Professional Negligence - Surveyors & Valuers Professional Negligence - Surveyors & Valuers

What is professional negligence?

Professional negligence occurs when a surveyor or valuer fails to exercise the reasonable skill and care expected of a competent member of their profession and that failure causes financial loss.

Not every mistake will amount to negligence. The courts recognise that surveying and valuation often involve professional judgement and that competent professionals may honestly reach different conclusions. The key question is whether the advice or work fell below the standard expected of a reasonably competent surveyor or valuer at the time it was given.

What duties do surveyors and valuers owe?

The duties owed will usually depend on the instructions given and the agreed scope of their work. This is usually set out in a written contract.

Surveyors and valuers are generally required to carry out their work with reasonable skill and care, to properly inspect and assess matters falling within the scope of their instructions, and to communicate material information and risks that may affect the client's decision-making.

In some circumstances, the duty extends beyond simply providing a report. A surveyor may be required to warn a client about significant risks that become apparent during the course of their work, particularly where those risks could have serious financial consequences.

The extent of the duty will often depend on the nature of the instructions, the type of survey commissioned and the experience of the client. An inexperienced homebuyer may be entitled to more detailed explanations and warnings than a sophisticated commercial property investor.

What are some examples of surveyor negligence?

Examples can include:

• Failing to identify obvious structural defects
• Missing signs of subsidence, movement, damp or timber decay
• Providing an inaccurate valuation outside the range that a competent valuer would have reached
• Failing to inspect relevant parts of a property
• Overlooking planning or development constraints
• Failing to advise on material risks affecting value
• Giving inaccurate advice on development potential
• Neglecting to warn about issues that ought reasonably to have been identified during the inspection

What is a negligent valuation?

Valuation is not an exact science and different competent valuers may arrive at different figures.

A valuation will not usually be negligent simply because another valuer would have provided a different assessment. The court will generally consider what the correct value was and whether the valuation falls within an acceptable margin of professional judgement. If the valuation falls outside that reasonable range, negligence may arise.

Negligent valuation claims commonly arise where a lender, investor or purchaser relies on an excessively high valuation and suffers loss when the true value of the property becomes apparent.

Can a surveyor be liable for failing to warn of risks?

Potentially, yes.

The duty to exercise reasonable skill and care may include a duty to warn where a reasonably competent surveyor would have identified a significant risk and drawn it to the client's attention. Whether such a duty arises depends upon the scope of the instructions and the circumstances of the particular case.

Examples might include failing to warn about serious structural concerns, cost implications of defects, limitations affecting development potential or issues that may materially affect value.

Does the scope of the survey matter?

Yes. One of the most important questions in any professional negligence claim is determining what the surveyor agreed to do.

Different types of surveys involve different levels of investigation. A surveyor is generally responsible for carrying out the work they have been instructed to perform and for addressing matters reasonably connected to those instructions. They are not usually expected to investigate issues outside the agreed scope of the work.

Engagement letters, terms of appointment, reports and correspondence are often crucial when assessing whether negligence has occurred.

What evidence will be needed?

The evidence depends on the nature of the claim but commonly includes:

• Survey reports and valuation reports
• Terms of the contract and appointment letters
• Property and transaction documentation
• Photographs and inspection records
• Correspondence and emails
• Planning and building records
• Repair estimates and expert reports
• Evidence of financial loss

In many cases, independent expert evidence from a suitably qualified surveyor or valuer will be required to establish the applicable professional standard and whether it was breached.

What compensation can be recovered?

The purpose of a professional negligence claim is generally to place the claimant in the position they would have been in had the negligence not occurred.

Depending on the circumstances, compensation may include:

• Reduction in property value
• Losses arising from an overvaluation or undervaluation
• Repair and remediation costs
• Additional borrowing or financing costs
• Lost investment opportunities
• Transaction losses
• Professional fees and other consequential financial losses

The recoverability of losses will depend on issues such as causation, foreseeability and the scope of the surveyor's or valuer's duty.

How long do I have to bring a claim?

Professional negligence claims are subject to strict limitation periods.

In many cases, claims must be brought within six years of the negligent act or omission. However, different limitation periods may apply where the negligence was only discovered later, and complex rules can govern latent defects and valuation claims.

As limitation issues can be difficult and highly fact-specific, legal advice should be obtained as soon as possible.