From Paul Shaverin FRICS FISVA, ISVA Council Member
The 2020 judgement in Hart v Large was of enormous significance to surveyors undertaking survey and valuation work. The case subsequently went to the Court of Appeal and its decision has recently been handed down.
To summarise the original case, the surveyor, Mr. Large, was instructed to undertake a survey for purchase on a rural property which was originally constructed as a bungalow but underwent extensive works of reconstruction and extension in 2009 before being put up for sale in 2011.
Mr. Large recommended a Homebuyer report and his recommendation was accepted by the purchasers, Mr. and Mrs. Hart. In his report Mr. Large gave a valuation of £1.2 million pounds and flagged up only two concerns – a red item for drainage and an amber one for pipes and gutters.
The buyers moved in late 2011 and very soon started suffering from water penetration, particularly through doors and windows and through the sunroom ceiling.
After some three years of investigations and repairs the Harts were eventually advised in 2014 that the property suffered from significant structural problems and required extensive remedial works and they commenced an action against their surveyor for negligence on the grounds that:
- He failed to advise them to commission a full building survey
- He failed to identify the significant damp problems.
- He failed to recommend that the Harts should obtain a Professional Consultant’s Certificate.
Proceedings were also instituted against the conveyancing solicitors and the architects responsible for supervision of the renovations and extensions.
The Court held that, in respect of the first ground, it was not negligent to recommend a Homebuyer report, but having done so there is a continuing obligation for the surveyor to keep his recommendation under review, both between being instructed and submitting the report, and also when advising post report.
On the second ground, Mr. Large was negligent notwithstanding there was no evidence of damp or water ingress at the time of the inspection as he could not see or confirm the presence of a damp proof course.
On the third ground he was also held negligent. There was no warranty for the works undertaken and Mr. and Mrs. Hart had no contractual rights against the builder. Mr. Large should therefore have recommended clearly that a Professional Consultant’s Certificate (PCC) was required. Mr. Large was fulfilling an advisory role and not just providing a valuation. Though he mentioned guarantees and PCCs there was no clear recommendation that in the circumstances one was essential.
The Court accepted that, if a recommendation for a PCC had been given, the purchase would not have gone ahead without it. The required remedial works were so extensive that the judge decided demolition and rebuild were required. Damages were assessed at £750,000 plus £15,000 for distress. The architects and conveyancing solicitor had already settled out of Court and Mr. Large was left with liability for the balance of £389,000.
Leave to appeal on the finding of negligence was refused, but leave was granted on the assessment of damages.
It is established case law that damages will usually be assessed as the difference between the negligent valuation and the true market value as at the date of the valuation, regardless of the cost of repairs and other losses which could be much greater than damages awarded on the difference in values. However, where, if it had not been for the negligent advice, the purchase would not have gone ahead at all, the negligent surveyor is liable for the total loss arising from the transaction.
In Hart v Large the Court of Appeal confirmed this to be a case of the latter type. The surveyor was in an advisory role and, but for the surveyor’s advice, the purchase would not have proceeded. As the damp proof course could not be seen, no competent surveyor could give a definitive value. The report should have stated the damp proof course was not inspected and made recommendations for further investigation and information. Additionally, if the need for a PCC had been stressed to be vital, without it the sale would not have proceeded and with it the architect would have been liable instead of Mr. Large.
Whilst the outcome might be considered to be harsh, we need to take account of it in our work and take on board the following lessons:
- Large was under-insured. It is essential that surveyors have adequate cover for the full amount of potential claims, both during one’s period of practice and also in any subsequent run-off period.
- Consider whether the type of inspection and report recommended to or requested by the client is appropriate and keep this under active re-consideration. If you turn up for the inspection and find that the property is not as was described or expected, contact the client before proceeding (aborting the inspection if necessary), expressly state the limitations of the agreed inspection and report and, where appropriate, recommend a higher level of inspection and report. Bear in mind the need to confirm instructions in writing before an inspection – this will probably mean re-scheduling the inspection. It may not protect you if, in a telephone conversation whilst you are at the property, the client tells you to proceed with a Level 3 report instead of a Level 2 report and you go ahead without having first issued the appropriate written documentation.
- If something cannot be seen, say so. Explain the implications and make clear appropriate recommendations for information and/or investigation. Likewise, if you have a suspicion of a hidden defect, say so. Explain why and, again, make clear recommendations for the way forward.
- If the valuation will be reliant upon first receiving the further information and investigations, say so and do not give a figure until you have all you need to be sure that your valuation is accurate.
- Do not rely on builders, architects, solicitors and the like doing their job. We need to do our own one properly and, where appropriate, make a clear, unequivocal recommendation to the client to obtain and verify guarantees, warranties, consents, approvals and all other necessary paperwork for works undertaken before going ahead. Explain the consequences of proceeding without doing so. If the paperwork is not available or not adequate for the circumstances, consider whether it is necessary to recommend to the client that it is vital to obtain a PCC prior to going ahead. The client may be very keen to proceed regardless. Do not let yourself be influenced – even if it leads to an unhappy or lost client. Better that than a PII claim down the line.
- Do not forget that the client relies on our advice. We must be clear, thorough and comprehensive in our advice. A failure to do so may be held negligent.
Remember at all times the ethos of the ISVA – we put the client first!
If you are interested in reading the decision at first instance, it can be accessed here: