Hubbard v Bank of Scotland Plc (t/a Birmingham Midshires) & Anor

A valuation surveyor’s duty depends on the type and scope of the report requested. A limited mortgage valuation is not a full structural survey. The surveyor’s duty is generally confined to reporting matters relevant to value which are apparent on visual inspection. The surveyor need not recommend a structural survey merely because a property has some cracking, where the surveyor reasonably considers the cracking to be small, longstanding and unrelated to ongoing movement.

The primary question is whether, in light of the facts known or which ought reasonably to have been known, a competent surveyor providing that type of report should have recommended further investigation. The content of any advice in the report is relevant only after that primary duty is established.

The claimant bought a house with mortgage finance from the defendant bank. A valuation report was prepared by a surveyor employed by the bank. The report recorded previous movement but stated that there was no evidence of ongoing movement. It was a limited mortgage valuation rather than a full structural survey.

After later subsidence and cracking became apparent, the claimant alleged that the surveyor should have warned of possible ongoing or future movement, advised her to obtain specialist structural advice, and substantially reduced the valuation. The High Court, sitting at Birmingham, dismissed the negligence claim on 22 May 2013. The claimant appealed on limited grounds concerning the surveyor’s duty and the interpretation of the report.

Floyd LJ delivered the judgment of the court. Kitchin LJ and Sullivan LJ agreed. The appeal was dismissed.

1. Applicable duty. The bank would be liable only if, in light of the facts which the surveyor knew or ought to have known, a reasonably competent surveyor providing a valuation report of this kind should have recommended that the claimant obtain a structural survey. It was necessary to determine that primary question before considering whether the report itself gave adequate advice.
2. Scope of a limited valuation. The report was not a full structural survey. Its purpose was to advise on matters relevant to valuation, following a limited visual inspection. The surveyor’s duty was therefore narrower than that of a structural surveyor, who would be expected to investigate beyond surface features. The surveyor was not instructed to undertake a ground or geological survey and was not expected to investigate the subsoil in the absence of relevant knowledge or suspicion.
3. Application to the evidence. The trial judge was entitled to prefer the evidence of Mr Close and to conclude that the surveyor reasonably regarded the cracks as small, old and not indicative of ongoing movement. The evidence did not establish that ongoing movement, or the relevant ground conditions, was apparent or should have been apparent to him. The proposition that any cracking combined with a sloping site required a full structural survey was unrealistic and went beyond the proper duty in a limited valuation.
4. RICS guidance and report wording. The recommendation for more extensive investigation under paragraph 6.2 of the RICS Mortgage Valuation Specification depended on a suspicion of hidden defects capable of materially affecting value. The surveyor did not hold such a suspicion, and the judge was entitled to find that he ought not reasonably to have done so. It was unnecessary to determine definitively whether the report positively recommended independent advice. The report did not discourage further advice and identified the availability of more detailed technical advice.
5. Since there was no breach of duty, it was unnecessary to determine causation.

1. Court of Appeal (Civil Division): Appeal dismissed.
2. High Court, Birmingham District Registry: His Honour Judge McKenna, sitting as a High Court Judge, dismissed the negligence action on 22 May 2013.