Like with any professional negligence claim, in order to bring a successful claim against a surveyor you have to prove that a duty of care owed was breached which caused you recoverable loss.
Usually it is not difficult to prove breach of a duty in contract or duty; the more difficult assessment can the measure of damages that should be awarded.
In a professional negligence claim, the purpose of damages is normally to put the victim in the position that they would have been had the negligence not occurred.
The recent case of Large v Hart (2021) in the Court of Appeal looked at a different method of measuring loss in surveyor’s negligence cases.
The property was located on a cliff above a beach in Devon. Between 2009 and 2011 it was extensively rebuilt and extended.
Mr and Mrs Hart instructed Mr Large to prepare a RICS HomeBuyer’s report, which was produced on 2nd November 2011 following an inspection on the same day. A valuation of £1.2 million was stated (slightly under the offer made of £1.24 million).
The report contained the following:
“The inspection is not exhaustive, and no tests are undertaken. There is, therefore, a risk that certain defects may not be found that would have been uncovered if testing and/or a more substantial inspection had been undertaken. This is a risk that the client must accept. However, where there is ‘a trail of suspicion’ the surveyor must take ‘reasonable steps to follow the trail’. These reasonable steps may include recommending further investigation.”
The Harts did raise some concerns about the general quality of the rebuilding works with Mr Large.
This led the Harts to raising a query about whether a Professional Consultancy Certificate (“PCC”) was required before they proceeded with the purchase given that the extensive rebuilding works were not covered by NHBC. Mr Large responded by e-mail on 17th November 2011:
“It is not necessarily essential that a (PCC) is provided, but with a project of this size, stated as being managed by an architectural firm, it would not be unreasonable to ask for this. If such a certificate is not available, there may be little practical recourse if it were found that unseen deficiencies exist. You should seek advice from your legal adviser.”
The Harts completed the purchase on 23rd November 2011 for £1.2 million. Unfortunately their dream soon turned into their worst nightmare when it transpired that the rebuilding works were so poor that there was no option but to demolish and rebuild the house again.
The Harts also brought claims against the solicitors and architects and was awarded £376,000.
The First Decision
The judge in the High Court found that Mr Large was negligence in that:
- He had wrongly assumed the presence of adequate damp-proofing when there was no evidence because “the walls were rendered in such a way as to make it impossible to see whether there were or were not such membranes, although there were some locations where a damp-proof membrane should have been visible but was not”
- He failed to properly advise that a PCC should have been sought and in fact was essential before proceeding with the purchase
The judge accepted that had the negligence not taken place then the Harts would not have proceeded with the purchase, also known as a ‘no transaction’ case.
The fact that the solicitors were also negligent on the issue of the PCC did not absolve Mr Large for his part – it did not break the chain of causation. It was clear that even if the architects had been asked they would not have provided the PCC.
Measure of Loss
The cases of Philips v Ward (1956) and Watts and Marrow (1991) established that the usual measure of loss in a negligent surveyor case is the diminution in value between what was paid and what should have been paid (rather than the costs of remedial works).
However, the question put before the judge was whether the difference in value should be assessed with
a) Only the defects which should have been reported; or
b) All the defects which in fact existed
The distinction between the first category (information) and the second category (advice) cases was established in the case of SAAMCO (1997).
The judge stated that
“Here what was needed by the Harts was clear and unequivocal advice that there were risks which simply could not be assessed and against which the Harts needed protection if they wished to proceed. Whilst this is not going so far as to say that Mr Large had “a duty to protect his client (so far as due care could do it) against the full range of risks associated” with the purchase of the Property, what they needed was advice which was so fundamental to whether the transaction should go ahead that Mr Large should be held to bear the consequences of such advice not having been given”
The judge departed from the usual approach in Watts and awarded the difference in price between the property with the defects as reported and the property with all the defects present on the basis it was clear that the Harts would not have proceeded and to otherwise would result in a ‘gross injustice’.
The Harts were awarded £750,000 (later reduced to £389,000 after credit for damages paid by the solicitors and architects).
Mr Large brought an appeal which was heard in December 2020 and handed down in January 2021. He initially sought to appeal findings of breach, causation and measure of loss. Permission was only granted for the third ground.
The Court of Appeal Decision
The distinction made in SAAMCO (1997) between ‘information’ and ‘advice’ was considered in BPE Solicitors v Hughes-Holland (in substitution for Gabriel) (2017) and it was noted that the distinction was not rigid or mutually exclusive.
In this case, “Mr Large had not only to inspect and report properly on the condition of the property; he was also obliged to make appropriate recommendations as to any further investigations which he thought necessary”.
It was stressed that this was ‘not a typical negligent surveyor case’ because “The conventional measure of loss would not have compensated the Harts for the consequences of the crucial failings found by the judge, namely the advice that should have been given – but was not – as to further investigations into the damp-proofing and the need for the PCC.”
It was for this reason that Mr Large was made liable for defects which he could not have reasonably expected to spot on his inspection – “he should have seen enough to give rise to a trail of suspicion which (when taken together with the need for a PCC which would have covered all aspects of the rebuilding works in any event) ought in turn to have led him to give very different advice.”
The appeal was therefore dismissed.
Obviously each case is very fact specific and none more so than in this case. However, it does demonstrate that a court will depart from the usual assessment for the right case to achieve the right result.
As the judge at first instance advised, “the only ways that the surveyor can protect the prospective purchaser are (1) to spell out the limitation on the advice given; (2) to be particularly alert to any signs of inadequate design or faulty workmanship; and (3) to draw attention in appropriate terms to protections available to the purchaser.”
If in doubt further investigations should be insisted on by the client, and/or recommended by the expert.