Negligence

Citation

Waterson, G. and Lee, R. (2001), "Negligence", Property Management, Vol. 19 No. 4. https://doi.org/10.1108/pm.2001.11319dab.001

Negligence

Negligence

Merrett v. Babb [2001] EGCS 20, The Times March 2 2001. CA

This case is of considerable concern to employed surveyors. An employee is not usually sued personally for negligence, a claimant will normally take action against the employer of the negligent individual or against the firm of which he is a director or partner. However, in this case the claimant had no choice but to sue the individual surveyor personally.

The facts of the case are commonplace. In June 1992 the claimant and her mother jointly wished to purchase a house. They applied to the Bradford and Bingley Building Society for a mortgage. The Building Society instructed a local firm of surveyors, Clive Walker Associates, to carry out a mortgage valuation. The defendant was an employee of Clive Walker Associates and he carried out the inspection of the property. He produced a report valuing it at the proposed purchase price, but although his report drew attention to a number of essential repairs it failed to make any mention of settlement cracks between the original building and a later extension. The report was signed by the defendant with his name, qualifications, the name and address of his firm and included a statement that he was not disqualified under s. 13 of the Building Societies Act 1986 from making the report.

By the time the claimant discovered the surveyor's negligence, Clive Walker, the sole principal of Clive Walker Associates, had been declared bankrupt and the trustee in bankruptcy had cancelled the firm's professional indemnity insurance' without arranging run-off cover. Accordingly, the claimant sued the surveyor personally. The county court judge upheld the claim in negligence and awarded damages of £14,500, the difference between what the purchaser had paid for the property and its true worth. The defendant appealed against the decision on the grounds that a duty of care was owed to the claimant not by him personally but by his firm. Furthermore, even if he did owe her a duty of care, she should have been awarded only half of the damages because she had only a half-interest in the property.

On the question of the duty of care, Morritt L.J. reviewed the authorities on duty of care, in particular the decision in Smith v. Eric Bush by which the judge had held himself bound. In his Lordship's view the judge was correct in this because the essence of that decision was that a professional person who carries out an inspection and makes the valuation is the person on whom the purchaser is relying to exercise proper skill and care. He felt that subsequent judgements had not modified the basis of the principle on which Smith was decided. His Lordship went on to observe that the facts of this case were barely distinguishable from that of Harris v. Wyre Forest District Council [1989] 1’EGLR 169 where the surveyor (Mr Lee) was an employee of the local authority but was held to owe a duty of care. His argument that his duty was owed to his employer and not to the purchaser failed. There was no relevant distinction belween Mr Lee employed by the council and Mr Babb employed by Clive Walker Associates. The nature of the valuer's employment is not relevant to the relationship between the purchaser and the employed professional valuer.

The fact that Mr Babb had signed the original report in his personal capacity and was, for the purposes of s. 13 of the 1986 Act, the person who was competent to value and the statement that he was not disqualified from doing so was taken by their Lordships as evidence that he assumed responsibility for it. He knew that his report would be relied on by Miss Merrett and her mother, thus the responsibility he assumed included a responsibility to them.

The second ground of appeal was quickly dismissed. The duty of care was owed to Miss Merrett and her mother jointly. He knew that they were considering purchasing jointly and they were both named in the instruction form pursuant to which he had carried out the inspection and valuation.

Wilson J delivered a concurring judgement, Aldous L.J. dissented.

There may, however, be a point of distinction between Harris and this case. In Harris, the local authority was the mortgage lender and therefore owed no duty of care to advise the borrowers as to the wisdom of the purchase. Thus if the valuer owed no duty of care the purchaser would have been without a remedy. However, if the valuer was held to owe a duty of care the local authority would be held liable as employer and the purchaser duly compensated for the negligence of the report. This may explain why the House of Lords was willing to find a duty of care in that case.