Surveyors, Homebuyers Reports and SAAMCO
In Large v. Hart [2021] EWCA Civ 24 the Court of Appeal upheld the judgment of Mr Roger ter Haar KC at [2020] EWHC 985 where he held that a surveyor was liable not merely for (1) the difference between the value of property (a) in the condition as represented by the surveyor and (b) in the condition as it should have been reported, but (2) the difference between the value of the property (a) in the condition as represented by the surveyor and (b) in its actual condition with all latent defects taken into account (even those which the surveyor could not have known about).
In Large, the surveyor undertook a survey for a homebuyers report. The inspection was not expected to be exhaustive and no tests were to be undertaken. It was common ground that, ordinarily, the purchaser would be accepting risks that certain latent defects may not be found.
The unusual feature of the case was that the property had recently been redeveloped, there was no NHBC certificate and the surveyor could not say whether the redevelopment had been undertaken properly. As to what a surveyor should have done, the judge said:
“the surveyor has a choice: either the surveyor can say that in truth he or she cannot say whether the property is (for example) actually weatherproof; or the surveyor has to dig very deep and analyse the built structure with a considerable level of scrutiny to advise whether there are areas in respect of which the advising surveyor has doubts…”
and concluded,
“In my view, the only ways that the surveyor can protect the prospective purchaser are (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 this case) a Professional Consultant’s Certificate…”
Ultimately, one of the grounds on which the surveyor was held liable was that he did not recommend with enough emphasis the need for a professional consultant’s certificate.
While the case confirms that in a claim against a surveyor for failing to spot and report defects, the measure of damages remains “difference in value”, Large is notable for four reasons.
Firstly, it shows that a surveyor instructed to undertake a homebuyers report may need to keep in mind and revisit during the course of his retainer whether a homebuyers report remains appropriate.
Secondly, a surveyor instructed to undertake a homebuyers report is not necessarily entitled to assume that things which cannot be seen are satisfactory or to ignore them completely. Despite the terms of any retainer, the surveyor needs to maintain a critical eye and may need to comment on unseen elements where he or she has, or should have, real doubts.
Thirdly, it shows that for the purposes of applying the well-known principles in SAAMCO one does not need to, and indeed it may be wrong to, characterise a professional’s duty simply as either one to provide “information” or one to provide “advice”, and that the classification is not necessarily binary. A professional’s duty may be of a hybrid nature, such that where the particular duty breached is in respect of “advice”, the professional may be liable for more than what he should have said was wrong and may be liable for all foreseeable consequences of the transaction, or at least latent defects which he could never have reasonably spotted on his inspection.
Fourthly, although SAAMCO refers to a professional being liable in an “advice” case for all foreseeable loss which is the consequence of the course of action taken, Large is a useful reminder that SAAMCO is a tool by which a judge can assess the correct loss and that consequently in some cases a more nuanced, fact-sensitive, approach may called for. The judge’s judgment was rightly seen as “a thoughtful approach to an unusual case”. By way of illustrations, in Large it was not suggested that the surveyor would have been liable for all potential losses including any falls in values in the property market, and Coulson LJ observed that, on the facts, the surveyor was not being held liable for extensive structural problems with the foundations which he could not have been reasonably expected to spot on his inspection.
Jason Evans-Tovey acted for the successful respondents.
