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Court of Appeal revisits loss in professional negligence claims against surveyors

In Large v Hart [2021] EWCA Civ 24, the Court of Appeal unanimously dismissed an appeal against the trial judge’s findings on the appropriate measure of loss in a claim against a negligent surveyor.

Chris Freeman, a Senior Associate in our Dispute Resolution team and professional negligence expert, considers whether this may have wider implications in assessing loss in these types of claim.

Background

The claim related to a HomeBuyer’s Report prepared for the respondents (the claimants at trial) by a surveyor in respect of a property they were intending to purchase on a cliff in Devon. The property had been recently redeveloped when it was valued by the surveyor at £1.2m, and provided with what was described by the Court of Appeal as a “generally clean bill of health” by him. The claimants proceeded to purchase the property which, as it turned out, was unfortunately blighted by damp, which ultimately meant that the building had to be demolished and reconstructed.

As well as the claim against the surveyor who provided the HomeBuyer’s Report, the claimants had also brought proceedings against their conveyancing solicitors and the architects responsible for the building works, but these were settled and did not form part of the appeal.

The decision at first instance

The judge at first instance in the Technology and Construction Court found that the surveyor should have advised that he could not see a visible damp-proof course at any relevant location and that further investigations were required. In addition, that the surveyor should have advised that a Professional Consultancy Certificate (“PCC”) was necessary, in fact essential in this case.

The key question then became what the appropriate measure of loss was. The claimants argued that it should be based on the difference in value between the property with the defects as reported (essentially the £1.2m they had paid) and its value with the defects which in fact existed. In contrast, the surveyor’s case was that the diminution in value should only relate to the defects he should have reported on but failed to.

The judge preferred the claimant’s argument, as otherwise the claimants would not have been properly compensated for the consequence of the surveyor’s negligence.

The Court of Appeal’s decision

Giving the leading judgment, Lord Justice Coulson concluded that the measure of loss applied by the first instance judge was appropriate. The principal defects in the property concerned the absence of damp-proofing. To the extent that the surveyor could not have been expected to have spotted some of these defects on inspection, he should have seen enough to give rise to a trail of suspicion, and he had also critically failed to advise that a PCC was necessary before the property was purchased (which would have covered all aspects of the rebuilding works). This was not a case where the measure of loss adopted rendered the surveyor liable for, say, extensive structural problems with the foundations which he could not reasonably have been expected to identify.

Comment

Lord Justice Coulson was keen to stress, as early as the opening paragraph of his judgment, that he was confident that “this appeal gives rise to no departure from the well-known principles governing the measure of loss in negligent surveyor cases” and it is notable that there are references in the judgment to this being an “unusual case on the facts” and “an unusual situation which is markedly different to the vast majority of negligent surveyor cases”. Lady Justice Andrews added her “own strong endorsement to what my Lord has said about the unusual nature of this case”. It is clear, therefore, that the Court of Appeal was not trying to establish a new approach to assessing loss in these types of claim but rather apply the existing principles to a complex factual matrix.

It is against this backdrop which the case must be viewed and it is largely a fact specific outcome, from which no new general principles can be taken. That said, the judgment does contain an interesting analysis of the key cases in this area including SAAMCo and Hughes-Holland and the much discussed distinction between so called ‘information’ and ‘advice’ cases. The Court of Appeal noted that they are not mutually exclusive and it is possible for a professional advisor to be providing both ‘information’ and ‘advice’ – “What matters is a consideration of the duty overall, so that the court can assess whether or not the professional had a duty to protect his or her client against the particulars losses claimed”. If assessed against the information/advice categorisation, the CoA thought that the judge at first instance had considered that this was a case which was much closer to an ‘advice’ case as opposed to an ‘information’ one.

The information in this article is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.

For more information please contact Chris Freeman in the Dispute Resolution Team.

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