The deputy judge in the Chancery Division had followed Smith v Eric S Bush and awarded damages to the claimant. The Court of Appeal, however, reversed that decision. Delivering the only reasoned judgment, Lord Neuberger MR, distinguished Smith v Eric S Bush on the important point that the evidence in that case was that around 90% of the prospective owner-occupiers did not commission a separate survey of the property, and relied instead on the mortgage valuation; the financial constraints of home purchase were recognised as a major factor in this. No such evidence had been adduced in the present case in respect of buy-to-let purchases, and the Master or Rolls assumed that it was likely that those who were entering the property market purely as investors would both be likely to have sufficient resources to commission a separate survey, and would in general be more financially sophisticated. Further, they would be likely to need specialist advice on the likely rental value and letting prospects of the property. It was not therefore reasonable for a valuer’s liability to extend to them. In effect, prospective owner-occupiers had been treated as somewhat of a special case in Smith v Eric S Bush, and the Court of Appeal was not prepared to extend that case any further.
A separate issue of causation was resolved in the claimant’s favour: he was held to have relied on the report. Discussion of this issue revealed some disturbing aspects. The claimant had signed up with a company which offered to assemble a valuable buy-to-let portfolio for him. The solicitors who acted for them also acted for him on his purchase of the flat. Having committed the company to the purchase of the flat (but without having obtained the claimant’s authority) they wrongly advised him that he was bound by the contract. The arrangements made would seem bound to lead to a conflict of interests.
Finally, the Court of Appeal offered some guidance on how, if there had been liability, the quantum of damages should be calculated; though subject to the proviso that limited evidence had been given on this point, and limited argument directed to it.
“Hill & Redman’s Law of Landlord & Tenant update”, 06.2011