LEGAL
Due to the investment nature of the
purchase in this case, however, it was not sufficiently clear that it would have been foreseeable by Colleys that Mr Scullion would rely on its report rather than obtaining his own advice; for similar reasons there was no sufficiently clear proximity of relationship; and in any event, it was not just and equitable that Colleys should be liable to Mr Scullion because the transaction was commercial in essence. The result was that Colleys owed no duty of care to Mr Scullion, and so had no liability to him in negligence and therefore no damages were owed. The Court of Appeal also recognised
that it was not correct to attribute all loss of revenue which Mr Scullion suffered in connection with the property to the inaccurate rental valuation, clearly there were periods when it would have been unlet and/or unsold for reasons unrelated to the overvaluation. The appeal decision therefore goes on to give crucial guidance as to how damages in rental overvaluation cases should be calculated and capped.
Colleys owed no duty of care to Mr Scullion so
had no liability to him in negligence
The decision is good news for surveyors.
The Court of Appeal has made a strong statement that it was wrong in principle to extend the duty of the lender’s valuation surveyor to purchasers in commercial cases. Domestic owner-occupier cases are seen as a justified by consumer protection principles, with buy-to-let investors less deserving of protection and more likely to obtain and to be able to afford their own valuation. Following this decision it is difficult to envisage a commercial case in which the
court might be willing to find an implied duty owed by a valuer. As regards the assessment of damages,
the Court of Appeal’s conclusion has to be correct, as it focuses attention on the losses actually caused by the negligence. The explosion of interest in the buy-to-
let sector and ownership of property as an investment during the recent property boom and bust has prompted a surge in professional negligence claims. There will continue to be plenty of scope for dispute and debate, as different facts give rise to cases brought by those hoping to recoup losses suffered. However it is to be hoped that this case, and the important liability and quantum principles established, will encourage the swift and sensible resolution
of many such claims. [1] Scullion v Bank of Scotland plc (t/a Colleys) [2011] EWCA Civ 693
Helen Stead:
helen.stead@
walkermorris.co.uk
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