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Negligence
Court of Appeal
17 June 2011
Lord Neuberger MR and Etherton and Gross L.J.
[2011] EWCA Civ 693
[2011] 37 EG 110
Negligence - Surveyor - Valuation - Duty of care - Surveyor valuing property for mortgagee in respect of buy-to-let transaction - Purchaser buying property in reliance on capital valuation and estimated rental figure in surveyor's report - Whether surveyor instructed by mortgagee owing duty of care to purchaser in respect of valuation - Whether liable in damages for negligent capital and rental valuation
The respondent applied for a mortgage in connection with his intended purchase of a two-bedroom flat as a buy-to let investment. The application form authorised the lender to obtain a valuation at the respondents expense and contained an acknowledgement by the respondent that neither the lender nor the valuer was to be treated as giving any assurance to him as to the value ofthe property. The appellant firm of property surveyors was instructed to produce a valuation report for the mortgage lender; the respondent paid the fee for that report. The report valued the properly in mid-2002 atj353,000, with an achievable rental value of ,£2,000 per month and average suitability for letting within 60 days.
The respondent purchased the flat for a total consideration of £300,007.50, after discounts from the ostensible purchase price of £352,950. Of that sum, £290,766 was funded by the mortgage lender. The property remained unlet for several months, after which a rent of only £1,050 per month was achieved with the tenant vacating after a year. The respondent sold the property in May 2006 for ,£270,000.
The respondent brought a claim for damages against the appellant. Allowing the claim, the trial judge held that the appellant had owed a duty of care to the respondent in respect ofthe valuation report and had negligently overstated both the capital and rental valuations of the flat: see C20103 EWHC 572 (Ch). He found that the respondent had suffered no loss in relation to the negligently high capital valuation but awarded damages of £72,234.54, plus interest and costs, for loss attributable to the rental valuation: see C20103 EWHC 2253 (Ch); [2010] PNLR 5.
The appellant appealed on liability. It contended that the respondent had not relied on its...