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Unusual ruling has implications for surveyors and insurers

A recent High Court ruling could have widespread ramifications for surveyors and their professional indemnity insurers.

The unusual case of Hart v Large found that the defendant surveyor was negligent in surveying a renovated residential property and awarded damages of £375,000 to the claimants.

Previously, where a surveyor has negligently failed to identify certain defects in a survey report, they would not be liable for the consequences of other defects they could not reasonably have been expected to identify.

However, the Hart v Large judgement showed the High Court's willingness to go beyond this traditional understanding of damages and the judgment could have widespread ramifications for surveyors and their insurers.

The particular facts of this case meant the SAAMCo principle did not limit Mr Large's liability. The SAAMCo principle took its name from the 1996 House of Lords case of South Australia Asset Management Corp (SAAMCo) v York Montague Ltd which stated that a professional can only be liable for losses which fall within the scope of their duty of care.

In this case, the claimants, Mr and Mrs Hart, purchased a £1.2 million property in rural Devon in 2011 and appointed Mr Large to carry out a survey on the property. Mr Large viewed the property and recommended a HomeBuyer report which highlighted two problem areas, being drainage and concerns with the pipes / gutter.

Against Mr Large, the claimants alleged he was negligent in: failing to recommend a full building survey, rather than HomeBuyer report; failing to draw attention to the issues of water ingress / damp in the HomeBuyer report; and failing to recommend that the claimants obtain a professional consultant’s certificate. Mr Large's services were referred to by the court as a hybrid between 'information' and 'advice'.

Mr Large appealed against the ruling, but it was upheld by the Court of Appeal. However, the Court of Appeal was explicit that the specific factual circumstances, in particular the failure in respect of a Professional Consultancy Certificate, meant that this was very different case to the typical negligent surveyor claim.

The Royal Institution of Chartered Surveyors (RICS) followed the proceedings closely and has been reviewing the case along with legal experts in this field and believes the decision emphasises the importance of keeping advice under review “as courts are willing to depart from the perceived usual measures of loss depending on the circumstances.”

Daniel Moss is the W Denis specialist point of contact. For any enquiries please contact him at daniel.moss@wdenis.co.uk and on 0044 (0)113 2439812.

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