Karl Phimister v D.M. Hall LLP, 26 October 2012

Outer House case in which Mr Phimister sued D.M. Hall for alleged professional negligence in respect of a mortgage valuation report carried out on a property in Buckie in Aberdeenshire. The report was prepared in support of Mr Phimister’s application for a residential mortgage over the property. The report valued the property at £230k and noted that the garden ground and surrounding land was said to extend to approximately 1.12 acres (DM Hall had not measured the area of the property and the area quoted came from the sales particulars) whereas in fact it only extended to about 0.66 acres.

Mr Phimister contended that DM Hall owed him a duty to check the area as part of their valuation and they were negligent in failing so to do. Whilst the area of the subjects may not have affected the valuation of the subjects for residential purposes (and Mr Phimister did not argue in court that it did), the smaller area severely restricted his opportunity to develop the site.

Lord Glennie found that Mr Phimister’s claim failed. To succeed Mr Phimister had to establish that the discrepancy between the actual acreage and that represented in the sales particulars should have been “obvious” to a surveyor carrying out his valuation with reasonable care. This would depend on the type of survey the surveyor was asked to carry out. Expert evidence agreed that the purpose of a mortgage valuation report was not to check the acreage of the site but to provide a valuation for mortgage purposes. A mortgage valuation report was not the appropriate tool to assess development potential; if the purchaser wanted such an assessment, he should instruct a development appraisal. A surveyor instructed to survey the subjects with a view to ascertaining whether there was room for building a certain number of houses on plots of a certain size would require, in the exercise of reasonable care, to assess the area of the subjects. However, Lord Glennie was not persuaded that a surveyor carrying out a residential mortgage valuation on a site with buildings standing on it would necessarily have been expected to notice that the site was considerably smaller than 1.12 acres. He would not, as Lord Glennie put it, “have been looking at the site through measuring eyes”.

In some cases the acreage of the site may be a relevant factor in assessing the value for mortgage purposes and, in such cases, the surveyor would have to take care to make an accurate measurement, or check a measurement given by another. However, in this case, the value lay in the buildings and not in the size of the plot and it was found that there was no reason to place such a burden on the surveyor.

The full judgement is available from Scottish Courts here.