The recent Court of Appeal decision in Large v Hart & Hart [2021] EWCA Civ 24 provides a salutary warning to surveyors to be clear in their report about its scope, including any limitations, caveats and actions available to their clients.

In November 2011, the surveyor, Mr Large undertook an RICS Homebuyers survey for Mr and Mrs Hart. Mr Large recommended that he provide a Homebuyers survey (“Level 2” survey category) and Mr and Mrs Hart agreed. The property was on a cliff top in Devon and had been substantially rebuilt and extended. The Harts showed considerable concern about whether they should proceed with the purchase of the property.

Mr Large valued the property at £1.2M and his report highlighted problems with the drainage and concerns regarding the pipes and gutters. No serious issues were raised. The Harts purchased the property for £1.2M having received Mr Large’s report.

It soon became clear that the property had significant damp and water ingress which required significant remedial works.

Mr and Mrs Hart brought negligence claims against the architect who supervised the rebuilding work to the property, their conveyancing solicitors and Mr Large. The architect and solicitors claims settled.

Mr and Mrs Hart alleged that Mr Large was negligent for:-

1. recommending a Homebuyers survey rather than a full building survey;

2. failing to identify the significant damp issues; and

3. failing to recommend that a professional consultancy certificate (PCC) should have been obtained.

Taking each point in turn, the court ruled:

Homebuyers Report

Mr Large should have advised that a building survey be carried out. The court stated that a surveyor had a continuing obligation to, having advised that a Homebuyers survey was appropriate, keep that advice under review (a) in the time between being asked to carry out the survey and reporting following that survey and (b) its appropriateness when advising after reporting on the initial survey.

Ultimately, the allegation of negligence failed because the judge accepted that surveyors’ opinions could legitimately differ (applying the Bolam test – [1957] 1 WLR 582)

Failure to identify damp

The court found Mr Large negligent in relation to his not having identified damp issues.

In his report, Mr Large did state that because the walls were rendered, he could not see where the damp proof membrane had been installed. The judge found that Mr Large should have reported that he could not see visible damp proofing at any location and should have then advised that further investigation was needed.

PCC

The judge found against Mr Large for not recommending a PCC from the architect prior to purchase, given it was a newly constructed property and did not have the benefit of an NHBC warranty.

The judge compare the importance of a PCC to a building control completion certificate. He found that had Mr and Mrs Hart known of the water ingress they would not have purchased the property. Similarly, he found that had the architects been asked to provide a PCC, they would have declined, which in turn would have meant that Mr and Mrs Hart would not have proceeded with the purchase. 

Damages

Mr Large argued that the appropriate measure for damages should follow the Watts v Morrow  (1991) 1 WLR 1421 case. Here the defects to the property should be identified and then the court should assess how those defects would reduce the value of the property to below £1.2M. Applied here the devaluation caused by the defects would have been small. 

The judge did not agree with this because such a level of award would not have put the Harts in the position they should have been in, if there had been no breach of duty.

The judge, considering South Australia Asset Management Corp v York Montague Ltd [1996] UKHL 10 (the SAAMCO case), decided that the starting point was to consider the cause of action against Mr Large. Here his breach was related to his failing to recommend the PCC. The purpose of the PCC was to obtain protection against the existence of defects which a competent surveyor could not identify.

The judge found that Mr Large’s failure amounted to the “negligent provision of advice”, thereby bringing the case into those where surveyors can be held liable for losses caused by their inadequate advice, rather than “negligent provision of information” when the entitlement to damages is more limited (see the SAAMCO case).

The judge awarded the Harts damages of £750,000 but moderated this to take into account the settlements which had been reached with the architect and the surveyor, reducing the award to £374,000.

The court also awarded £15,000 for inconvenience and distress (a very high award for such a head of loss).

Mr Large appealed, but the Court of Appeal upheld the original decision.

Conclusion

Lessons which surveyors must be mindful of as a result of the case are:-

1. Be clear on the scope of the survey and identify its limits to the client;

2. Continue to keep your advice under review having recommended a particular type of survey;

3. Taking into account the type of property, always bear in mind recommending a full building survey;

4. If an item has not been inspected, report this and provide an explanation;

5. Recommend further investigation where appropriate;

6. Consider recommending a PCC. 

7. While the facts of this case are unusual, and a court is unlikely to depart regularly from the more usual Watts v Morrow approach, it does illustrate how the court may look to provide for a claimant where it consider the usual measure of damages to be too low.

If you have any questions on this case, or are interested in discussing a claim involving professional negligence, please do not hesitate to contact the writer, Graham Mead, a partner in our Commercial Litigation department on 01473 298234 or gmead@prettys.co.uk.