Expert Who Surveys Wrong House Liable ?

If I employ a man to instal a new cold-water tank in my roof, and it leaks from the start, I can insist that he pay for the damage, including the cost of the proper completion of the job. If necessary, I can sue him, and do so on the basis not only of the contract that we made, but also in tort on the basis that he has been negligent.

As with tradesmen, so it is with professional people. If I employ an engineer to build a railway bridge, and the bridge collapses when the first train tries to use it, I will usually have a valid claim, and again it may be in tort or in contract, or a combination of both.

However, if the bridge collapse follows an earthquake, it may be more difficult and will depend inter alia on the location. Earthquakes are extremely rare in Ireland, but more common in, say, China,Turkey or California. A question that would have to be asked would be whether the engineer's design sufficiently catered for the risk of earthquake in the particular location.

Many, if not most, claims against professionals such as engineers, surveyors, or insurance brokers, are complicated by the necessity to assess what a competent performance of the professional assignment really is. Neither lawyers nor medical practitioners, for example, normally guarantee a particular outcome e.g. that a piece of litigation will be "won", that an X-ray will definitively establish the presence or absence of a tumour, or that a particular cancer will be permanently cured. The client has to pay for the work regardless of result, and generally can only complain if the work is conducted negligently.

Platform Funding Limited v. Bank of Scotland plc

Mr F's firm, Colleys (a division of HBOS), was instructed by lender A to value a property at 1, Bakers Yard. He was told to contact Mr H. (the borrower) to arrange the necessary inspection of the property. Mr H tricked Mr F into inspecting 5 Bakers Yard instead. Both houses were still in course of construction, but the latter was substantially more complete.

Mr F wrote his report and included the statement "I surveyed [1 Bakers Yard]".

Lender A did not provide the loan, but Lender B, having been given an identical report by Colleys, did so. The deceit was discovered in due course and the lender sought redress from Colleys. One might have imagined that resistance would be futile, but resist they did, and English Appeal Court judges came to different conclusions on what the result should be.

The claim made was straightforward: you were asked to value number 1, and you falsely told us that you had done, causing us loss. It is noteworthy that this, as presented, is a claim for breach of contract, not one of negligence. Colleys' defence was essentially that Mr F's obligation, contractual or otherwise, was to take reasonable care and he could not be said to have failed to do that in the circumstances.

The Court of Appeal by 2-1 held, in essence, that the issue of reasonable care was not relevant. There was an unqualified claim by Mr F to have inspected and valued the property which the contract required him to do, but he supplied a valuation of a different property instead, for which error there was no legally effective defence.

The decision is here. The judgment of Moore-Bick L.J. contains a very useful survey of the law, including detailed consideration of several cases.

Rix L.J. probably provided the most succinct summary of the majority view at paragraph 53

In sum, I agree with Moore-Bick LJ that in the normal retainer of a surveyor to inspect and value a property there is an inherent obligation to inspect and value the right property, such that inspection and valuation of a completely different property is a breach of contract, notwithstanding the surveyor's care.

Sir Anthony Clarke M.R. thought otherwise. He was most influenced by a precedent discussed by Moore-Bick L.J. viz.Midland Bank Plc v McQueen [1999] Lloyd's Rep PN 223 (not available on-line as far as I know) in which a solicitor had been deceived as to the identity of the person who signed a guarantee, but was held not liable, even though he certified that the document had been duly signed. He could not see that the instant case was distinguishable. His view in summary (expressed at paragraph 59) was that Mr F

... would be expected to take reasonable care to identify the house. Thus he would be expected to make reasonable enquiries, as for example here by asking [Mr H], whom he might well reasonably expect to be honest. However, absent an express term of the contract that he was undertaking an absolute obligation in respect of the whole or part of his instructions, or an implied term to that effect, I would hold that there was no breach of contract unless he failed to exercise reasonable skill and care.

The result seems right, just about, but I cannot escape the feeling that neither the majority nor the minority view is entirely satisfactory. That was not necessarily the judges' fault, as they were to a degree limited by the pleadings, the judgment at first instance, and the precedents available to them.

It does not seem sensible to regard reliance by a valuer on guidance of any kind from the prospective borrower as being sufficiently careful. On the other hand, it is difficult - "impossible" might be a better word - to distinguish Midland Bank v. McQueen and there will be those who cynically suggest that the only real difference between the cases is that McQueen was a lawyer. (They would be wrong: see the Zwebner decision discussed at paragraphs 22 & 23).

Conclusion

Those who rely on professional opinions such as those discussed above will have to be very clear as to who will be left "carrying the can", not only in cases of fraud, but in circumstances of honest and not incompetent mistake. Professional experts will amend their opinions to exclude exposure to potential liability if they can. Will their clients' insurance cover the area not covered by the liability of the professional ? Can professionals be expected to check every possible area of mistake or deceit ?