Cases - Scullion v Bank of Scotland Plc (t/a Colleys)
Record details
- Name
- Scullion v Bank of Scotland Plc (t/a Colleys)
- Date
- [2011]
- Citation
- EWCA Civ 693
- Legislation
- Keywords
- Negligence in valuations and surveys
- Summary
-
The claimant 'S' bought a flat with a view to letting it out ('buy-to-let'). S sought finance from a bank that engaged the defendant surveyors (Colleys) to provide the lender with a valuation and a prediction of the monthly rental income. S did not himself instruct an independent valuer. The rental prospects had been overstated and S was forced to sell the property, unable to meet the mortgage repayments. S sued the surveyor.
The first instance judge held that Smith v Eric S Bush imposed a duty of care on the surveyor towards S as there was sufficient proximity between the parties and S had relied on the valuation when deciding to secure the loan and purchase the property. The Court of Appeal overturned the decision. While it was open to the judge to find that S had in fact relied on the valuation, it was not reasonably foreseeable for the purposes of imposing a duty of care that he would have done so. The buy-to-let purchase was a commercial transaction and in this context surveyors would generally be entitled to expect purchasers to instruct their own independent valuer. Smith v Eric Bush distinguished as applying to ordinary household purchases only. The presumption could be rebutted by evidence that the surveyor agreed to assume responsibility towards the purchaser for the correctness of the valuation and that no other valuation would be undertaken. No such evidence was available on the facts.
In the context of commercial property investment a presumption arises that a purchaser will instruct his or her own independent valuer and not simply rely on the lender's. In the absence of evidence rebutting the presumption, the lender's valuer will not owe the purchaser a duty of care.
Commercial property investors should instruct their own independent valuers when purchasing property, or otherwise ensure that the lender's valuer specifically agrees to assume responsibility towards them in addition to the lender (for instance by joint instruction).