The case featured in this edition of Property Matters serves as reminder that whatever your profession obtaining clear, solid and accurate instructions is vital, and especially if you want to avoid covering the cost of legal fees! A surveyor recently found out the hard way that despite exercising reasonable skill and care during the course of his professional responsibilities, he was still liable to his client for more than £30,000 when things went wrong.
This was the result of the Court of Appeal Decision in Platform Funding Limited -v- Bank of Scotland plc (formerly Halifax plc) 2008.
Facts of Platform Funding
The surveyor was instructed to value a property which Platform Funding Limited (PF) was to take as security for a loan to a Mr Hewes. The surveyor was told that the property was 1 Bakers Yard and that Mr Hewes would allow access to the property. The surveyor contacted Mr Hewes, met him on site, inspected the property and reported to the prospective mortgagee. Unfortunately Mr Hewes showed the surveyor around 5 Bakers Yard on which there was an almost completed detached house.
At 1 Bakers Yard there was a substantial detached house still in the course of construction. Consequently the surveyor visited and reported on the wrong house. PF took a charge on 1 Bakers Yard and ended up selling it as mortgagee, but leaving a shortfall on the mortgage account in excess of £30,000. PF sued the surveyor although they did not claim that the surveyor had been negligent, just that he had neither inspected nor reported on the correct property.
The surveyor’s responsibility
Two of the judges, in respect of the responsibility of a professional, concluded that the current law was:
- The default obligation is one limited to the taking and exercise of reasonable care.
- It requires special facts or clear language to impose an obligation stricter than that of reasonable care.
- A professional man will not readily be supposed to undertake to achieve a guaranteed result.
- If he is undertaking with care that which he was retained or instructed to do he will not readily be found nevertheless to have warranted to be responsible for a misfortune caused by the fraud of another.
The Platform Funding decision
The majority decision concluded that the surveyor had undertaken an absolute obligation to inspect the correct property and was in breach of contract in failing to do so. They equated the surveyor’s failure with a photographer photographing the wrong person. In their view whilst the surveyor’s duty may well generally be to exercise reasonable skill and care it was open to the surveyor to assume an absolute obligation and in respect of inspecting and reporting on the right property that is what the surveyor had done.
In a difference of opinion however, Sir Anthony Clarke MR took the view that the surveyor was not promising to do more than exercise all reasonable skill and care and that the valuer would owe the same duty when required to inspect a property where the location was not in doubt, such as one of a large number of flats in a semi built estate.
What are the implications?
Liability for breach of contract will not arise if the professional has fulfilled instructions without negligence. If the professional assumes a strict liability, an absolute obligation, to do something rather than merely to exercise reasonable skill and care then he accepts a much greater responsibility. Whether or not he has done that will depend on the facts of the case and in particular the precise retainer or instructions originally received.
The moral is to read retainer/instructions very carefully and refuse to accept the responsibility outlined unless it is clear that you are only agreeing – in respect of all matters included in the task – to exercise reasonable skill and care. You should independently verify each element of the work on which you are to report and qualify your report where necessary.
Where location or extent of a property is an issue, for instance, then a plan should definitely be used along with the client’s confirmation of its accuracy. Where there is doubt clarification should obviously be obtained. Ensure that you do not leave yourself, or your business, open to a costly mistake!