Case Law

Question 1

Scullion V Bank of Scotland

Answer 1

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 of Appeal 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 2

South Australia Asset Management Corporation V York Montague Ltd

Answer 2

SAAMCO cap​

• Banks sued valuers for losses incurred due to negligent overvaluations.​
• An ‘information’ case is where the professional contributes a limited part of the material on which the client will rely in deciding whether to enter into a prospective transaction.​
• 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. A valuer does not have a duty of care to guarantee the valuation is correct just that care and skill has been exercised in its preparation. ​
• 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 3

Webb Resolutions V Esurv and Blemain Finance V Esurv (2012)

Answer 3

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 4

Roberts V J Hampson & Co (1988)

Answer 4

Following the trail ​

• If surveyors have grounds for suspicion they must 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.​

​- Mortgage valuation on a converted church hall. Noted limited amount of damp and rot but recommended property to building society. ​

​- Found negligent in failing to check whether the damp and rot might be more widespread. Have to follow the trail, can’t just spend same amount of time on all mortgage valuations. Some may take longer if trail needs to be followed.

Question 5

Donoghue v Stevenson [1932]

Answer 5

Doctrine of negligence​

​- Mrs Donoghue purchased ginger beer from a café but sued Stevenson for dead snail in Ginger beer.​

• 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 6

Hart V Large

Answer 6

o Homebuyer report provided by Richard Large, a surveyor, for a redeveloped Devon dwelling.
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 As a result of this case, 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)). Surveyors should also be mindful to recommend a professional consultant’s certificate if appropriate and to record any limitations on inspection in writing.