Know Who Your Client Really Is.

Original Article
November 17th, 2019


In this article, we relate the tale of a claim against a surveyor – where the claim wasn’t by the person who had commissioned the survey in the first place (who we will call A) –  but was in fact another person (who we will call B). The success of this claim hinged on whether person B was also the client. It was a complicated situation and we cannot go into too much detail, but we hope that by sharing it other surveyors can take care to prevent something similar from happening to them.

Brief background
The surveyor in question completed a Home Condition Survey in 2013. The surveyor was commissioned by A. A was known to the surveyor, being a local businessman. It was A who signed the terms of engagement and paid the invoice and it was his name on the front of the report. All emails between the surveyor and A regarding the inspection and the report were addressed solely to or from A. However, on a couple of the emails, a third person with a different surname was copied in and A used the term ‘we’.

The surveyor was not advised in any email exchange who this third person was and indeed, because the surname was different it did not occur to them to clarify that the client was anyone other than solely A. The key point here is that the client and surveyor were known to each other – not as friends but as business acquaintances.  

The surveyor carried out the inspection and provided the survey report, naming A on the front of the report. We should also highlight that the report contained a disclaimer that stated that the report was for the use of the client and that the surveyor accepted no liability if it was used by someone else.

The only query raised by A was about obtaining additional information that had not been available on the date of inspection. The surveyor answered this query and heard no more.

It is also worth noting that another RICS valuer also inspected the subject property and endorsed the value of the Property. Neither surveyor considered that there were significant defects at the time of the original inspection which had an impact on value.

The Claim

Nearly 4 years later the surveyor received a professional negligence pre-action protocol letter of claim from B’s solicitors. The letter claimed that prior to B purchasing the property A was acting as their agent when instructing the surveyor to undertake the Home Condition Survey on their behalf.

The pre-action protocol letter sent by B’s solicitor said that B had purchased the property.

The surveyor and the legal team appointed by the insurer (since this was a pre-action protocol letter, solicitors were appointed) carried out a detailed investigation. It transpired that B had waited some considerable time before there was any indication of anything wrong.

Approximately 2 years after the original survey, a number of investigations were commissioned by B, including a Schedule of Defects Report which set out a schedule of repairs needed and the estimated costs of those repairs.

However, it was a considerable time after this when the surveyor received the claim letter which was accompanied by the Schedule of Defects Report.

The very lengthy defects schedule included items costed at only a few pounds to much larger sums for replacement of more significant items. Many of the small items would not be considered to affect a person’s decision to buy (broken bolts for example) and would not be relevant to a Condition Report. Other issues were likely to have been worsened between the time of the original inspection and the schedule of repair. Also, some items were not so much repair as improvement or ‘betterment’, when judged against the condition of the property at the time the surveyor had carried out the original inspection.

However, this schedule of repairs formed the basis of the claim, which was not insignificant in value.

B also instructed an expert who had a good reputation in the area and worked for a well-respected, national firm. The expert had submitted a report indicating that they considered that the defects identified in the schedule of repairs resulted in a diminution in value of two-thirds of the repairs costed in the detailed schedule of repair.

Was this a spurious claim and why the time delay?

The surveyor confirmed he had received no previous complaint or concerns from A (or B) in the four years between the survey date and the claim, and there was no warning that a pre-action protocol letter would be issued. The surveyor had only ever been dealing with A, so did B even have a justified claim against him? It’s an important reminder that sometimes there may be other factors at play and unfortunately, it can mean surveyors and other professionals in the property industry find themselves caught in the middle of an unpleasant situation.  
Who was owed a duty of care? 

The claim was brought on the basis that the surveyor knew, or ought to have known, that B would be relying on his report. B stated that A was their agent. Remember, A was not a stranger to the surveyor.

This may indeed have been the case. However, there are cases, such as Banca Nazionale del Lavoro SPA v Playboy Club 2018 where the decision found that an advisor does not owe a duty of care to an undisclosed principal. The judgement explained that duties of care are based on the principle that there is some kind of relationship between the claimant and the defendant which requires the defendant to protect the claimant’s interests.

B would therefore need to prove that the surveyor knew that B was A’s principal. B was relying on email exchanges which they were copied into. These exchanges do not give the surveyor any indication that it was in fact B who was buying the property and would be relying on the information within the report or that it would be B who was owed a duty of care.

On the face of it, there is a simple defence. Namely that the surveyor had no knowledge of who B was or their role in the transaction. However, the argument presented by B was that the surveyor should have known who they were. The fact that the surveyor did not know that B was in fact the purchaser could not be proven and it was entirely his word against theirs.

The surveyor also faced additional difficulty in preparing a response to all the defects mentioned because, unfortunately, his evidence had been corrupted. (We have said many times that it is so important to make sure that all records relating to a survey are stored in such a way that they are secure and can be accessed in the future if needed. Ideally, you should have a backup copy saved elsewhere in case one copy becomes corrupted or lost).  

This case didn’t go to court but due to the nature of negligence claims and the costs associated with defending them, sometimes a commercial approach is taken to avoid even further costs accumulating.

What have we learnt?

There is no doubt that this whole case caused much stress for the surveyor, so could it have been avoided?

•          The claimant’s case would have been weaker if the surveyor had never heard of A. But, if A was completely unknown to the surveyor, would the claim have even been made in the first place? That we will never know, but it does provide a warning that care should be taken to identify your client, and particularly if you are communicating with someone already known to you in some way. We recommend you clarify with your client who a person is if they have been copied into an email.

•          Whichever report format you use, you should ensure the report is clear about any duties owed to third parties. A clear disclaimer that a report can only be relied upon by the named client should be included and highlighted.

•          As we always stress, it is imperative that you have contemporaneous notes and photographs to defend a potential claim. It is essential therefore that all notes, photographs, plans etc. are stored in a format that is readily accessible for some years in the future and is backed up. We cannot emphasise this enough.

•          No matter how good a surveyor you are, you may still get caught up in a long and stressful claim, so ensure you cover yourself as much as you can.