In E.surv Limited v Goldsmith Williams Solicitors [2014] EWHC 1104 (Ch), the court held that a surveying firm was entitled to a contribution under the Civil Liability (Contribution) Act 1978 from solicitors who had failed to report to their lender client details of a previous sale of the property (that would have had an effect on the surveyor’s valuation had they known about the previous sale value). The solicitors owed a general duty underMortgage Express v Bowerman (1996) to report any matter to the lender which they consider may adversely affect the lender. The incorporation of the CML Handbook into the retainer did not oust this general ‘Bowerman’ duty.

Background

The surveyors valued a property for mortgage purposes as £725,000, having been told by the borrower that it had previously been sold for £600,000 within the previous 12 months.

The solicitor owed duties to the lender under the CML Handbook. These included the duty to take reasonable steps to verify that there were no discrepancies between the description of the property as valued and the title and other documents which a reasonably competent solicitor would obtain.

The solicitor obtained Land Registry official copies which showed that the property had been sold within the previous six months for significantly less than £725,000.

The surveyors paid £200,000 to settle an earlier claim from the lender. They sought a contribution from the solicitor.

The solicitor argued that they were not liable to the lender under the more restricted CML Handbook duty and that the incorporation of the handbook into the retainer ousted the general ‘Bowerman’ duty. They argued that they were not liable to contribute to the settlement.

Held

The court gave judgment in favour of the surveyor, finding that the difference between their valuation and the previous sale value was so significant that the solicitors should have reported it to the lender. The court also held that the transaction would not have proceeded had the solicitor reported the previous sale to the lender. The solicitors were, therefore, liable to make a contribution towards the settlement.

Comment

This decision shows that the introduction of the CML Handbook and a standard form Certificate of Title prescribed by the Solicitors Practice Rules 1990, and later the SRA Code of Conduct 2007, does not mean the general ‘Bowerman’ duty does not continue to apply to conveyancing transactions.