SURVEYOR DID NOT OWE DUTY OF CARE TO BUY TO LET PURCHASER

In Scullion v Bank of Scotland (t/a Colleys) [2011] EWCA 693, [2011] All ER (D) 126 (Jun) the Court of Appeal held, allowing an appeal from the decision of Richard Snowden QC, that the defendant surveyors did not owe a duty of care to the claimant who had purchased a property on a buy to let basis in reliance upon the survey prepared for the mortgagee by the defendant. In this respect there is an important difference between a purchaser who buys a relatively modest house as a dwelling (to whom a duty of care is likely to be owed by a valuer) and a buy-to-let purchaser (who is now unlikely to be owed such a duty of care). It is therefore important that buy-to-let purchasers obtain their own valuations before purchasing the property in question and that they should not rely on a valuation which has been obtained for the mortgagee.

The Facts

The claimant purchased a flat in 2002 with a view to letting it out. He hoped to make a return on the rental value of the property and also to make a capital profit when he sold the flat at some future time. The defendant surveyors were instructed by the mortgage lender to value the property. They valued the flat on the open market at £353,000 and stated that it could be expected to achieve a rental of £2,000 per calendar month. At the trial of the action the Deputy Judge, Mr Richard Snowden QC, held that a careful and competent valuer would have valued the property at £300,000 and would have given it a rental value of £1,100 per month. Thus the defendant was held to have acted negligently in over-stating both the capital value of the property and its expected rental income and, consequently, the claimant was in principle entitled to recover damages from the defendant in respect of the negligent over-statement of the market value of the property and the overstatement of its rental value. But the claimant was held not to be entitled to recover damages in respect of any fall in the value of the property which was attributable to market movements in the period between the acquisition of the property by the claimant and the date on which he was able to sell it (on this aspect of the decision see our November 2010 issue, pp11-12). The defendant appealed to the Court of Appeal who allowed the appeal and held that the defendant did not owe a duty of care to the claimant.