A surveyor has successfully defended a claim that he was personally liable for losses resulting from a property survey. The result is good news for valuation surveyors and their insurers.
It is a significant reduction of the impact of the 2001 case of Merrett v Babb which made surveyors, acting on behalf of their employer, personally liable for damages.
The case, Matthews v Ashdown Lyons and Maldoom, centres on an alleged negligent valuation. The claimant instructed Ashdown Lyons to undertake a building survey of a Clapham town house in 2008. Following the valuation, the claimant purchased the property for £750,000. Ashdown Lyons subsequently went into administration in 2009. It transpired soon after that there were problems with the company’s professional indemnity insurance cover.
In 2011 the claimant started professional negligence proceedings against Mr Maldoom, the surveyor who had carried out the survey. It accused him of overvaluing the property by some £70,000. The case relied on the principles set out in Merrett v Babb, where a surveyor had been found personally liable. In the Marshall case, however, the Court recognised the circumstances were different. The judge decided in favour of Mr Maldoom and dismissed the claim on 14 February 2014.
In the Merrett v Babb case the purchaser had been of modest means and buying low-value residential property. The purchaser had not arranged, or paid for, the valuation. In contrast, the property in the Marshall case was valued at £750,000 and could not be described as modest. In addition, by instructing Ashdown Lyons, the claimant had engaged a surveyor for his own benefit. The judge also said that the claimant had other causes of action against Ashdown Lyons in contract and in negligence.
Mr Maldoom was given financial assistance and support by the RICS Member Support Service to fight the case. Browne Jacobson Financial & Professional Risks partner Nik Carle, who acted for Mr Maldoom, said: “With so many surveyor services businesses having folded during the downturn of recent years, we have seen a spike in personal liability cases against RICS members individually. Generally, these claims have attempted to stretch Merrett v Babb beyond its limits but to date, none has succeeded.”
James Burgoyne, Director – Claims & Technical, Brunel Professional Risks. “The decision in Merrett v Babb meant there was a real risk that professionals could be found personally liable even when they were acting on behalf of their employer. The Marshall case shifts the balance and greatly reduces the circumstances in which a claimant can pursue a professional personally for damages. The court recognised the limited company status of Ashdown Lyons, and it is noteworthy that it declared that the insolvency of the employer and resulting lack of insurance were an ordinary commercial risk for the recipient of professional services to bear, where they were not of modest means.”