Case Law

Question 1

Yianni v Edwin Evans & Sons

Answer 1

​

Valuers provided a report to lender ​

Subsidence discovered ​

Action taken against valuers ​

Court established valuers owed a duty of care to the plaintiffs and that there was a sufficient link between the parties that it could be foreseen that the carelessness of the valuation report might cause damage to the plaintiffs.

Question 2

Smith v Bush

Answer 2

mortgage valuer owes a duty of care to the purchaser of the subject property

• Surveyor’s report stated that the property was not in need of any essential repairs.
• chimney collapsed
• contract between lender and purchaser included an exemption clause - exempted Defendant from liability for his report
• Claimant argued both in contract and tort; exemption clause was unreasonable; and Defendant owed the Claimant a duty of care in tort.
• Court held exemption clause was unreasonable

Question 3

Scullion V Bank of Scotland

Answer 3

No duty of care for a commercial buyer.

• Colleys overvalued a BTL property (sale). ​
• Acting for lender but applicant tried to sue Colleys on basis they had duty of care to buyer.​
• Court found buy-to-let purchase is a commercial transaction and it is reasonable for a surveyor to assume a commercial buyer will instruct their own independent valuation

Question 4

South Australia Asset Management Corporation V York Montague Ltd

Answer 4

SAAMCO cap​ - Damages limited to the difference between the valuation of the property and its true value

• Banks sued valuers for losses incurred due to negligent overvaluations.​
• Liability is only for the financial consequences of valuation being wrong and not for the financial consequences of the client entering into the transaction insofar as these are greater.​
• House of Lords found valuer can only be responsible for those losses which fell within his duty of care to avoid.
• Damages limited to the difference between the valuation of the property and its true value, on the ground that the recoverable loss could not exceed what the lender would have lost if the valuation had been correct.

Question 5

Webb Resolutions V Esurv and Blemain

Answer 5

Acceptable error margin ​

• Most residential transactions with ample comparable evidence the acceptable error margin is +/- 5%. ​
• Increases to +/- 10% for ‘one-off’ properties where there is some comparable evidence available ​
• And up to +/- 15% for exceptional properties with very little or no comparable evidence.

Question 6

Roberts V J Hampson & Co (1988)

Answer 6

Following the trail ​

• take reasonable steps to follow the trail until they have all the information which it is reasonable for them to have before making their valuation.​

Question 7

Donoghue v Stevenson [1932]

Answer 7

Doctrine of negligence​

• Neighbour test established​
• You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour.​
• There does not need to be a contractual relationship for a duty to be established and manufacturers owe a duty to the consumers who they intend to use their product.

Question 8

Hart V Large

Answer 8

o Homebuyer report
o Property valued for proposed purchaser at £1.2m, with several defects identified relating to drainage, pipes and gutters.
o Client subsequently identified significant water ingress and damp issues post sale, requiring substantial remedial works that were not identified in the original report, resulting in negligence claim.

o surveyors should ensure that the appropriate level of survey is advised for the type and nature of property in question (e.g. Building Survey (L3) rather than Homebuyer (L2)).
o Surveyors should also be mindful to recommend a professional consultant’s certificate if appropriate and to record any limitations on inspection in writing.