Quantifying a surveyor’s negligence: a new approach?

Ordinarily, the loss caused by a negligent surveyor is measured as the diminution in the value of a property as represented in a surveyor’s (defective) report and in the value of the property as it ought to have been represented in the report.

However, the recent judgment in Large v Hart & Hart [2021] EWCA Civ 24 saw the Court of Appeal measure loss as the difference between the property’s value as represented in a surveyor’s (defective) report and the property’s true value (ie. and not merely the value the surveyor can have been reasonably expected to give it). As we shall see, the difference in the Court of Appeal’s approach is that the negligent surveyor is not only held responsible for reporting properly on the condition of a property, but also for making further recommendations that it ought to have considered necessary given the surveyor’s own limitations.

Facts

Before purchasing a cliff-top property in Devon (“the Property”), the Claimants instructed the Defendant, a surveyor, to produce a RICS Homebuyer’s report (“the Report”). The Report found no significant defects in the Property and valued it at £1.2m. After completing, the Claimants uncovered a substantial damp problem in the Property that was caused by defective rebuilding works undertaken by the previous owner. The works were so defective that the Claimants’ only option was to demolish and rebuild the Property.

The Claimants issued a claim in negligence against the Defendant.

High Court

The High Court held that the Defendant was negligent in that (1) the Report failed to identify visible damp proofing that he ought to have expected to see and (2) the Defendant did not advise the Claimants to obtain a Professional Consultant’s Certificate (“PCC”) before purchasing the Property. This was a significant breach of the Defendant’s duty as the PCC would have protected the Claimants against defects that a competent surveyor would have been unable to identify in a new build property.

In assessing the Claimants’ loss, the High Court awarded damages that reflected the difference in value between the Property as stated in the Report (ie. defect-free) and the Property with all the discoverable or certifiable defects. As explained above, this was unusual in that damages are normally assessed as the difference between a property’s true value and the property’s value as it ought to have been reported by the surveyor (ie. with only they defects reasonably discoverable by a competent surveyor).

The Defendant appealed, arguing that the damages award ought to have only reflected the omissions in the Report – rather than those that might have been discovered in the PCC.

Court of Appeal (CA)

The Court of Appeal rejected the Defendant’s argument on damages.

The Court of Appeal found that the Claimants would be severely under-compensated if the losses were only assessed on the basis of errors in the Report. Had the Defendant advised the Claimants to obtain a PCC, it was clear the purchase would not have gone ahead. Consequently, it was right that the Claimants be compensated for the Defendant’s failure to give further advise by including those defects discoverable by the PCC in the assessment of damages.

Conclusion

The Court of Appeal stressed that the case was unusual on the facts and it was not departing from established principles of law. However, the case does seem to establish a new method for quantifying loss in cases of surveyor negligence where a departure from ordinary measures of loss are necessary for achieving a fair outcome.

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