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What is this week's blog about?
In this week’s blog, we take a look at the key legal case of Hart v Large. This will be of relevance to all RICS APC and AssocRICS candidates, particularly those involved in any aspect of residential surveying or delivering home surveys to consumers.
You can read the full judgement in the Court of Appeal, which dismissed the appeal and upheld the High Court’s judgement.
What happened in the High Court case?
The High Court case related to a dispute between the purchasers, Mr & Mrs Hart, and their surveyor, Mr Large. Mr Large had been instructed to provide a Level 2 HomeBuyer Report (HBR) on a newly refurbished property in Devon.
Mr Large’s HBR reported minor issues relating to drainage, gutters and pipework. The property was valued at £1.2m and Mr & Mrs Hart proceeded to purchase the property at this figure.
Following the purchase, Mr & Mrs Hart experienced problems relating to water ingress and damp. They initiated a negligence claim against Mr Large, as well as claiming against the conveyancing solicitors and the architect who dealt with the refurbishment works on behalf of the previous owner.
The High Court held that Mr Large was negligent because his inspection and report failed to identify the significant issues relating to damp. Mr Large also failed to advise, both within his report and during subsequent correspondence, to advise that Mr & Mrs Hart obtained a Professional Consultant’s Certificate (PCC) prior to purchase.
How were damages applied?
The normal rule of applying damages was established in the case of Watts v Morrow. This provides for damages to be assessed on the difference between the surveyor’s valuation and the value of the property in its actual condition.
However, in Hart v Large, the Court diverged from the normal position and the award for damages in favour of Mr & Mrs Hart was assessed as £750,000, taking into account a relatively high sum of £15,000 for inconvenience and distress. This was reduced to £374,000 taking into account out-of-Court settlements with the conveyancing solicitors and architect.
What happened in the appeal?
The appeal focussed only on the damages applied by the High Court. Mr Large argued that the damages should have been assessed on the basis of the difference between his valuation and the value of the property with the defects that could have been identified, but which were missed.
This was based on the argument that the damages should not reflect the costs of repair, unless Mr Large had provided a warranty as to the condition of the property (which he did not).
The Court of Appeal held that Mr Large was negligent in his advice relating to the damp and damp proofing. In this case, Mr Large should have followed the trail in relation to the evidence of poor workmanship observed and lack of visible damp proofing where it should have been observed, leading to a recommendation of further investigations being carried out.
In particular, the new RICS Home Survey Standard states that a RICS member must recommend further investigations ‘if they have a suspicion that a visible defect may affect other concealed building elements’.
Mr Large was also found negligent in failing to advise obtaining a PCC prior to purchase, would have provided Mr & Mrs Large with protection against concealed defects. If Mr Large had have recommended obtaining a PCC, then Mr & Mrs Hart would not have proceed to purchase the property.
Mr Large should have investigated sufficiently to ‘give rise to a trail of suspicion which (taken together with the need for a PCC which would have covered all aspects of the rebuilding works in any event) ought in turn to have led him to give very different advice’.
As a result of these events, the Court of Appeal held that Mr Large should bear ‘the consequences of such advice not having been given’. This upheld the High Court’s decision in relation to the measure of loss, which was unusual in a case of this nature. This was because the conventional method, in Watts v Morrow, would only have compensated Mr & Mrs Hart for the simple defects that were missed by Mr Large.
What precedent was set?
The Court of Appeal’s judgement turned on the unusual facts of the case and does not represent a departure from the conventional position relating to the measure of loss in negligence claims against surveyors. In this case, it was the missed defects, failure to advise further investigations and lack of advice to obtain a PCC that led to the Court assessing damages on a much broader basis.
What does this mean for surveyors?
The Hart v Large case emphasises the importance for surveyors of:
Being clear and advising clients on the survey level and scope of inspection, limitations and caveats
Recommending justifiable further investigation
Considering whether any new information provided after inspecting or reporting affects their original advice, and updating their advice if it is justified to do so
Residential surveyors should ensure that they are familiar with the new RICS Home Survey Standard. You can find out more by reading our blog article on the guidance. RICS will be publishing supplementary content to support surveyors in light of the Hart v Large decision.
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Stay tuned for our next blog post to help build a better you.
N.b. Nothing in this article constitutes legal, professional or financial advice.