Assessment of Damages in Professional Negligence Claims

By Jerome O'Sullivan

The most common method that the Court applies to assess damages in cases involving a surveyor's negligence is to calculate the diminution value in the property that arises from any defects which the surveyor negligently failed to report. This is referred to the 'no transaction' approach set out in Watts v Morrow [1991] 1 WLR 1421.

 

However, in the recent case of Hart and another v Large and others [2020] EWHC 985 (TCC), the High Court took a different approach. The Claimant had purchased a property that had been substantially demolished and rebuilt. Prior to purchasing, he instructed the Defendant surveyor to prepare a structural survey. The Defendant reported on a number of defects, but failed to identify and report upon further substantial defects.

At trial, the Defendant argued that damages should be assessed in accordance with the Watts case above and that the Defendant should only be liable for the diminution in value arising from any defects which the surveyor had negligently failed to identify and report upon.

The Claimant argued that damages should be based upon the diminution in value between the value of the property with the defects that the surveyor had in fact reported on and its value with all the defects that had existed in the property, including defects that the surveyor failed to report upon.

The Claimant argued that given the level of defects that were apparent, the surveyor should have advised the Claimant that there were likely to be other substantial defects and that the Claimant should not proceed to purchase the property unless the architect who designed and administered the contract was willing to provide a Professional Consultant's Certificate (PCC). A PCC certifies that the property had been constructed to a satisfactory standard and in compliance with the Building Regulations. One of the advantages of a PCC is to obtain protection against the presence of defects that a reasonably careful and competent surveyor would not be able to identify in a completed property.

The Court held that the surveyor's failure to advise the Claimant that it was essential to seek a PCC from the seller's architect was negligent. The Court ruled that if the Claimant had been advised to do so, he would have requested a PCC from the seller. In this case, the seller's architect would not have been able to provide this certificate and the Court held that the Claimant would not have proceeded with the purchase.

Comment on the case

This case demonstrates that a surveyor's scope of duty can extend beyond identifying defects that a reasonably competent and careful surveyor could identify but to also warn the client to obtain a PCC from the professionals involves in the construction of the property. Therefore, as a matter of law, the surveyor's liability for defects could extended beyond the defects that a reasonably competent surveyor could have identified.

However, considering the Court's departure from the findings of the Watt v Morrow case, the Defendant has been granted permission to appeal on the issue of the correct measure of damages. We await with interest the Court of Appeal's ruling on these issues.

The author of this article is a Partner at Fletcher Day and has significant experience in advising clients involved in complex and high-value litigation. For advice and information in relation to the issues set out in this article, please contact Jerome O'Sullivan at josullivan@fletcherday.co.uk.

5 November, 2020
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