A digger demolishing houses for reconstruction.

 

A surveyor has been found liable for the full extent of a couple’s loss after their property had to be demolished and rebuilt. 

The case was an instance of a surveyor giving negligent advice in relation to the transaction itself, where the transaction would not have proceeded if the advice had been correct, and therefore the surveyor being liable for the full extent of losses incurred. The more usual measure of damages which assesses the difference between the value of the property without the unidentified defects and the value with all the defects missed in the survey report was therefore not applicable.

Mr and Mrs Hart were planning to buy a recently renovated cliff-top home in Devon.  They appointed the surveyor to inspect the property and he recommended a RICS HomeBuyer report.  Following the inspection, the surveyor gave the property a mostly clean bill of health and valued it at £1.2 million.

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The Harts completed the purchase without a PCC, but soon discovered there were serious problems. 

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Mr Hart asked the surveyor if they needed a Professional Consultancy Certificate (PCC) from the architect who oversaw the recent works, given the extent of the renovations and extensions to the property.  The surveyor advised that one was not strictly necessary, but it would not be unreasonable to request one.

The Harts completed the purchase without a PCC, but soon discovered there were serious problems. There was extensive damp and the renovations had been undertaken so badly that the only sensible course of action was to demolish and rebuild the house.

Mr Hart started proceedings against the architect, solicitors and the surveyor to recover the couple’s losses. The claims against the architect and solicitor were settled out of court.

In the Technology and Construction Court (TCC), the judge found the surveyor liable for not identifying and reporting on the damp problem, and for failing to advise Mr and Mrs Hart to obtain a PCC before they bought the property. It was the latter point which turned the matter into an “advice” case, and therefore exposed the surveyor to the greater range of damages.

The judge decided that the normal measure of damages which measured the difference in the value of the property with and without the defects missed in the report would not fully compensate the Harts for their losses.  Instead he focused on the surveyor’s failure to advise the Harts to obtain a PCC.  He concluded that had a PCC been recommended the purchase would have fallen through and the Harts would have incurred no loss.  He therefore found the surveyor liable for their full loss of £750,000 – the difference between the valuation and the value of the house with all the faults which actually existed.  This was offset by settlements already received from the architect and surveyor.

The latest decision by the Court of Appeal upheld the original findings of the TCC.

James Burgoyne, Director – Claims & Technical, Brunel Professions said:  “BPE Solicitors v Hughes Holland confirmed an important distinction between giving advice and giving information, and this case is an illustration of the difference such a distinction can make in liability for a claimant’s losses. We will have to see whether the court’s categorisation of the present case as a hybrid of advice and information is elaborated by further cases in the future.

Reports about the case have been published by DAC Beachcroft, Beale & Co and Clyde & Co.

Brunel provides a wide range of Professional Indemnity Insurance broking services to property professionals.  Click here to find out more, or call Mark Sommariva on 0203 475 3275.