Ratio Decidendi
A valuer instructed by a building society to value a modest residential property owes a duty of care to the purchaser, even though the valuer's contract is with the building society, because the valuer knows that the purchaser will rely on the valuation. A disclaimer purporting to exclude liability for negligent valuation fails the reasonableness test under the Unfair Contract Terms Act 1977.
Hechos
Mrs Smith applied for a mortgage to purchase a house. The building society instructed Eric S Bush, a firm of surveyors, to carry out a valuation. The valuation report negligently failed to identify a serious structural defect (removal of a chimney breast without adequate support). The report contained a disclaimer stating that the surveyor accepted no responsibility to the purchaser. Mrs Smith purchased the property in reliance on the valuation. The chimney later collapsed.
Resumen de la sentencia
The House of Lords held that the valuer owed a duty of care to Mrs Smith under the Hedley Byrne principle, notwithstanding that his contractual relationship was with the building society. The valuer knew that the purchaser would rely on the valuation when deciding whether to buy the property. The disclaimer failed the reasonableness test under UCTA 1977. Lord Griffiths emphasised that in the case of modest dwellings, it was unreasonable to expect purchasers to commission their own independent survey.
Citas clave
"The valuer knows that the purchaser will rely on his valuation, and if he is negligent in carrying it out, the purchaser will suffer financial loss."
— Lord Griffiths
Tratamiento posterior
Leading authority on the duty of care owed by surveyors to purchasers and on the application of UCTA 1977 to disclaimers of liability.
May not apply to high-value or commercial properties where the purchaser is expected to commission their own survey.