Negligence — Action by owners of flat against surveyors alleging negligence in a valuation report to a building society in connection with plaintiffs’ purchase of the flat — Plaintiffs purchased the flat in 1981 for £13,750, the value placed upon it by the defendant surveyors — The building society made a loan of £11,500 to the plaintiffs, but with a provision that the maximum amount advanced on the security of the flat, if no other security was taken, was £10,312 — The surveyors’ report was not given to the plaintiffs and they decided against having an independent survey, relying on the fact that the building society was willing to lend money on the security of the property — In the report the defendants said that the external and internal condition of the property was good and that there was no evidence of movement, subsidence or landslip in the property — Some two years later trouble arose when the plaintiffs decided to sell the flat and the prospective purchasers obtained a report and valuation from another surveyor — He noticed some cracks (vertical, not horizontal) and advised that a structural survey should be obtained — A report, commissioned jointly by the plaintiffs and the prospective purchasers, from a consultant civil engineer revealed that the walls were cavity walls and that the wall ties had rusted — The rusting resulted in expansion, producing hairline cracks — At this point the prospective purchasers withdrew, leaving the plaintiffs with the flat — It appeared from evidence at the trial that the problem of rusting wall ties was not recognised until the 1970s and that surveyors who were primarily estate agents did not really become aware of it until later — When the plaintiffs began to find damp in the flat and some rotting floorboards they decided to sue the defendants — At the trial there was some conflict of evidence both as to what a reasonably competent surveyor should have seen in 1981 and as to the cost of the remedial works — The judge accepted that the defendants owed a duty of care to the plaintiffs — In the end the judge concluded on the evidence that there was nothing visible in 1981 to alert the defendants as to the potential problems which might arise from defects in the flat, nothing to indicate wall-tie rusting or structural movement — The defendants fulfilled their duty to take reasonable care to give a fair valuation on the basis of the limited inspection which they were expected to make — They had not been negligent — Action dismissed
No cases are
referred to in this report.
This was an
action by Ian Nash and his wife, Lynne Beverley Nash, against Evens &
Matta, a firm of surveyors and estate agents, of Tonbridge and Tunbridge Wells,
Kent, alleging a breach of duty of care to the plaintiffs in the valuation for
mortgage carried out by the defendants on the instructions of the Eastbourne
Mutual Building Society. The subject property was a flat at 211 Railway
Cottages, Bexhill Road, St Leonards on Sea, East Sussex.
T Straker
(instructed by Durnford Ford) appeared on behalf of the plaintiffs; D I Ridd
(instructed by Barlow Lyde & Gilbert) represented the defendants.
Giving
judgment, EWBANK J said: In 1981 Mr and Mrs Ian Nash decided to buy a home. Up
to that point they had been living with a member of the family. They looked at
several places and eventually decided to buy 211 Railway Cottages in Bexhill
Road, St Leonards. The asking price was £13,750.
The estate
agent who was trying to sell the house told them that it was a snip and that if
they did not buy it someone else would snap it up. They agreed to buy it for
the asking price. They asked for a mortgage and applied to the Eastbourne
Mutual Building Society for a mortgage. The mortgage company instructed Evens
& Matta to make a valuation inspection of the property.
It was a
ground-floor flat and part of two semi-detached houses which had been converted
to make four flats in all, nos 209 to 212 Railway Cottages. Mr R F Matta went
along with his assistant and spent about 20 minutes there. He says this is the
average time for this type of valuation of a small flat. He passed the flat and
gave it a value of £13,750, saying to the building society that there was a
great deal of property on the market but few sales and that a price war was
likely. He thought it was prudent to suggest that the total loan should not
exceed £11,500.
The Eastbourne
Mutual Building Society made an offer to Mr and Mrs Nash of £11,750 and they
accepted that offer. Among the documents that were sent to Mr and Mrs Nash by
the building society was a notice that the maximum amount which the society
would be prepared to advance on security of the property if no other security
was taken, was £10,312.
The report by
Mr Matta concerning the condition of the property was not sent to Mr and Mrs
Nash. Mr Nash said that although there was a warning given by the building
society that the valuer’s duty was limited to making a valuation and that he
might have difficulties with the property which would be revealed by a
structural survey, he decided not to have any independent surveyor’s report. He
said that his solicitors did not advise him that he ought to get an independent
surveyor’s report. He says that he thought, as so many people do, that the fact
that the building society were willing to lend money on the security of the
property meant that the property was ‘OK’ as he put it. He did not think that
there was any need for a structural survey.
Although he
did not know that it was Mr Matta who had done it, he thought that if Mr Matta
had looked at the property and made sure that it was all right, then it would
be all right. He drew no inference from the fact that — if there was any
inference to be drawn — the maximum amount which the building society were
prepared to advance on the security of the property was £10,312. So they bought
this flat and moved in.
In due course,
in 1983, they decided that they would like to move to a bigger place and they
put the house on the market. Mr and Mrs Pilbeam agreed to buy the flat for
£18,000 and they made application for a mortgage. Mr M W Rapley who, like Mr
Matta, is a fellow of the Royal Institution of Chartered Surveyors, made a
valuation at this time. He saw some cracks in the walls and he said that there
should be a structural survey before the money was loaned. In due course an
investigation took place into the condition of the house. The house had been
built in 1895 and it had been built by the Southern Railway for their servants.
I am told that the Southern Railway had a high
far looked at the house was the fact that it was a cavity-wall house because it
was thought that, from the date of the house, it would be a solid-wall house.
It was some way in advance of the general standards of the time. It was a
cavity-wall house with wall ties made, I think, of iron.
What had
happened, as it was subsequently discovered, was that these wall ties were
rusting. This was causing cracks which would result in the walls falling down.
The cost of repair was quite substantial.
The problem of
rusting wall ties does not seem to have been recognised until the 1970s. It had
not been recognised by the building people. There was an article in the Sheffield
Morning Telegraph of May 30 1983. In Sheffield a special type of mortar had
been used which was more deleterious to iron than other types of mortar, and
houses in Sheffield were experiencing problems with rusting wall ties in
advance of houses generally.
In this
article it explained how the trouble had occurred and it said that at this
date, 1983, statistics compiled by the Royal Institution of Chartered Surveyors
suggested that failure in private houses was not yet a serious problem. The
heading of the article stated that small pieces of metal hidden in cavity walls
could be seriously weakening the brickwork of thousands of homes according to
research by government building experts.
Surveyors
dealing with building were aware of the problem, apparently, in the 1970s, but
surveyors who were primarily estate agents, I am told, did not really become aware
of the problem until later. Houses on the seafront of St Leonards had
experienced this problem because of the effect of sea water carried on the
wind, I suppose, so that the fact that wall ties could rust was known by then,
but it was not the case further inland. The Railway Cottages had the railway
between them and the sea and estate agents would not have expected, I am told,
the rusting of wall ties at this time.
Mr and Mrs
Nash also found damp in the house and there were also some rotting floorboards
some of which were replaced by Mr Nash. When Mr Nash found out the extent of
the problem which he faced he decided to sue Mr Matta.
Mr Matta owes
a duty in preparing the report to exercise that degree of skill and care which
is to be expected to be exercised by an ordinary, competent surveyor. In my
judgment, he owes that duty not only to the building society but to those
people who are likely to rely upon his report and that means, in the context of
this case, Mr and Mrs Nash. The plaintiffs say that he is in breach of that
duty because he ought to have realised in 1981 when he made his report not
necessarily that the wall ties were rusting but that something was wrong and it
needed to be looked at. He ought to have recognised, as Mr Rapley did in 1983, that
a structural survey should be carried out. It was not enough merely for the
building society to say in their valuation report that there may be defects in
the property which would be revealed by a full structural survey and you can
engage a certified surveyor who will tell you what his fee will be.
Mr Matta says
that he saw no cracks when he examined the place in 1981 and there was nothing
to alert him to the need for a structural survey. The plaintiff says that is
not the case because he says himself that he saw some cracks at the time, and
Mr D A Foster, who is an experienced building surveyor, says that by
extrapolation, in the circumstances when he saw the flat later on, it is
probable that there were cracks when Mr Matta saw the property.
The first
report which I have seen is that of Mr Rapley, made in 1980. He was involved in
the sale to the previous owners. His report states under general conditions
that they were satisfactory, the internal decoration was good and the external
decoration was good. Under general remarks he says that the building is in quite
good condition, but that there was an area of rendering at the top which will
require repairing. This item did not affect the valuation and presumably it
will be dealt with during the normal course of maintenance. He said that the
building was of 9in solid-brick walls rendered externally, as everyone so
believed until the full investigation was made.
Mr Rapley saw
the building from a footpath and other points of vantage. He saw two cracks in
the rendering of the window of flat 210 at the far end from the Nashes’ flat.
Visible from the footpath were vertical cracks and they were over the window of
no 210. He did not even mention them in his report because he thought they were
of no significance. The vertical cracks were not significant, particularly in
somebody else’s flat. He saw no vertical or horizontal cracks in the Nashes’
flat or in the flat above the Nashes’. When the Nashes decided to buy, Mr
Matta, as I have said, made the valuation report and the fee for this was £29.
In answer to the question whether there was any evidence of movement,
subsidence or landslip in the property or its immediate vicinity, he said ‘no’.
As to the external condition of the property, it was good as was the internal
condition.
Mr Matta said
that the flat had been recently redecorated outside and it was in good
condition. The redecoration, I am told, was in 1979. He did not see any
significant cracking nor did he see anything to indicate damp. It is not normal
in this type of valuation to lift fitted carpets near to night storage heaters
nor to use damp meters in order to get a reading as to damp penetration.
He said that
his inspection was not a cursory one and it would have been impossible for him
to miss seeing cracks which were visible. He did not miss any cracks and he did
not see any cracks. There was no smell of damp in the house and no sign of damp
discoloration nor any indication of damp.
When the
Pilbeams decided to buy the house in 1983 Mr Rapley was asked to make a report
and valuation. I have indicated that he advised a structural engineer to make a
survey because he saw, on this occasion, cracks. He said that they were all
vertical cracks and not horizontal cracks and they were about 2mm to 3mm wide.
He thought, as he had done previously and as Mr Matta had done, that it was a
solid wall. He thought it indicated movement of the structure and that is why
he thought there ought to be a structural survey. He said he did not see any
horizontal cracks.
The report he
wrote for the Eastbourne Mutual Building Society, who were asked to give a
mortgage, was that there was evidence of structural movement resulting in the
cracking of three external walls. He said that further investigation was
essential and the inspection must be carried out by a structural engineer. He
made a sketch of the position of the cracks that he saw in 1983 which alerted
him. It is a little plan intended for his own use only. It indicates one crack
on each of the external walls running forwards and upwards.
The Nashes
decided to ask their upstairs neighbour to write a structural report as Mr
Rapley had advised. It was suggested that the general idea was to allay fear
rather than to provide a proper structural report. Mr Nash said that he agreed
with this report. It describes the side elevation and a hairline crack below
the sill of bedroom 1, a hairline crack by the windows of bedroom 2 and a
hairline crack on each side of the window on the front elevation.
The report
from the neighbour indicated cracks in the rendered surface only which did not
extend to the building structure, caused by settlement over the years. There is
no reason to suppose that the description of the cracks as hairline at the time
he saw them is incorrect and it is consistent with Mr Rapley’s description.
Hairline apparently means up to about 2mm wide and Mr Rapley had found them to
be 2mm to 3mm wide on average. Mr Rapley would not accept this report as a
structural report. It merely told you what could be seen from the outside which
Mr Rapley had seen for himself. So Mr Shepherd was appointed jointly by Mr Nash
and Mr Pilbeam. He is a consultant civil engineer and he wrote a report. He
made a survey of the cavity walls which involved boring a hole in the wall and
looking through. He made the discovery, by looking through the holes he made in
the wall, that the wall ties were rusting. He accepts that the wall ties had
expanded, forming visible cracks in the same area on the outside. Mr Shepherd
also described the cracks at this time as being hairline.
The Pilbeams,
not unnaturally, dropped out of the sale and the plaintiffs remained in the
house. Nothing has been done to repair the corrosion and they have been
waiting, I suppose, for this case to be heard. It is in fact the landlord’s
obligation to repair and all four tenants are equally liable to pay for any
repairs to the external walls. The landlord wished to make the repairs, but the
Nashes have refused, on the advice of their solicitor, to allow the repairs to
be done. There has been a dispute as to what should be done.
Mr Foster, who
is a chartered building surveyor, says that the only proper way of dealing with
the problem is to take down the outer wall, remove the rusted ties and rebuild
the wall with new ties. The system generally adopted in 1981 was to take out
the ties and replace them with new ones. It is suggested by Mr Foster that this
method was a much cheaper method and longer lasting and I dare say he is right
about that.
When one comes
to damages the question is what would be the reasonable thing to do in order to
sell the house, since the plaintiffs wished to sell it. So far as I can see,
there is much to be said for doing
somebody else. That would certainly appear to be considerably cheaper.
In a subsequent
letter, Mr Shepherd says that Mr and Mrs Nash have a statement from their
neighbour that the redecoration of the outside walls was carried out in about
1979. He says that presumably at that time the cracks were filled up. He says
that it is possible at the time of the plaintiffs’ purchase of the house the
repairs may have been visible, but he says it is impossible for him to state in
1983 whether any open cracks would have been apparent.
Mr Foster
takes a different view. He thinks that there probably would have been
horizontal cracks visible by 1981 because of the nature of the defect. He
agrees that the vertical cracks were of no significance as far as wall-tie
rusting was concerned. He says that he saw the place in the winter of 1983 and
there were several cracks, both horizontal and vertical, to the external walls
at high and low level. He said that the cracks would develop and become worse
and the penetration of rising damp will affect the fabric. If it is allowed to
continue the walls would become structurally unstable and the problem ought to
be dealt with within six months. As I have mentioned, that has not been done.
He says that
he cannot say from his own knowledge that there were cracks in the wall visible
in 1981. In relation to the wall ties it is corrosion over the years and they
were already badly rusted by 1981. He says that the cracks in the structure had
been filled in probably in 1979 and that as vertical cracks were seen by Mr
Rapley on the other side of the place in 1980, he believes those were old
cracks reopened. He agrees that it would not be apparent that there were cavity
walls and he would not have expected the houses to have cavity walls.
He says that
the cracking resulting from wall-tie rust is progressive and can increase rapidly.
A single, small crack can develop into a bold and obvious crack within a year.
It is suggested that, in certain circumstances, it could be a good deal less
than a year. He thought in 1983 that there were signs of rising damp and decay.
He puts the cost of repair at £8,000 in 1983. He says that now the cost would
be around £15,000, if I understood him correctly. That cost would be divided
among four people. In his report he says that taking into account the defects
in the property the value which a competent surveyor ought to have assessed was
£9,000 as opposed to £13,750.
As far as
repairs are concerned, I have estimates from three firms. The first is from Mr
Lee and he describes himself as a replacement cavity wall tie firm. The way he
would do it is not the way which Mr Foster would do it. He would charge £3,500
for repairs to the house. Mr Foster regarded it as a bodger’s job. He said you
have to regard all these estimates as fair. Mr Barker is another builder and he
would charge £5,000 and there was Mr Boswell, who would charge something around
£2,200. Mr Foster is particularly sceptical of Mr Boswell’s estimate, which he
believes does not go far enough and he believes it is wrong about some of the
descriptions of the problem.
It is to be
noted that these firms who are estimating to do the repair job are estimating
at a much lower figure than Mr Foster’s solution. Mr Foster says that there are
firms which have sprung up once the problem was known about and it is necessary
to watch very carefully the firm which is employed. I am sure he is right.
Mr Rapley made
a further report in September 1986. He says that at the time of his inspection
in June 1980 the external decorative condition and the condition of the
building was good. He said that when Mr Matta inspected the property it was
also likely to have been good. He believes it was probable that the external
condition was subtantially the same in July 1981 as it had been in June 1980.
He said that
in 1980 there was no sign of rising damp and no sign of damage to the floor
timbers although again he made only a limited visual inspection. In 1983 he
noticed damp as Mr Foster had done in 1986. He takes the view that in 1981 the
trouble with damp and the floor defects would not have been readily apparent to
a surveyor.
Mr Rapley
wrote a letter on October 2 1986. He thought that £13,750 as a price was not
unreasonable subject to this trouble being dealt with. He said that in 1981
when Mr Matta inspected the house, no wall-tie work would have been necessary.
Mr Foster does not agree with that. He believes that you cannot deal with the
problem in a piecemeal way. Mr Rapley says that it is only necessary to do the
upper part and that may be right as far as the external sides are concerned. He
costs the repairs that would have been necessary in 1981 at £3,000 and the
liability, accordingly, to the Nashes of £750. He would assess the value of the
purchase price which would have been appropriate, because of the defects, at
£12,250. Mr Foster asserts that, having regard to the condition when he saw it,
it is probable that the cracks that should have alerted Mr Matta were visible
in 1981.
Mr Nash says
indeed that when they saw the house there was a crack from his window upwards
and horizontal. I have to consider that evidence in the light of the other
evidence I have heard. The evidence of Mr Foster on this aspect is, in my
judgment, speculative. I have the evidence of Mr Matta that there were no
cracks together with other evidence contained in various reports, to set against
the evidence of Mr Nash that cracks actually existed, and horizontal cracks at
that, in 1981.
I have to say
that I am unable to accept Mr Nash’s evidence that there were any horizontal
cracks visible in 1981. It is quite contrary to all the other evidence in the
case. I accordingly accept Mr Matta’s evidence that there were no cracks. That
being the case, in my judgment there was nothing to alert Mr Matta as to the
potential problem which might exist because of the defects of some sort or
other in the house. Certainly there was nothing to indicate wall-tie rusting,
in my judgment, and nothing even to indicate structural movement.
Mr Matta has
described to me the nature of his visual inspection and valuation. As I have
said, in my judgment I think he owes a duty to a potential purchaser to take
reasonable care to give a fair valuation. The purchaser was only aware of the
offer made by the building society and the figures that they provided. He did
not and could not have relied on the valuation by Mr Matta in the figure of
£13,750 because the building society offer was at the figure of £11,750 and he
had notice that the maximum amount they would advance on the security of the
property was in the sum of £10,312. Even if Mr Matta had been in breach of his
duty in making the valuation, in my judgment, on the evidence I have heard, the
loss to the plaintiffs would not reduce the proper price of the house.
In those
circumstances, sorry as I am for the unfortunate position Mr and Mrs Nash are
in with this defective house, the valuation by Mr Matta of the flat in 1981 was
not done negligently. It was within the range of valuations that would be
expected from an ordinary, competent surveyor given the limited nature of the
inspection he was asked to make. In those circumstances I am obliged to dismiss
the action.
The action
was dismissed with costs; the order for costs not to be enforced without leave.
