How a misjudged “not”, cost a retired surveyor with lapsed insurance £1/2 Million.
“No good deed goes unpunished” Oscar Wilde
“arriving at our new home our excitement was replaced by shock at being greeted by the front door removed and remedial works being attempted”buyer of a £1.2M recently extended cliff top house in Devon, 2011.
Hart v Large is a High Court case, that has sent shockwaves through the property consultancy industry. It increases the cost of professional error 10 – 100 times. Important numbers to reflect on:
- £600 survey fee 2011,
- £389,000 + costs awarded against surveyor,
- £765,000 total awarded to buyers 2020 (incl. £376K settled by solicitor & architect),
- £1,200,000 price paid 2011,
- £1,950,000 price paid 2017 for a house with similar views but apparently fewer bedrooms.
The appeal upheld the judgement. Whether or not you agree with the judgement and appeal, the method of determining damages and the scale relative to the fee or property price has changed RICS homebuyer and damp surveys forever by;
- reducing the number of surveyors willing to survey for homebuyers,
- reducing the scope of surveys,
- increasing surveyors’ pre-selection of property and client types,
- increasing professional indemnity insurance costs,
- increasing surveyors’ workload and therefore fees,
- increasing the referrals to specialists, including damp surveyors,
- increasing the time, money and effort spent in spelling out a surveyor’s role, responsibilities and limitations.
Top tips – details below
- Surveyors must communicate their role, risks and responsibilities to clients well in advance, so that clients can decide if these meet their needs.
- Clients must communicate their concerns in advance of a survey, so that a surveyor can consider whether clients’ needs fit within their role, responsibilities, abilities and limitations.
About Hart V Large
- The Property was originally a bungalow built in the 1920s or 1930s.
- On the 7th August 2009, Mr. Fitzsimons entered into a building contract with Simon Proctor Ltd. The contract sum was £402,375.
- Mr. Large valued the property in the sum of £1,200,000 and advised that the reinstatement cost of the property was £440,000.
- The purchase was completed on 23 November 2011, Mrs Hart writes “arriving at our new home, when our excitement was replaced by shock at being greeted by the front door removed and remedial works being attempted.
- I have to assess whether [the surveyor] fell below what I am satisfied were his usual high standards when advising the Harts in respect of the Property. The judge appears to be comparing the surveyor to his own “high standard”, rather than the normal test; “What would a reasonable person of ordinary prudence have done in the defendant’s situation?”
- I conclude that Mr Large was negligent in failing to recommend in his Report that a Professional Consultant’s Certificate should be sought. Apparently the surveyor mentioned it, encouraged the buyer to ask for it through the solicitor, but played down its importance. From reading surveyor blogs and listening to podcasts, it seems unlikely that many surveyors would have discouraged the buyers from purchasing simply because it was missing a PCC, at least not before this case.
- That Mr Large should have reported that he could not see visible damp proofing at any relevant location and that further investigations were required. Damp Proofing (“DPC” or “DPM”) is required to stop groundwater (that is the water under the water-table) from being absorbed up a wall, commonly known as rising damp. The house is described as being on a hill-top, if that is so, then the risk of groundwater ever coming into contact with a wall is remote, effectively zero, unless the house is built on an uncontrolled spring or geyser. From the level of published detail in the judgement, such as the local architect’s name, the Judge appears to encourage the general public to use land registry data and the flood check map to find this beautiful property, and photos of it which are still showing on RightMove. You can look up the risk of groundwater and consider for yourself if there is a practical benefit for a DPC (other than for building regulations sign off).
- The Claimants’ case that Mr Large was negligent at the outset in failing to advise that the Harts should commission a “building survey” rather than a HomeBuyer Report”. This should not be relevant as the defects were hidden and therefore are unlikely to have been picked by spending more time at the property during the survey. RICS have since changed their reports, to the RICS “Home Survey Standard” perhaps as a consequence of this claim.
- [The] diminution in value of the property would be equal to the assumed cost of demolition and rebuilding. [In] my view I should make allowance for the fact that I have held that on a complete rebuild a somewhat more attractive building might be created. I have no evidence upon which to value this, but doing the best I can, to reflect this I reduce the award for difference in value to £750,000. On the face of it this departs from the SAAMCO principle that has held for 20 years, which limits recovery of damages from a negligent advisor to losses which fall within the scope of the advisor’s duty. The principle distinguishes between two types of duty, namely to provide advice and to provide information.
Defendant’s expert witness
170 “6.13 [At] the time of my inspection, other than as revealed by the opening up carried out by the Claimants’ experts and their contractors, I saw no evidence of significant water ingress, or indeed any evidence of, for instance, defects to flooring within the main residential areas alleged to have been caused by water ingress issues.“
6.14 From my initial walk around the Property it was also clear that despite the Claimants having been in residence for a little under 8 years, the Property still retained an appearance of a premises that had been extended/redeveloped to a generally high standard of finish, with good quality floor coverings, good quality kitchen fitments and sanitary ware which at the time of redevelopment would have been of high quality. I also understand, however, that the Claimants have undertaken certain remedial works which have resolved a number of the problems that were experienced from their early occupation of the Property.
This is important as an expert witness assists a court in reaching its decision by providing independent expert technical analysis and opinion on an issue. They carry significantly higher financial and professional risk and so would normally spend much more time considering issues than a standard homebuyer surveyor has time to do.
If this expert witness could not see “evidence of significant water ingress” then how is a standard homebuyers expected to. If damp can’t be seen or detected during the survey, how is a surveyor going to know unless it is raining, it has recently rained or rain is replicated by spraying water and even then it can take hours for water to show through. The time, practical complexities and unforeseen consequences do not allow for spraying houses with water during surveys.
Mrs Hart (claimant buyer)
Mrs Hart also describes in her witness statement how contact was finally made with Mr. Large127:
“72. We emailed Mr Large on 12 May 2012 to advise of problems with the property and to enquire about his use of a damp meter.
128 Mr Large replied on 15 May 2012 “…I recall a conversation expressing my concerns in this respect & hopefully your solicitor did get some documents…” We assume that Mr Large is referring to the conversation that he had pre purchase with Mr Close around the 20 November 2011”…As I recall it the seller was presenting the property as a virtually new house…” “it would be worth investigating the question of any guarantee that may be attached to the roof terrace construction. Hopefully your solicitor would have passed any documents on to you.”
129 Mr Large visited us at [the Property] on 6 July 2012. We asked him during that visit if a different survey would have been more appropriate. He said that a Homebuyers Report was the most suitable survey. He has continued to assert throughout these proceedings that his report “was appropriate, correct and reasonable”. He told us he had not noticed the obvious repairs to the SW large window or the bodged Triflex and Duct tape next to the French door, which is confirmed in his audio tape.”
Mr Large (defendant surveyor)
“On 15 May 2012 Mrs Hart again made contact and advised me by email that they had some bad leaks, one in the front door frame and the other in the flat roof over the lower ground floor. She asked about my use of a damp meter. My response, by email the same day, was to confirm, having also been sent some photographs, that there did appear to be a detailing defect with the roof and also to ask if this was in relation to the recent storms as the Property is in a very exposed location. I confirmed that I had used a damp meter and had not found evidence of water ingress or damp at the time of my inspection. I also confirmed that other than the door being rather stiff and swollen, as commented on in my report, there had been no evident defect with the front door. I offered to come out and inspect if need be. I also queried whether a guarantee for the flat roof had been provided.
“79. Mrs Hart responded confirming that water had been coming in through the ceiling since February 2012 and the front door had been leaking since they moved in. There was no evidence of either of those issues when I inspected the Property and used a damp meter. I did report that the front door was binding slightly and had swollen a little (E6 of my report) and that it might require some remedial attention if the problem persisted but there was no sign of water ingress. I believe this is also evidenced by the photographs that I took at the time which show the appearance of the Property to be in good condition in that respect.
“80. I had offered to attend the Property and the Claimants eventually took me up on this in late June 2012, when we arranged for me to visit on 6 July 2012. The Claimants were very pleasant when we met, but they were clearly fed up and I was very concerned when I saw the state of the Property. The issues, in particular with water ingress and evidence of poor workmanship, which I saw in June 2012 were just not there to be seen when I inspected the Property in November 2011.
“81. Mr Hart showed me the terrace where it had been opened up and this was the only area where Mr Hart was slightly critical when he was speaking to me. He asked me if I thought that the lead covering the windows sills was slightly flat and asked if the water could pond there because of that. I accept that they were slightly flat and as a consequence water might pond there, but the wind would normally blow it off. I did not mention that issue in my report as I could not see how the water from there would go into the house; it was no more likely to than rainwater running down a window pane would be likely to run through to the inside of a window. Whilst this may be considered rather poor detailing it is not uncommon and without evidence of any ingress of water was certainly not a detail I would include in a HomeBuyer report. It was not a significant defect and I did not believe that it had caused the problems of which the Claimants were, in June 2012, now complaining: it was not where the issue was. I advised Mr Hart of this.
“82. I never contemplated that the Claimants would bring a claim against me at this time. They seemed pleased to see me and appreciative of the help I had given them and the questions they asked about the damp meter and the lead covering for the window sills were not of an accusatory nature.”
“209. Mr Large wrote to the buyers: “It is not necessarily essential that a certificate is provided, but with a project of this size, stated as having been managed by an architectural firm, it would not be unreasonable to ask for this. If such a certificate is not available, there may be little practical recourse if it were found that unseen deficiencies exist. You should seek advice on this from your legal adviser.”
Let the “buyer beware” or “sold as is,” means the buyer assumes the risk of defects or failure to meet expectations. It is a cornerstone of British Common Law.
It is clear from reading the Hart v Large judgement that the vendors and their builders were fully aware of the defects, yet they bore no liability because a few basic questions were not asked of them through lawyers, such as:
- Has rainwater ever dampened internal walls after it has rained?
- If so please provide details of where rain has dampened walls in the property, the nature of the defect and what has been done to rectify this defect.
- Have you ever used stain block to cover up a damp patch.
- If so please describe where?
- Have you ever asked the builder to return to the property after works were agreed as complete.
- If so please send correspondence between you and the builder (sent and received) and describe the issues, works to solve the problem and if there are any unresolved problems.
- Do you ever have to top up the central heating system?
- If so, please detail the frequency and detail any repairs.
- Is there any bathroom, kitchen, toilet or other part of the building with mains or waste water that don’t currently function?
- If so please provide details and what if any remedial actions have been tried.
- Is there any bathroom, kitchen, toilet or other part of the building with mains or waste water that has not been used for 6 months or more?
- If so please provide details so that the services can be tested.
- Spell out and agree the role, responsibilities and limitations of a surveyor, and expectation of the buyer clearly in advance. The surveyor and buyer should not make any agreements they are not both comfortable with.
- A buyer can’t be expected to know, unless it is spelt out, why a surveyor can’t guarantee to determine the presence of damp, mould or rot as:
- Almost all properties occasionally leak following strong wind and rain. Such leaks can only be detected if it has rained recently. The only people who spend enough time in the property to know, are the occupiers, so they should be asked as part of a buyers enquiries.
- Leaking mains water, wastewater and heating systems can be hard identify and pinpoint without dyes and tracer gases which are not messy, time consuming and not offered as a part of a standard survey. Leaks are especially hard to identify when pipes have been out of use, such as radiators in summertime.
- Damp Proof Courses (“DPC”) are used to stop groundwater, that is water from under the water-table from rising up a wall, known as rising damp. Most properties built after 1875 have a DPC but it is rarely visible and rarely required as groundwater is rarely in contact with walls. The only way to determine if the DPC is sufficient to stop groundwater causing rising damp is to flood the ground below the DPC. The cost and consequences are disproportionate to the benefits of that knowledge. Surveys should endeavour to identify rising damp and will establish and report on the risk of rising damp from groundwater. The height of the water-table under a building can vary due to factors outside of our control.
- Insufficient ventilation, insulation and heating and excessive vapour will result in condensation and mould in all properties.
- Most properties over 100 years old have hygroscopic salts in walls mainly around chimney breasts. Hygroscopic salts are not a source of water. They rarely result from rising damp. They cannot cause rot or mould but can cause decorative spoiling. These salts are normally hidden by building material such as plaster. They can only be detected when relative humidity is high, typically in excess of 70%RH.
- Cellars and below ground floor storage units were not designed for habitation. Below ground brick walls are best left uncovered or painted with lime so that rain water can evaporate away. Sub-floor vents are best left as originally designed unimpeded to ensure moisture that enters the sub-floor void is evaporated away safely.
- Properties require six monthly checks during or immediately after a rainstorm to ensure rainwater goods are working correctly. Roof valleys, gutters, hoppers, down-pipes, gullies and drains should be checked and unblocked. All cracks should be filled as they appear including render cracks and cracks around openings. Damaged or slipped roof tiles or flashing need replacement as they occur.
- Many measures can be employed to temporarily repair or paint over cracks or obscure dampness including damp proofing walls. Surveyors should use their best endeavours to identify cracks and uncover dampness in walls but cannot be held responsible for actions taken to obscure cracks and dampness. If you are a buyer you should instruct your lawyer to ask the vendors if they have covered up cracks or covered up dampness in walls such as through damp proofing treatment and ask for details of what work was done.
- Most dampness in properties results from the unintended consequences of changes made to a property. Surveyors should try to identify the changes most likely to result in dampness and look for damp resulting from those changes. However, if you are a buyer, you should instruct your lawyers to ask the vendors to inform you of all major changes that have been undertaken over the last 10 years, such as a loft conversion or extension. Buyers should then instruct lawyers to request all Professional Consultants Certificates, Building Regulations Compliance Certificates, Planning Approvals, FENSA certificates, supplier and builder’s warrantees and any other guarantees or compliance certificates. If there are any certificates you or your lawyer believe are missing then you should ask your lawyer to pursue the matter or insure against deficiencies. Ask the vendor to provide builder/ supplier guarantees/ warrantees and establish if the builder/ supplier is likely to remain solvent for the guarantee period and if so, what price and over what period, would they consider transferring the guarantee/ warrantee. These are responsibilities of the conveyancer and therefore is not a surveyor’s role or responsibility.
- Access hatches and inspection chamber lids will only be lifted where it is easy to do so. A surveyor cannot report on anything not seen or measured. Surveyors will try to gain access where possible but cannot move objects considered too heavy or fragile such as cupboards, beds, ornaments, vases etc. nor can a surveyor lift floor coverings without permission. They cannot report dampness in the voids under floors or above ceilings unless they have sufficient access which should be arranged and agreed in advance by the owner. If they are required to open up floor coverings or secured floorboards they should request the owners agreement in advance by email or writing specifically excluding liability resulting from damages incurred regardless of whether damages were caused by negligence.
- Keep Professional Indemnity insurance in place for many years after surveying, as long as you have a risk. Some clients would like a surveyor to act as insurance against defects, such as damp. The issue with this model is:
- Professional Indemnity insurance companies naturally try to find a loop hole to avoid paying claims,
- Professional Indemnity premiums will probably rise to the extent surveying is no longer viable.
The single misjudged “not” written in an email, probably cost Mr Large about £1/2 Million on a £600 fee; line 209 where Mr Large’s writes: “it is not necessarily essential that a certificate is provided”. The irony is Mr Large probably thought he was being helpful. He didn’t forget to mention the Professional Consultants Certificate and made no financial gain from downplaying the “practical recourse if it were found that unseen deficiencies exist”.
It is clear from Hart v Large that the vendors and builders were aware of defects, yet bore no liability because of Caveat Emptor.
In a sense a buyer would not need a surveyor if it wasn’t for Caveat Emptor. Vendor recourse can only be achieved through proving misrepresentation, such as in answers to enquiries.
Go found me site on behalf of Valerie Large.