As the economy continues to falter and property prices decline further, buyers of property, overwhelmed with buyer’s remorse, seek to recover losses from failed investments made at the height of the boom.
In Scullion v. Bank of Scotland t/a Colleys, the High Court decided that a lender’s valuer did owe a duty of care to a low-value, buy-to-let investor. The High Court considered that those investors were unlikely to have commissioned their own reports and valuers should know that those investors would be relying on their valuations.
Dean Parnell, Partner, Sydney Mitchell, comments:
prior to the decision of the High Court it was previously thought that a lender’s valuer would owe no duty of care to a purchaser in a commercial transaction.
On appeal the court overturned the decision of the High Court and found that it was not just to impose a duty of care on the valuer.
In arriving at its decision the Court of Appeal noted that the Scullion case did not involve an ‘ordinary domestic householder’ who generally does not obtain his own valuation. In this instance it was not necessarily foreseeable to the valuer that Mr Scullion, a buy-to-let commercial purchaser, would rely on the lender’s valuation rather than obtain his own advice. Accordingly, no duty of care was owed and the appeal was allowed.
Premature Sighs?
Naturally there has been a huge sigh of relief by surveyors particularly as the property market continues to fall and buy to let investors seek to recover their losses.
The Court of Appeal’s decision will make it more difficult for commercial purchasers to bring a claim against a valuer where they do not have a contract - but the doors may not be completely closed!
If a purchaser in a commercial transaction can show that on the facts the valuer knew that he would be relying on the valuation and would not be obtaining his own valuation then relief may be possible.
Maybe valuers should be holding their breath!
Dean Parnell is a Partner in our Dispute Resolution Department resolving professional negligence claims 08081668827. online enquiry form.
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