An unusual approach to an unusual surveyor’s negligence case

Hart & Anor v Large [15.01.21]

The Court of Appeal decision in Hart & Anor v Large [15.01.21] serves as a useful reminder of a surveyor’s duties when reporting on a newly-constructed (or redeveloped) property and the approach the court will take to the losses claimed.

Background

In 2011, the claimants, Mr and Mrs Hart, purchased their dream, cliff-top home in Devon. The property had been redeveloped under the supervision of architects. Prior to their purchase, the claimants obtained a Homebuyers’ Report from the defendant surveyor, Mr Large, who valued the property at £1.2 million.

Although the defendant’s report raised some drainage issues, his inspection revealed no other issues of particular concern. The defendant suggested that the claimants should ask the architect involved to provide a Professional Consultant’s Certificate (PCC) and advised the claimants to seek legal advice if one was not provided. The PCC was not obtained and the claimants did not seek legal advice.

The claimants brought a claim against the defendant, the architects and their conveyancing solicitors.

The claims against the architects and conveyancing solicitors settled prior to trial. The claim against the defendant was that he was negligent for (a) not recommending a full building survey, (b) failing to identify issues with damp, and (c) failing to insist that the claimants should obtain a PCC from the architects, or to emphasise the risks involved in failing to do so.

The principal defect in the claimants’ property was the absence of proper damp-proofing, which the claimants maintained meant the property needed to be demolished and rebuilt.

Decision at first instance

The Technology and Construction Court (TCC) did not accept that the defendant acted as no reasonably competent surveyor would have acted in not advising the claimants to obtain a full building survey.

The court found the defendant liable for failing to identify issues with damp-proofing and for failing to recommend a PCC be obtained in sufficiently strong terms. The purpose of the PCC would have been to obtain protection against defects which could not be identified on inspection. The court commented that the willingness of the architects to provide a PCC would have been an ‘acid test’ of their faith in the quality of the works. The court accepted that the claimants would not have proceeded with the purchase, had the architect been asked to provide a PCC and refused.

On loss, the court came to the view that applying the usual method of loss as per Watts v Morrow [1991], (i.e. the difference in value of the property as it was presented in the report, and its value in its actual condition) would have resulted in a ‘gross injustice’ to the claimants.

The court awarded the claimants circa £750,000 (being the difference between the property’s value according to the Homebuyers’ Report and its value with all of the defects which existed, including those which the defendant could not have been expected to see as part of a Homebuyers’ inspection), plus £15,000 for inconvenience and distress.

The defendant appealed, arguing the court’s approach on loss “might be taken to have radically altered the usual approach of the courts to damages in negligent surveyor cases” and that the defendant was effectively being treated as if he had given a warranty in respect of the condition of the property.

Court of Appeal

The appeal was dismissed. The Court of Appeal was bound by the TCC’s finding that, although the defendant could not have been expected to identify all of the damp-proofing issues during his inspection, there was enough to give rise to a trail of suspicion which, alongside the defendant’s failure to strongly recommend the claimants obtain a PCC, ought to have led him to give different advice from that provided.

Where losses suffered by the claimants were unconnected to the defendant’s failure to follow the trail of suspicion regarding the damp-proofing, they could be said to result from his failure to advise the claimants to obtain a PCC. The measure of loss applied by the TCC was upheld, and was “a thoughtful approach to an unusual case.”

The Court of Appeal looked at ‘information’ and ‘advice’ cases, and came to the view that the two are not mutually exclusive, with Coulson LJ commenting that: “What matters is a consideration of the duty overall, so that the court can assess whether or not the professional had a duty to protect his or her client against the particular losses claimed.” The case was much closer to an ‘advice’ case than an ‘information’ case and, according to the Court of Appeal, the SAAMCO and Hughes-Holland approach is a tool by which a Court can assess loss; it does not have to be followed in every case.

Comment

Whilst viewed by some with consternation and as a departure from the case law on the correct approach to loss in surveyors’ claims, the Court of Appeal made it clear that the decision was very much based on the unusual facts of the case. The decision highlights the courts’ willingness to depart from the usual approach to measuring loss to reach what it considers to be a fair outcome.

Simon Wilton, counsel for the defendant, offers this insight: ‘This case was indeed unusual, but the result highlights the way in which the SAAMCo and Hughes-Holland decisions can open the door to revision of long-established conventions, such as the traditional Watts v Morrow measure of loss in a surveyor’s case. Time will tell whether Hart v Large is an isolated departure, as the Court of Appeal clearly envisaged, or whether the door will be opened further by later cases’.

Kennedys acted for the defendant at first instance