Caution, Forethought, and Prudence – lessons from an English case

Hart v Large [2020] EWHC 985 is a recent English case. [1] The principles from the case can be given further thought within a New Zealand context, especially regarding the scope of duties for surveyors and assessment of damages.

Facts

In 2011, the Harts purchased a property worth £1.24m.[2] Originally, the property was a bungalow built in the 1920s/1930s and had been renovated by the previous owners, the Fitzsimons, before being put on the market.[3] The Harts engaged Mr Large to conduct a survey of the property. [4] Mr Large advised the Harts to select a HomeBuyer Report, a comparatively less detailed type of report. [5] The report presented two issues; one with drainage and one with pipes/gutters. [6] However, once the property was purchased, significant structural problems relating to water ingress and damp came to the fore.[7] These required significant remedial works.[8]

Litigation

The Harts claimed in negligence against:

  • Architects engaged by the previous owner;
  • The Hart’s conveyancing solicitor; and
  • Mr Large.

The claims against the architects and lawyers were settled out of court. The claim against Mr Large proceeded to court. The allegation against Mr Large was threefold – that he was negligent in:[9]

  • failing to recommend a full building survey
  • failing to advise of the issues of water ingress/damp in the HomeBuyer Report; and
  • failing to recommend the Harts to obtain a professional consultant’s certificate.

Result

With the first issue, the Court found in Mr Large’s favour. This meant that the Court regarded Mr Large as not being negligent when he advised the Harts to obtain the HomeBuyer Report.[10]

As to the second and third issues, the Court found in favour of the Harts. This meant that Mr Large was negligent in failing to one, advise of the water ingress/damp issues in the HomeBuyer Report.[11]

In other words, he should have advised of the limitations of his survey. And two, failing to recommend the Harts to obtain a professional consultant’s certificate.[12]

Damages/Assessment of Loss

The argument advanced on behalf of Mr Large was one in line with the Watts v Morrow [1991] 1 WLR 1421 approach.[13] Specifically, that damages should be assessed based on the degree to which the defects, that should have been addressed, would have reduced the property value below the £1.2m purchase price.[14] This argument was rejected. [15] The Court reasoned that if this was applied as the assessment of damages, it would not have put the Harts in the position they should have been in if they knew, through advice, that some risks were not assessable, and which would have resulted in a very low award of damages.[16]

The Court applied South Australian Asset Management Corp v York Montague Ltd Ltd [1996] 27 EG 125; [1997] 1 AC 191, HL, specifically Lord Hoffman’s judgment. The idea in applying this case was to state that when assessing damages, the starting point is considering the causes of action against the surveyor.[17] Here, one of Mr Large’s breaches of duty included failing to recommend to the Harts that they should have obtained a professional consultant’s certificate. The Court said that the assessment of damages was the difference in the property value with the reported defects, and the property value with all the defects.[18]

Lessons

The decision offers a reminder to surveyors, and potentially other related professionals, of the scope of one’s duty and ensuring customers are aware of it.

Prudence, caution, and forethought are the core lessons from this case.

Copyright Steve Keall, all rights reserved, 2020

Written by Bhavin Parshottam


[1] Hart v Large [2020] EWHC 985.

[2] At [5] and [28].

[3] At [15] and [29].

[4] At [34].

[5] At [34].

[6] At [55].

[7] At [99] to [101] and [160].

[8] At [99] to [107].

[9] At 60, 77, and 80.

[10] At [130].

[11] At [195]-[197].

[12] [206]-[214].

[13] Watts v Morrow [1991] 1 WLR 1421.

[14] At [238].

[15] At [239].

[16] At [247].

[17] At [239].

[18] At [254].

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s