Court of Appeal holds negligent surveyor liable for house’s full diminution of value

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The Facts

After extensive rebuilding works between 2009 and 2011, a cliffside property in Devon was offered for sale, following which the eventual purchasers instructed a surveyor to survey the property and prepare a RICS HomeBuyer’s report. The surveyor was concerned about the general quality of the rebuilding works, in which circumstances a ‘Professional Consultancy Certificate’ (PCC) was the best form of ‘insurance’ in relation to concerns about the standard and quality of the rebuilding works.

However, the surveyor failed to refer to the need for a PCC in his report. When he was asked about this by the eventual purchasers, he said that “it would not be unreasonable to ask for this” and that the purchasers should seek advice from their solicitors. Following the completion of the purchase for £1.2 million, the purchasers received advice (not from the surveyor) that the rebuilding works had been done so badly that the property would need to be demolished and rebuilt.

The Court’s decision

The High Court held that the surveyor was negligent for failing to draw the purchasers’ attention to the defects prior to completion and for failing to advise the purchasers to obtain a PCC (even though the prior rebuilding works at the property had been completed under the supervision of architects and not with the benefit of an NHBC scheme). Roger Ter Haar QC, sitting as a Deputy High Court Judge, held that if the surveyor had given different advice, the purchasers would not have gone through with the purchase.

On the issue of damages, the surveyor attempted to argue that he should only be liable for the reduction in the value of the property that arose from the defects that he should have reported on (but did not). However, the purchasers argued that the amount of damages should be determined by the difference between the value of the property as reported and the value of the property with the defects that in fact existed (rather than simply those defects the surveyor should have noticed and reported).

The High Court agreed with the purchasers, and calculated the diminution in value of the property as being £750,000; with £376,000 having already been paid by the purchasers’ solicitors and the architects who had supervised the defective rebuilding works, the surveyor was left to pay £374,000 in damages.

The surveyor obtained permission to appeal the High Court’s measure of the purchasers’ loss before the Court of Appeal. However, the Court of Appeal held that the surveyor had a duty of care to the purchasers “not only to inspect and report properly on the condition of the property; he was also obliged to make appropriate recommendations as to any further investigations which he thought necessary”.

As a result, the Court of Appeal held that the measure of loss applied by the High Court against the surveyor was appropriate because no other measure of loss would have adequately compensated the purchasers for the consequences of the surveyor’s negligence.

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