| CONTRACT — Breach —Valuation of property— Valuation for mortgage lender of property identified to valuer by borrower — Valuer certifying value of property— After default by borrower valuation of wrong property discovered — Valuer under obligation to exercise reasonable care and skill in valuation — Whether obligation to exercise reasonable care in identifying property or unqualified obligation to inspect specified property — Whether valuer liable in damages for lender’s loss
Platform Funding Ltd v Bank of Scotland plc (formerly Halifax plc) [2008] EWCA Civ 930; [2008] WLR (D) 283
CA : Sir Anthony Clarke MR, Rix and Moore-Bick LJJ: 31 July 2008
A surveyor, instructed by a mortgage lender to value the property offered by the borrower as security for a loan, who certified that the property had been inspected and a fair valuation given, was liable in damages to the mortgage lender for losses suffered as a result of having valued the wrong property in breach of an unqualified obligation to inspect the specified property.
The Court of Appeal so held, (Sir Anthony Clarke MR dissenting), dismissing the appeal of the defendant valuer, Bank of Scotland plc (formerly Halifax plc) from the decision of Judge Collins in the Central London County Court on 2 November 2007, giving judgment for the claimant lender, Platform Funding Ltd, for damages to be assessed.
MOORE-BICK LJ said that the defendant valuer provided a valuation of a property identified in its report as 1 Bakers Yard but had not inspected that property, a plot of land on which stood a house in the course of construction. He had been misled by the borrower into inspecting 5 Bakers Yard, a plot close by on which stood a house that had almost been completed. The claimant lender made an advance to the borrower on the security of 1 Bakers Yard. The borrower failed to maintain the payments due, and the lender repossessed the property. At that point the mistake came to light. The property was sold leaving a shortfall of over £30,000. The lender sought to recover its loss from the valuer. After reviewing the authorities, his Lordship concluded that although there was a presumption that those who provided professional services normally did no more than undertake to exercise the degree of care and skill to be expected of a competent professional in the relevant field, there was nothing to prevent them from assuming an unqualified obligation in relation to particular aspects of their work. Whether a professional person had undertaken an unqualified obligation of any kind in any given case would depend on the terms of the contract under which he had agreed to provide his services. The question to be asked was whether, having regard to the facts and matters known to both parties when the instructions were accepted, the professional person assumed an unqualified obligation in relation to the particular matter in question. Although the court should be cautious about holding that a professional person had undertaken an unqualified obligation in the absence of clear words to that effect, there was no reason not to give effect to the language of the contract where it was clear. The question before the court was whether inspection of the wrong property would amount to a breach of contract in the absence of negligence. The contract in the present case was typical of the instructions given by prospective mortgage lenders to surveyors and valuers every day of the week. The inspection and valuation of a property called for the exercise of professional skill and judgment and a surveyor would not ordinarily be expected to assume an unqualified obligation in relation to the manner or extent of his inspection or the assessment of value. On the other hand, it was not clear why the valuer’s obligation to inspect the property to which his instructions related should be qualified in the same way. In the present case the valuer’s instructions were couched in clear and unqualified terms. The contract could not properly be construed as providing that the valuer was to do no more than exercise reasonable skill and care to identify and inspect the property. By accepting instructions to inspect and value 1 Bakers Yard the valuer undertook an unqualified obligation to inspect that property and was in breach of contract in failing to do so.
RIX LJ delivered a concurring judgment. SIR ANTHONY CLARKE MR delivered a dissenting judgment.
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