Merrett v Babb

A professional valuer who inspects and reports on a modest residential property may owe the prospective purchaser a personal duty of care, although the valuer acts as an employee and the purchaser neither knows the valuer's identity nor deals with the valuer directly. The duty arises where the valuer knows that an identifiable purchaser will probably rely on the valuation without obtaining an independent survey, and such reliance is reasonable.

For negligent professional services, an assumption of responsibility is determined objectively. It describes responsibility recognised or imposed by law. A professional's duties to an employer do not preclude a concurrent duty to the person who foreseeably and reasonably relies on the professional's work.

A salaried surveyor prepared and personally signed a mortgage valuation of a modest house for his employer, an independent firm instructed by a building society. The prospective purchasers received an anonymised version of the report and relied on it. The county court found that the surveyor negligently failed to report material settlement cracking and awarded damages representing the full diminution in value.

The surveyor appealed on two grounds. He contended that any duty was owed by his employer rather than by him personally. He also contended that the sole claimant could recover only her half of the loss because the property had been bought jointly with her mother, whose claim had become time-barred.

The central questions were whether the employed surveyor personally owed the purchasers a duty of care and whether the mother could be joined after expiry of the limitation period so that the joint claim could be maintained.

1. Appeal dismissed by a majority. May LJ, with whom Wilson J agreed, held that the employed surveyor personally owed the two purchasers a duty of care. Smith v Eric S Bush and Harris v Wyre Forest District Council [1990] 1 AC 831 remained unmodified and governed the special circumstances of mortgage valuations of modest residential property.

2. The law treats the relevant relationship as one between the purchaser and the professional who performs the valuation. The nature of that person's employment does not remove the duty. The purchasers could reasonably rely on the professional skill of the individual who inspected the property, even though they did not know his identity and received an anonymised report. A professionally qualified adviser may owe a duty to the effective recipient of the advice in addition to duties owed to an employer.

3. The surveyor knew that the named purchasers were likely to rely on his report. He signed it personally, stated his qualifications and certified that he was not disqualified under section 13 of the Building Societies Act 1986. Those circumstances confirmed his personal responsibility. The assumption-of-responsibility and Caparo approaches were not competing rules: objectively understood, responsibility is recognised or imposed by law where foreseeability, proximity and the requirement that liability be fair, just and reasonable are satisfied.

4. Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830 and Standard Chartered Bank v Pakistan National Shipping Corporation (No 2) [2000] 1 Lloyd's LR 218 were distinguished. They concerned whether a director assumed personal liability alongside a limited company. Their requirement for overt dealings did not govern the special mortgage-valuation relationship, in which direct dealings were commonly absent.

5. The duty and resulting loss were joint. The original action claimed the whole loss, but that claim could not properly be maintained unless both purchasers were parties. The mother was therefore a necessary party under section 35 of the Limitation Act 1980 and CPR rule 19.5. The court exercised its discretion to join her because the defendant had always faced the full claim and suffered no injustice beyond losing a fortuitous limitation defence.

6. Aldous LJ dissented. He considered that Williams required evidence that the employee personally conveyed an assumption of responsibility on which the claimant could reasonably rely. Because the claimant did not know the surveyor's identity and the firm had been instructed and paid, he would have allowed the appeal. He would alternatively have limited recovery to the original claimant's half share.

1. Court of Appeal: By a majority, ordered that Mrs Scheppel be joined as a claimant and dismissed the surveyor's appeal. The damages award of £14,500 was maintained, with the formal order varied to enter judgment for both claimants. Permission to appeal to the House of Lords was refused.
2. Truro County Court: HHJ Overend held that the employed surveyor personally owed the purchasers a duty of care, found the valuation negligent and awarded the original claimant £14,500 plus interest.