Surveyors PI: Hart v Large – surveying and valuing residential property

United Kingdom

In the recent case of Hart v Large, the High Court found that the defendant surveyor was negligent in surveying a recently renovated residential property and awarded damages of £375,000 to the Claimants.

The judgment provides important guidance on the scope of duties for surveyors and the assessment of damages.

Background

The Claimants, Mr and Mrs Hart, purchased a £1.2 million property in rural Devon in 2011 and appointed Mr Large to carry out a survey on the property. Mr Large viewed the property and recommended a HomeBuyer report which highlighted two problem areas, being drainage and concerns with the pipes / gutters.

The property was originally a bungalow built in the 1920s or 30s and, prior to being put on the market in 2011, the previous owners had carried out a substantial renovation of the property and engaged a firm of architects to carry out the required architectural services. Following the purchase of the property, it quickly became evident that there were serious issues with water ingress and damp that ultimately required extensive rectification works.

Claim against the Surveyor

The Claimants brought claims in negligence against the architects instructed by the previous owners, the Claimants’ conveyancing solicitors and Mr Large. The claims against both the architect and the solicitors settled prior to trial.

Against Mr Large, the Claimants alleged that he was negligent in: (1) failing to recommend a full building survey, rather than HomeBuyer report; (2) failing to draw attention to the issues of water ingress / damp in the HomeBuyer report; and (3) failing to recommend that the Claimants obtain a professional consultant’s certificate.

High Court’s Decision

In relation to the first issue, whether Mr Large should have advised the Claimants to obtain a full building survey, the Claimants’ expert witness provided evidence stating that although he would have advised for a full building survey, it had not necessarily been wrong for Mr Large to advise to opt for a HomeBuyer’s report. This evidence was fatal to the Claimant’s case on this issue, and the High Court found that Mr Large had not been negligent on the evidence.

It was noted, however, that in the case of a newly reconstructed property where there is no contractual right against the rebuild contractors or professional advisers engaged by the previous owners, the only ways that the surveyor could protect the prospective purchaser were: (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, including (on the facts of the case) a professional consultant's certificate.

The High Court further stated “that a surveyor has a continuing obligation, having advised that a HomeBuyer's Report is appropriate, to keep that advice under review (a) in the time between being asked to carry out a survey and reporting following that survey; and (b) as appropriate (a very important qualification) when advising after reporting on the initial survey.”

Turning to the second issue, Mr Large was found to be negligent in his advice in the HomeBuyer report for failing to draw attention to the other defects (in particular those of damp / water ingress) in the property. At the time of the survey, there had been no evidence of damp, however, it was clear that there was no evidence of damp-proof membranes.  In accordance with the RICS Practice Note, Mr Large should have stated that this issue was ‘not inspected’, as he could not conclusively state either way whether there was adequate damp proofing.

Mr Large was also found negligent on the third issue in failing to recommend the need for a professional consultant’s certificate prior to committing to the purchase of the property, particularly given that this was a newly constructed property. He had placed reliance on the architects’ work, and the Claimants had no contractual rights against the contractors engaged in the build.

The High Court concluded that had the Claimants known of the issues of damp / water ingress prior to the purchase of the property they would not have proceeded with the purchase. Likewise, the High Court found that had the architects been asked to provide a professional consultant’s certificate, in the circumstances they would not have done so, and the Claimants would not have proceeded the purchase.

Damages

On behalf of Mr Large it was argued that damages should be assessed by the extent to which the defects which should have been reported on would have reduced the value of the property below the purchase price of £1.2 million, following the usual Watts v Morrow (1991) approach.

The High Court did not accept this argument, as it would not have put the Claimants into the position they should have been in had they been made aware that there were risks which could not be assessed, and would have led to a very low award of damages. The Court was clear that, following Lord Hoffman’s judgment in South Australian Asset Management Corp v York Montague Ltd (1997), the starting point when assessing damages is to consider the cause of action against the surveyor. In this case the main breaches of duty by Mr Large related to failing to recommend that the Claimants should have obtained a professional consultant’s certificate.

On this basis the Court said that it was the difference in value of the property with the defects as reported, and the value with all the defects in the property which was the appropriate measure.

On the valuation evidence, the High Court accepted that at about a level of £250,000 to £300,000 the cost of remedial works would be a threshold by which an incoming purchaser intending to demolish and rebuild the property. Therefore, considering the prices in 2011, the diminution in value award would be around £750,000. The High Court reduced the award by £376,000 to account for the settlement sum between the Claimants and the architects and solicitors, and also awarded £15,000 for inconvenience and mental distress.

Comment

The decision is an important reminder for surveyors on the scope of their duties in advising prospective buyers. Although it may be appropriate to advise purchasers to consider a HomeBuyers report over a full building survey, consideration of the type of property and RICS guidance should be made when preparing that report, along with the appropriateness of recommending a professional consultant’s certificate which could ultimately protect both the surveyor and the purchaser.

In particular, the decision highlights the importance of keeping advice under review, the fallacy of settling on the limitations of a report type when it is known there may be some unidentified problems being particularly highlighted in the judgment. It also highlights that the courts are willing to depart from the perceived usual measures of loss depending on the circumstances. 

Further reading: Hart v Large [2020] EWHC 985 (TCC).