Republic International Trust Company Ltd & Ors v Fletcher Ramos (A Firm)

A professional survey report must be construed as a whole, including its recommendation. General references to defects or risks do not necessarily amount to an adequate warning where the report recommends proceeding with the purchase and treats further investigations or remedial work as matters arising after purchase. A purchaser is entitled to rely on the report as reasonably understood. Where an adequate warning would have prevented the purchase, causation is established. Damages may be assessed by comparing the represented value with the property's actual value, using reasonable remedial costs where appropriate. The absence of detailed repair records does not reverse the burden of proof or require dismissal if reliable oral and documentary evidence enables a reasoned assessment.

In Republic International Trust Company Ltd & Ors v Fletcher Ramos (A Firm), purchasers of a substantial country house recovered £401,000 from the defendant surveyors after the Queen's Bench Division (Technology & Construction Court), before His Honour Judge Richard Havery QC, found that their report was negligent. The report failed adequately to warn of the risk of extensive dry rot and recommended that there was no reason to postpone purchase. The defendants sought permission to appeal on negligence, causation and the assessment of damages, including the judge's acceptance of evidence about repair costs despite inadequate contemporaneous records. The central issues were whether the trial judge was entitled to reach those conclusions and whether any proposed appeal was arguable.

Lord Justice Pill delivered the judgment, and Lady Justice Arden agreed.

1. Disposition and permission. The application for permission to appeal was refused with costs. The stay of execution on the judgment sum was lifted. The appellate court had to consider whether the trial judge was entitled to reach the challenged conclusions. It was not arguable that the material findings of fact or the resulting conclusions could be disturbed.
2. Negligence and construction of the report. A professional report is likely to be read first through its recommendation. That recommendation may qualify earlier passages, but it must be appropriate in the circumstances identified by the report. Although the report referred to dry rot and dampness, its recommendation that there was no reason to proceed, together with references to matters requiring immediate or early attention and steps to be taken in proceeding with purchase, was reasonably understood as post-purchase guidance. It did not warn that the property should not be bought without further investigation into possible extensive dry rot.
3. Reliance and causation. The surveyor should have inspected the relevant leadwork or stated that inspection had not been possible, and should have warned of the risk arising from the building's condition. On the findings, the purchasers would not have bought had an adequate warning been given. They were entitled to rely on the recommendation, so the negligent omission caused the loss.
4. Quantum. The correct measure was the difference between the value represented by the surveyors, allowing for defects they had recognised, and the property's actual value. The judge was entitled to assess the relevant diminution by reference to reasonable remedial costs. The fact that the surveyors were not negligent in every respect did not alter that basis.
5. Evidence of repair costs. The claimants bore the burden of proving the recoverable sum. However, the lack of detailed contemporaneous records did not reverse that burden or require the claim to fail as a matter of law. The judge was entitled to accept carefully tested oral evidence supported by the Scott Schedule, while making deductions for matters not attributable to dry rot.

• Court of Appeal (Civil Division): Application for permission to appeal refused with costs; stay of execution on the judgment sum lifted: [2001] EWCA Civ 815.
• Queen's Bench Division (Technology & Construction Court): His Honour Judge Richard Havery QC found the surveyors liable in negligence and awarded £401,000.