Surveyors and other property professionals will already be very wary of the dangers which unscrupulous or dishonest property owners can pose. Astute surveyors will often be suspicious of recent decoration to a property if it looks as though the reason is to hide defects which they might otherwise spot.
In Platform Funding Limited v Bank of Scotland plc (2008), an innocent valuer was deceived into valuing a wrong property on behalf of his mortgagee client. Despite not having acted negligently, the valuer was held liable. Many are concerned that, in the context of increasing mortgage fraud, this case may mark an unwelcome departure from the approach which the courts have taken in previous years.
Surveyors are usually alert to spot camouflaged defects. When they miss them and are later sued, the issue which the court has to address is whether there were other signs of the defect to put them on notice or sufficient evidence of the deception such that they should have looked further. When there are neither, the surveyor should escape liability.
A good illustration of the approach which the courts take can be found in the well-established decision of Whalley v Roberts and Roberts (1990). In that case, a surveyor failed to spot that a bungalow had been built four inches out of level in circumstances where the builder had taken active steps to hide the truth. There had been no cracking to the walls and no other apparent anomalies in appearance to put the surveyor on notice. The case against the surveyor was dismissed. Surveyors have not always been so lucky though. In Morgan v Perry (1973), the vendor's attempts to conceal the defects were identified by the judge as a "cover up job" which the surveyor should have seen.
So far so good. It would seem to most people that it is only fair that when a surveyor or, indeed, any other professional is himself the victim of a deception he should only be held liable if there were steps which he could and should have taken to prevent the fraud. The principles at large here were set out most clearly in the 1999 decision Midland Bank v Cox McQueen (1999) (a solicitor's decision) but the principles are of general application. In Cox McQueen, the solicitor gave an undertaking to explain a mortgage to the borrower's wife. Through no fault of his own, he was deceived by the borrower into giving an explanation to an impostor and was later sued when it turned out that the wife had no knowledge of the mortgage advance. Lord Woolf, the Master of the Rolls, said in Cox McQueen that it was not part of the solicitor's role to answer for the fraud of the husband, found that he should be judged against the standard of reasonable skill and care, and was not at fault.
The question which many property professionals are now asking, though, is whether the recent decision in Platform Funding does now change the landscape. In Platform Funding, the Court of Appeal gave detailed consideration to the principles set out in Cox McQueen but reached very different conclusions on the valuer's liability.
In Platform Funding, a valuer employed by the Bank of Scotland valued a property which he was fraudulently led to believe by the borrower was the intended security for a mortgage advance. He was induced to value one plot with an almost completed property on it, whereas the real subject property was still in the course of construction. Neither site was labelled and it was common ground that there was nothing which the surveyor could have done to detect the fraud.
A majority of the Court of Appeal found for Platform Funding. As we have seen, the professional will not normally undertake to do more than act with reasonable skill, but the Court of Appeal agreed in this case that there was still a minimum threshold which a professional must pass in order to perform his retainer at all. Here, just like the photographer who takes a picture of the wrong wedding, by valuing the wrong property the valuer had simply not performed the retainer at all. The breach was so fundamental that liability would still attach even though the valuer could have prevented the fraud.
The Court of Appeal was not unanimous. The Master of the Rolls did say that to hold the valuer liable did mark a departure from the principles which the Court had laid down in Cox McQueen. It is not clear as yet whether Platform Funding will mark the start of any new trend, but it is likely to give encouragement to claimants to test the boundaries if there is any chance of establishing liability without showing fault.
How then does a surveyor acting with all reasonable skill and care protect himself against a finding along the lines of Platform Funding? In Platform Funding, the valuer had 'certified' that he had inspected the property when he had in fact failed to do so. By employing such language, the valuer increased his exposure to a finding that he was liable to his lender client, irrespective of the fact that the valuer was deceived by the borrower. In this way, it is apparent from Platform Funding that identifying the relevant threshold will turn on the language of the contractual documentation and that where words such as 'certified' are used this will increase the burden. As is so often the case, careful attention to detail before the retainer is performed may well reap dividends in bringing any claim which is subsequently made on the right side of the line.
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