However, from mid-September, 2003 onwards, the first defendant's officers were aware of the absence of a separation between the two properties at foundation level, if they had not been aware of this previously. By then, unfortunately, the battle lines had been drawn in this litigation. No attempt was made by the first defendant to acknowledge and propose or provide an engineering solution for the problem. This is a factor which the court is entitled to have regard to in judging the reasonableness or otherwise of the actions of the plaintiff. After all, as between the plaintiff and the first defendant, the first defendant was the wrongdoer, a fact I have already alluded to in the context of the criticism of the plaintiff for failing to carryout investigative works in relation to the raft foundation of No. 5.

Following the guidance given by Henchy J. in Munnelly v. Calcon Ltd., I also think that the relation of the plaintiff and the first defendant to their respective properties is a significant feature. The first defendant, a limited liability company, was commercially developing its property. The inter partes correspondence indicates that from the outset the concern of the first defendant was that it was incurring a financial loss by reason of being restrained from completing its development. By contrast, No. 5 was the home of the plaintiff and his family. These are factors which have to be taken into account in assessing the reasonableness or otherwise of the remainder of the heads of the plaintiff's claim. That said, the plaintiff's claim has to be assessed on an objective basis.

Expenditure incurred by the plaintiff up to the trial of the action

The defendants, properly in my view, do not quibble with the plaintiff's claim for reimbursement of the small items of expenditure which he incurred in connection with No. 5, which aggregate €2,701.30. This sum will be included in the award.

In relation to the plaintiff's claim for rent of alternative premises at the rate of €5,000 per month for fifteen months, it was submitted that the plaintiff acted unreasonably in vacating No. 5 in July, 2003, renting what was described as a grander and bigger house when mews properties similar to No. 5 were available at less than half the rent which he is paying for the house in Wellington Road, and remaining for fifteen months in the rented accommodation.

The plaintiff's evidence was that he moved out of No. 5 because of Mr. Molloy's advice, conveyed in his letter of 1^st July, 2003, that No. 5 was then not suitable for habitation because of extensive damp and mould growths and that he and his family should vacate the property as soon as possible. The plaintiff's evidence was that his understanding from Mr. Molloy was that there was "toxic" mould present in No. 5 and that it was very bad for old people and young people. No other evidence was adduced that at the time, or at any time subsequently, No. 5 was a health hazard. While I am not satisfied that No. 5 was a health hazard, I am satisfied that there was significant water damage and disrepair caused by the defendant's activities, to a degree that the plaintiff and his family could not reasonably be expected to continue to reside in the premises. Moreover, I have no doubt that the condition of the premises was exacerbated by the various inspections and investigations which the dispute between the parties and this litigation have necessitated. The concerns of the plaintiff and his advisers in relation to the absence of a joint at foundation level proved to be justified, and this was known as early as mid-September, 2003. Other than to do the largely external works which were done mainly from No. 70, which it offered to do at the end of June, 2003, the first defendant never acknowledged any liability to the plaintiff until the hearing of this action commenced on 19^th October last and never offered to do any work. The plaintiff advanced as his reason for remaining out of No. 5 the advice he got, following the inspection of the properties at foundation level, that until there was a separation between the two foundations No. 5 would continue to suffer and that the only way a separation could be achieved was by demolition of one or other building. While, as I have already indicated, I am not satisfied on the evidence that demolition and reconstruction is necessary to render No. 5 structurally sound, having regard to what I have found to be the level of expenditure which would have been necessary to make No. 5 free from structural defect and sound, and the stance adopted by the first defendant, I consider that the plaintiff was justified in remaining out of No. 5 until the hearing of these proceedings commenced, subject to one qualification. But for the almost secretive manner in which the plaintiff disposed of No. 5, the hearing would have commenced on the date on which it was scheduled to commence, 13^th July this year, three months earlier than it did. The defendants might have contended that they were prejudiced by the adjournment, if the plaintiff was allowed the rent of alternative premises for the period of the adjournment in the award. That contention was not specifically made at the hearing and the plaintiff did not get an opportunity to answer it. In the circumstance, the award will include fifteen months rent of alternative premises.

Mr. Bergin assessed the rent of a property comparable to No. 5 at €4,000 per month. Miss Eva Molloy, of Gunnes Estate Agents, who was called by the first defendant, gave evidence that the rental value of No. 5 in the year 2003 let furnished was in the region of €2,200 per month. She gave evidence of properties which were available in the Dublin 4 area at that level of rent in the middle of 2003. Mr. Ensor put the rental value of No. 5 as of July, 2003, on the assumption that the property was in good condition, somewhere in the region of €2,000 to €2,200 per month on the basis of his view of the accommodation at second floor level. On the assumption that the second floor level was habitable, he put the rent at between €2,200 and €2,500. On the evidence, I believe that No. 5 would have fetched €3,250 per month if let on the open market in good condition in July, 2003. That being the case, it would not be reasonable to measure the damages on the basis of the rent actually paid by the plaintiff, €5,000 per month. To do so, to use the words of Henchy J. in Munnelly v. Calcon Ltd., would enrich the plaintiff excessively and unnecessarily and would mulct the defendants unreasonably. Therefore, the award will include the sum of €48,750 in respect of rent for alternative premises together with the sum of €612.50 in respect of the stamp duty paid on the lease and removal expenses in the sum of €1,846.10.

General damages

In quantifying general damages for interference with the use and enjoyment of No. 5, the significant period was from the end of May to 19^th July, 2003, during which period the interference was serious and distressful for the plaintiff, whose concern was not only for himself but also for his family. The plaintiff also had the inconvenience and stress of moving out of No. 5 into rented accommodation. Further, I am satisfied that from the commencement of the construction works on No. 70 in November, 2002 until the end of May, 2003 there were occasions when the activities on No. 70 impacted on No. 5 and its occupiers in a manner which exceeded what would be regarded as reasonable given the proximity of the two properties, in respect of which the plaintiff is entitled to be compensated. There was consistency between the approach adopted by the plaintiff in the affidavit to ground the application for an interim injunction in relation to these incidents and the evidence of the plaintiff's wife. I think the plaintiff and his wife adopted a reasonable attitude in circumstances which must have been annoying and irritating, and while, as was submitted by both defendants, the plaintiff in his oral testimony exaggerated the position, I would be prepared to put this down to an altered perception in hindsight.

On the evidence, I think the proper measure of general damages is €10,000. In reaching this conclusion, I have had regard to the helpful summary of the law on general damages in analogous situations contained in the judgment of O'Sullivan J. in Leahy v. Rawson and Ors. (The High Court, 14^th January 2003, unreported).

The order

There will be an order that the defendants pay to the plaintiff the sum of €238,909.90 made up as follows:

€

Diminution in the value of No. 5: 175,000.00

Works to No. 5: 2,701.30

Rent of alternative property: 48,750.00

Stamp duty on lease: 612.50

Removal expenses: 1,846.10

General damages: 10,000.00

Total: €238,909.90

The order will be against both defendants jointly. As between the plaintiff and the defendants no part of the award is solely attributable to the liability of the first defendant in contract.

Approved: Laffoy J.