We first reported on the case of Scullion v Bank of Scotland PLC in October 2010. The Court of Appeal has now reversed the first instance decision and has held that a surveyor who undertook a valuation for mortgage purposes did not owe a duty of care to a buy-to-let purchaser.
The claimant had decided to invest in a buy-to-let property and the mortgagee organised for a firm of valuers (which is now part of the defendant) to value it. The valuer produced a valuation report setting out the value and an indication of the monthly rental that might be achieved. The claimant was not subsequently able to let the property at the sum indicated by the valuer and sold it. A significant shortfall remained on the mortgage account and the claimant sought damages from the valuer. At first instance, the court held that the valuer's duty of care extended to the claimant and that he was entitled to damages for the negligently high rental valuation.
On appeal, the Court of Appeal held that this was not an ordinary domestic purchase but a commercial, investment purchase. The valuer could not have foreseen that in such a case the claimant would rely upon his valuation rather than obtain his own advice from an estate agent or his own independent valuer.
The court held that people who enter into such transactions are generally more commercially astute and richer than people who buy to occupy and could therefore be regarded as more likely to be able to afford and to obtain an independent valuation or survey. A valuer valuing a buy-to-let property for a prospective mortgagee would expect a prudent purchaser to obtain his own advice on such things as the ease of letting the property, the level of rent achievable, any rent-free period that might be necessary and other terms that might be important. No duty of care was owed to the claimant.
Things to consider
This is an important decision for valuers as it has restricted the class of purchasers that a duty of care is owed to. Borrowers obtaining buy-to-let mortgages should perhaps be more strongly advised to pay for and obtain their own independent valuations.