Hubbard v Bank of Scotland PLC  EWCA Civ 648 The Court of Appeal has recently recognised the limitations inherent in a mortgage valuation and the limited duty of care owed by the surveyor carrying out the report.
Mrs Hubbard bought a property in 2005 with a loan from the Bank of Scotland. Unbeknown to her, the property was partly built on an infilled quarry. The Bank's surveyor, Colleys, had inspected the property and prepared a valuation report.
The valuation report noted two cracks at the property but concluded "no recent movement, no further action". However, the valuation report did not purport to be a full structural survey and through its guidance noted its limited scope, indicating the option to request a more detailed report, and suggested obtaining "independent advice" for any problems highlighted.
In 2007, after further cracks appeared, it was established that the property suffered from differential subsidence. In 2010, a structural survey was undertaken which showed progressive movement.
Mrs Hubbard claimed that Colleys' report failed to:
- State that the subsidence was ongoing
- Advise her to seek independent specialist advice
- Warn her that the valuation should be substantially reduced due to cracking
Findings at trial
At trial, the Claimant's expert argued that the evident cracking of a property built on sloping ground coupled with a wrap-around extension should have led to a nil value report pending a full structural survey.
The Judge rejected this, ruling that the surveyor had not been negligent, the valuation was accurate and the possibility of obtaining independent advice had been mentioned.
Mrs Hubbard appealed, stating that Colleys was in breach of its duty to warn about the risk of possible future movement.
Court of Appeal
On appeal, the issue was whether a reasonably competent surveyor providing a valuation report would have recommended taking independent advice and obtaining a full structural survey. If so, the Court would then consider whether that advice was actually given.
The Court recognised the importance of the limitations of the valuation report. The surveyor who was only undertaking a visual survey had a more limited duty than the structural surveyor. The fact that the house was built straddling a former quarry was irrelevant as the surveyor neither knew nor ought to have known of the existence of the quarry or the nature of the subsoil.
The Court of Appeal dismissed the appeal and found that there was no duty to recommend a full structural survey as otherwise a surveyor would have to provide a nil value report pending a full structural survey upon discovering almost any crack in any property.
This decision recognises that a valuation surveyor has no duty to identify problems that could only be uncovered by a full structural survey. A surveyor will also not be expected to recommend a full structural survey unless his own survey indicates that it is necessary. However, it is important that the scope and the limitations of the valuation report are made very clear from the outset
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