The Court of Appeal has given judgment in a case concerned with whether surveyors are under a strict duty to value the correct property for standard mortgage valuations.
Sir Anthony Clarke, Rix and Moore-Bick LJJ considered the matter in a dispute between Britannia Building Society’s intermediary lender, Platform Funding, and the former Halifax Bank’s valuation arm, Colleys.
In November 2002, Colleys was instructed to provide a standard mortgage valuation for a house at 1 Bakers Yard, Spalding,
Colleys was informed that Hewes would meet the valuer at the site to show him the property.
However, as a result of an alleged fraud by Hewes, the valuer was shown a different property, namely 5 Bakers Yard.
Apparently, no 1 was an empty shell without a roof whereas no 5 was nearing completion. Accordingly, Colleys valued the property at £230,000, when the true value for no 1 was £95,000.
Subsequently, on the basis of Colleys’ valuation, Platform loaned Hewes £154,495.
In August 2004, Hewes defaulted on the loan and the property was sold, leaving Platform with a shortfall of £30,000.
Platform sued Colleys, alleging negligence and breach of contract.
In Central London County Court, Judge Collins found that although Colleys had not been negligent when it valued the wrong property, it was liable for breach of a strict contractual duty to value the correct property. Therefore, despite having taken reasonable care, it was liable to Platform.
On appeal, Thomas Grant, counsel for Colleys, argued that “in the normal context of a standard valuation for mortgage purposes, no such warranty will arise”.
Rix and Moore-Bick LJJ dismissed the appeal, saying: “Although there is a presumption that those who provide professional services normally do no more than undertake to exercise the degree of care and skill to be expected of a competent professional in the relevant field, there is nothing to prevent them from assuming an unqualified obligation in relation to particular aspects of their work.”
Moore-Bick LJ found that Colley’s instructions had been clear and unqualified: “In my view, by accepting instructions to inspect and value 1 Bakers Yard it undertook an unqualified obligation to inspect that property and was in breach of contract in failing to do so.”
The judge went on to say that although it was unfortunate that Colleys had to bear the consequences of Hewes’s fraudulent conduct, he could not see that justice demanded that the consequences should fall on the lender, which was even less well placed to avoid them.
Dissenting, Sir Anthony Clarke MR said that he would have allowed the appeal since there were no special facts or clear language to impose an obligation on Colleys that was stricter than that of reasonable care.
Platform Funding Ltd v Bank of Scotland plc (formerly Halifax plc) Court of Appeal (Sir Anthony Clarke MR, Rix and Moore-Bick LJJ) 31 Jul 2008
Thomas Grant and Alex Winter (instructed by Walker Morris, of
