A Residential Surveyor in the High Court – Thoughts on Hart v Large.
With thanks to Chris Rispin BSc FRICS for review and comments.
In May 2020, an important judgment was handed down in a High Court case. In this article, Carrie de Silva provides an initial analysis of the case.
A surveyor was engaged, on 1 November 2011, to carry out a HomeBuyer Report (HBR) on a cliff top property in Devon on which there had recently been considerable work. The surveyor attended the property on 2 November, emailing his report to the client on the same day. The report showed no significant problems, other than lack of information about the septic tank, and a sale for £1,200,000 went ahead. However, after the purchasers moved in there was considerable and continuing water damage through doors and windows, along with various other matters.
The surveyor was found to be negligent.
Key problem: In purchasing recently built or refurbished property, there were no contractual rights against the architect or builders as the work was done for the vendor prior to purchase. With new build, an NHBC certificate would normally cover. With less extensive work there would, in the alternative, be a Professional Consultant’s Certificate, the rights against which should be transferred to the purchasers. This was not obtained in this case.
The surveyor advised, initially in an undocumented call, that a Building Regulations Completion Certificate for works and also guarantees for windows, doors, heating installation, electrical appliances, sanitary ware, etc. should be obtained and that legal advice should be sought. He also indicated that an architect’s supervisory certificate would be transferable to purchasers as a reasonable expectation. The Building Regulations Completion Certificate was obtained but no specific guarantees.
For building works not under the NHBC Scheme, a Professional Consultant’s Certificate should be sought. It was not provided and, indeed, the solicitors just excluded the clauses relating to this (presumably as it was unavailable), apparently without querying the matter.
The surveyor emailed the purchaser querying the delay in providing requested documents, the format of the Building Regulations Completion Certificate and the nature of the architect’s Making Good Defects Certificate, and stressed the need to seek legal advice on the matter.
The purchasers decided to accept the problems but requested of their solicitor, in writing, that ‘all receipts and documentation previously discussed’ be supplied on exchange, on the written advice of the surveyor.
Despite the receipt of some of the certification, it soon became apparent that there were ongoing problems. Indeed, on completion day (23 November 2011) the purchasers arrived at the property to find workmen on the premises sorting out problems on the instructions of the architects. Nearly two weeks later the documentation had still not been received and six months later water leakage was significant and worsening.
The purchasers commissioned a further survey, a civil and structural engineer’s report and an architect’s report, and some months after purchase, they liaised with the surveyor in what he considered a non-combative approach, simply seeking his professional advice. Eventually, though, they resorted to the courts and, with the solicitor and architect having settled, the judge looked to consider in which aspects of work the surveyor was potentially negligent.
Was the surveyor negligent in recommending a HomeBuyer Report (HBR) rather than a Building Survey?
RICS products for residential property include three levels of report:
- A Condition Report
- A HomeBuyer Report
- A Building Survey
Although opinions differed, it was accepted by the court that a HomeBuyer Report was ‘not necessarily wrong’. Note that the measure is not whether a different surveyor would have suggested something different but, per Bolam , whether it is unreasonable for any competent surveyor to have opted for the HomeBuyer Report in these circumstances. So, a HomeBuyer Report was not a negligent choice.
Having decided that a HomeBuyer Report was acceptable, should the surveyor have suggested a higher-level report after visiting the property?
This question was not answered with regard to the defendant as being ‘unnecessary’ in the light of other matters, but the judge did stress that even where an HBR is a valid choice, this must be kept under review both from the time of commission to the time of reporting and at the time of any further advice provided after the report.
Was the surveyor negligent in the contents of the HomeBuyer Report?
Yes – there should have been a note regarding elements which could not be, or had not been seen, rather than vague assumptions to things having been done properly. There were also signs of ‘sloppy workmanship’ which should have prompted the surveyor’s concerns. And the claimants said they raised issues prior to the survey regarding the construction and cliff top position. Unfortunately, these emails had been deleted.
The judge made repeated reference to a Not Inspected (NI) rating which he indicated should have been used. Practitioners will be aware that this is an express term normally relating to whole areas of a property usually covered which were not (see 4.2 in 2016, 5th ed. RICS HomeBuyer Report – Survey and Valuation) but, as noted above, uncorroborated assumptions as to good workmanship on something which has not been seen, cannot be made, and the report should record facts and assumptions with foundation, not suppositions.
Was the surveyor negligent regarding advice as to Professional Consultant’s Certificate (PCC)?
In the HBR the surveyor did highlight the lack of a Completion Certificate and guarantees, and indicated that they should be sought but did not, in clear and unequivocal terms, state that a PCC must be sought. In an email a fortnight later he said that a Completion Certificate was essential and that a PCC was ‘not necessarily essential’ but its absence would leave no recourse, and that legal advice should be sought.
So, yes, failing to recommend a PCC in the HBR, in clear terms, was negligent. And, in the later email, it should have been highlighted as ‘essential’.
Did the solicitor’s negligence break the chain of causation?
As noted earlier, the claimants also brought actions against their solicitors and architects who, from the law report, appear to have had overt shortcomings. These disputes were settled out of court. Did, particularly, the solicitor’s negligence break the chain of causation as to the surveyor’s negligence, i.e. was the solicitor’s negligence so fundamental to the loss as to negate the surveyor’s actions? Answer reached in judgment: no. The purchase of the property was a direct result of the surveyor’s negligence.
What was the consequence of the surveyor’s negligence?
It was found that the claimants would not have purchased the property if the advice on both the condition of the property and the lack of certification and guarantees had been complete and non-negligent.
What were the damages?
It was found that the claimants’ loss could not be resolved with damages of the difference in value between the negligent valuation and a competent valuation. It was found that the claimants would not have purchased the property had the survey been of a satisfactory standard. The key negligent factor was not about the surveyor missing certain structural issues but in failing to spell out the need for a Professional Consultant’s Certificate, which would have provided both the necessary confirmation of standard, and a right of action in the event of problems.
In assessing the level of damages, the question is: was the duty one to provide information only (as is deemed to be the case in most mortgage valuations) or was it an advisory duty? Although normally treated as discrete terms, the judge cited Lord Sumption in Hughes-Holland v BPE Solicitors  as stressing that the terms are not mutually exclusive.
But broadly, in an information only valuation, damages would be limited to the so called SAAMCo cap, i.e. the difference between the negligent value and the ‘true’ value.
Where there is a wider scope of advice (and it was deemed that the transaction was entered into on the basis of the report and surrounding information provided by the surveyor), the costs of all defects are at issue, as they would not have purchased the property but for the negligent report.
The judge noted that many aspects would not have been apparent even to a competent surveyor, and the only competent survey would be one which would serve to dissuade the claimants from purchasing. Thus, the usual Watts v Morrow  measure (the difference between the negligent and a competent valuation) would not be fair to the claimants. Conversely, it was submitted on behalf of the surveyor that a competent valuer could not be said to give warranty of all possible unknowable defects. These are simply an inherent risk of purchasing the property.
In the final assessment, the judge found that, had a Professional Consultant’s Certificate been stressed as vital the transaction would not have gone ahead thus the full costs of defects, on a demolition and re-build basis, were awarded.
The damages were assessed at £750,000 (a compromise between the experts’ assessments but nearer the higher end), with the solicitor and architect having already paid £376,000 leaving net damages for the surveyor defendant at £374,000, to which £15,000 was added for inconvenience and distress.
An analysis of the workings of the valuations will be left to those with the relevant expertise, and there are a number of online commentaries. As mentioned, leave has been given to appeal on the valuation point. But a few notes about the expert witnesses:
The judge commented that the expert valuer for the surveyor lacked the analytical detail of the claimant’s expert, did not take a realistic view of the prospective purchasers wanting demolition and re-build, and used inappropriate comparables (higher value locations), and comparables which did not take into account likelihood (or lack thereof) of planning permission for similar property enhancements. Without any comment as to the veracity of this judicial opinion, it does underline the need for expert witnesses to consider their submissions very carefully, and to be able to corroborate all aspects of their opinions with appropriate sources which stand up to examination. However ‘correct’ the witness is, if the evidence is not well-sourced and substantiated, and the expert does not respond well to scrutiny, the judge is unlikely to favour their position.
On the quantity surveyors, the evidence of the QS for the claimant was ‘preferred’ (although not without highlighting a point of calculation).
An extensive review of the role and influence of expert witnesses is for another day but an expert being significantly criticised or one party’s expert being clearly preferred is common. Not in this case, but it is also common that experts are chastised in court for being unfamiliar with Civil (or Criminal) Procedure Rules, the format and content of reports, the necessary liaison with the other party, and their professional body guidance. So any surveyor going into this work must, as a starting point, familiarise themselves with both the parts of the Civil Procedure Rules, Practice Direction 35 Experts and Assessors (or, less likely) Criminal Procedure Rules (Part 19 Expert Evidence), and Surveyors Acting as Expert Witnesses (4th ed, 2014 – see also the accompanying Client Guide and the Scottish edition, 2015).
As an aside, at one point, counsel for the defendant questioned the claimant’s building surveyor as to whether they thought the defendant surveyor was negligent, and then commented on the witness not understanding negligence, at law. Although experts should be competent and well prepared in their field, the judge noted that the witness was not a lawyer. He intimated, effectively, that the witness should be questioned in a way which allows the lawyers and the judge to draw out the application of the facts to the legal parameters of a finding of negligence.
Lessons for practice
Choice of product
The surveyor should be fully comfortable that the level of product commissioned is appropriate to the property. This should be considered against the RICS product parameters with the surveyor highlighting where they consider a requested product to be inappropriate. The property in question had recent extensive work, was in an exposed, coastal position and had an area of flat roof where some might have favoured a more detailed report (although it must be stressed that, in this case, the surveyor was found not to be negligent on the decision to provide the HBR).
For the client, the terms in a quotation should be very clear about the difference between a HomeBuyer Report and a full Building Survey (and, indeed, a Condition Report). The client may well not appreciate the difference and just assume that they have had a ‘survey’ which will pick up ‘everything’.
Ongoing review of product
Even if a Condition or HomeBuyer Report is deemed appropriate, if during the course of the review, or afterwards, a more detailed report is felt to be prudent, this must be notified to the client.
Be clear with other professionals as to parameters of responsibility. The judge indicated that a surveyor’s role ‘dovetails’ into the conveyancing process. This term nicely illustrates the required level of engagement. The judge noted as ‘a real risk’ the concern that the solicitor thinks the surveyor is doing something and vice versa, and the client is left with neither of them covering a particular matter.
If modern building techniques or anything else, coupled with level of survey, mean that matters, e.g. damp-proofing, cannot actually be seen to satisfaction, this must be indicated in the report. Saying things such as ‘are likely to be designed with’ and ‘are likely to be’ will lull a client into a false sense of security. If something cannot/has not been seen, a note should be added setting out the possible implications, along with what additional survey or guarantee may be required as a consequence. The judge noted that because the works were recent, it appeared that the surveyor simply assumed everything had been inspected and signed off by competent professionals.
Be aware, also, of the impact of weather on new build/refurbishment. If the property has not seen a winter (particularly one on a coastal front), has the watertight-ness of windows and doors been adequately tested?
These are the dangers of inspecting a recently completed property. Few, if any, defects are likely to be apparent, hence the need for a warranty on new buildings and recent refurbishments.
Whether building control certificates or contractor completion certificates are reliable is a separate issue and there are many commentators on the current building control system, the implications of which have been felt in everything from annoying niggles for new home owners through to the Grenfell Tower fire. But building control does provide a measure of satisfaction and contractors’ certificates (with transfer of cover to new purchasers) provide a direct line to actionable legal responsibility.
Basic standard good professional practice: keep an up to date file and include a note of all telephone conversations (following them up with a formal note to the client, or whoever, setting out what was intended), and file all emails.
The measure of damages in the case was unusually high, beyond the normal method of assessment. This may well be unlikely, but it is clearly a possible outcome of a claim. For surveyors working on their own account or for small firms, the level of cover should be carefully considered in relation to the value of properties being surveyed. Is an increased level of cover indicated? Is an increased agreement on insurance for a one-off job indicated?
ter Haar J highlighted the correct course, to offer protection for the purchaser.
(a) Be clear about limitations of advice. See note above about the understanding of the general public of different levels of survey.
(b) Be alert to signs of inadequate design.
(c) Draw the client’s attention to the need for terms of protection (e.g. NHBC, Professional Consultant’s Certificate and guarantees on specific items).
The judge noted the problems in the surveyor neither wishing, nor having the role, to chill the property market. There could be very many issues not visible on a mortgage valuation and clearly a report cannot indicate and suggest follow up on every potential issue, but it is also not acceptable to assume ‘it is all right’ with no basis.
In conclusion, this case will have concerned many in the residential surveying and valuation profession. But an eye to the ‘lessons for practice’ above should help ensure that work will not be found to lack reasonable care. And (with no reference to Hart), an overarching point, highlighted many years ago in another High Court negligent valuation case, Fryer v Bunney , is that, to paraphrase Justice Newey, we must none of us carry out our work on ‘automatic pilot’, doing jobs of an apparently standard type for the umpteenth time. A useful compass for professional life is to think, ‘what if I had to justify this decision/report/remark/action in the very unlikely event of being in court in a few years’ time?’ Not a question to scare, simply to make us all take the time to stop and think.
Comments from Sava
“This is a landmark case and will no doubt impact on how surveyors approach inspecting a property. We will revisit this matter at a later date, particularly in the light on the new RICS Home Survey Standard.”
About Carrie de Silva
Carrie is Principal Lecturer in Law and Taxation at Harper Adams University as well as a Director of BlueBox Partners and a Sava trainer.
 From South Australia Asset Management Corp. v York Montague Ltd  House of Lords