ON APPEAL FROM THE HIGH COURT OF JUSTICE
Mr Richard Snowden QC
Case No: HC07C02643
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE ETHERTON
LORD JUSTICE GROSS
| Emmett Thomas Scullion
|- and -
|Bank of Scotland PLC (trading as Colleys)
William McCormick QC and Philip Noble (instructed by Miller Rosenfalck) for Mr Scullion
Hearing date: 23 May 2011
Crown Copyright ©
Lord Neuberger MR:
The relevant facts
Was the Report causative of Mr Scullion's loss?
Did Colleys owe Mr Scullion a duty of care when submitting the Report?
"[T]he advice was being given with the intention of persuading the recipient to act upon it. In the present case, the purpose of providing the report is to advise the mortgagee but it is given in circumstances in which it is highly probable that the purchaser will in fact act on its contents, although that was not the primary purpose of the report. I have had considerable doubts whether it is wise to increase the scope of the duty for negligent advice beyond the person directly intended by the giver of the advice to act upon it to those whom he knows may do so. Certainly in the field of the law of mortgagor and mortgagee there is authority that points in the other direction."
"In the case of a surveyor valuing a small house for a building society or local authority, the application of these three criteria leads to the conclusion that he owes a duty of care to the purchaser. If the valuation is negligent and is relied upon damage in the form of economic loss to the purchaser is obviously foreseeable. The necessary proximity arises from the surveyor's knowledge that the overwhelming probability is that the purchaser will rely upon his valuation, the evidence was that surveyors knew that approximately 90 per cent of purchasers did so, and the fact that the surveyor only obtains the work because the purchaser is willing to pay his fee. It is just and reasonable that the duty should be imposed for the advice is given in a professional as opposed to a social context and liability for breach of the duty will be limited both as to its extent and amount. … The amount of the liability cannot be very great because it relates to a modest house. … I would certainly wish to stress that in cases where the advice has not been given for the specific purpose of the recipient acting upon it, it should only be in cases when the adviser knows that there is a high degree of probability that some other identifiable person will act upon the advice that a duty of care should be imposed."
"It would not be difficult therefore to conclude that the person who sought such information was likely to rely upon it. In the case of an intending mortgagor the position is very different since, financial considerations apart, there is likely to be available to him a wide choice of sources of information, to wit, independent valuers to whom he can resort, in addition to the valuer acting for the mortgagee. I would not therefore conclude that the mere fact that a mortgagee's valuer knows that his valuation will be shown to an intending mortgagor of itself imposes upon him a duty of care to the mortgagor. Knowledge, actual or implied, of the mortgagor's likely reliance upon the valuation must be brought home to him. Such knowledge may be fairly readily implied in relation to a potential mortgagor seeking to enter the lower end of the housing market but non constat that such ready implication would arise in the case of a purchase of an expensive property
whether residential or commercial."
In the absence of such a specific finding of awareness in the present case I do not think that it can necessarily be assumed that the experience of a local authority valuation surveyor must be the same as that of an independent surveyor regularly acting on behalf of a large building society. … I do not find
it easy to infer from such findings as were made by [the trial judge] that [the valuer] was aware that the Harrises would be likely to buy on reliance on his valuation without obtaining further advice. However, I understand that your Lordships do not share this difficulty and in these circumstances I do not feel disposed to dissent from the majority view."
The measure of damages
Lord Justice Etherton:
Lord Justice Gross: