Court of Appeal
Published October 6, 2008
Platform Funding Ltd v Bank of Scotland plc (formerly Halifax plc)
Before Sir Anthony Clarke, Master of the Rolls, Lord Justice Rix and Lord Justice Moore-Bick
Judgment July 31, 2008

A mortgage lender who instructed a surveyor to value a property as security, was entitled to damages from the surveyor for the losses suffered after the borrower defaulted on the loan, and it was discovered that the wrong property had been valued in breach of an unqualified obligation to inspect the particular property.

The Court of Appeal so held, the Master of the Rolls dissenting, dismissing the appeal of the defendant, Bank of Scotland plc, formerly Halifax plc, from the decision of Judge Collins in Central London County Court on November 2, 2007, giving judgment for the claimant, Platform Funding Ltd. Mr Thomas Grant and Mr Alexander Winter for the valuer; Mr Clifford Payton and Mr Ben Hubble for the lender.

LORD JUSTICE MOORE-BICK said that the defendant valuer provided a valuation of a property identified as 1 Bakers Yard, Belchmire Lane, Gosberton, Lincolnshire, but he had not inspected that property, a plot of land on which stood a house under construction. The borrower had misled him into inspecting 5 Bakers Yard, where the house had almost been completed.

On the security of 1 Bakers Yard, the lender made an advance to the borrower, who failed to maintain the payments due. The lender repossessed the property in order to realise its security. At that point the mistake came to light. The property was sold leaving a shortfall of over £30,000. The lender sought to recover its loss from the valuer.

His Lordship reviewed the authorities, in particular Greaves & Co (Contractors) Ltd v Baynham Meikle and Partners ([1975] 1 WLR 1095), Barclays Bank plc v Weeks Legg and Dean ([1999] QB 309), Zwebner v Mortgage Corporation Ltd ([1998] PNLR 769) and Midland Bank plc v Cox McQueen ([1999] Lloyd’s Rep PN 223), and concluded that although there was a presumption that those who provided professional services normally did no more than undertake to exercise the degree of care and skill to be expected of a competent professional in the relevant field, in relation to particular aspects of their work there was nothing to prevent them from assuming an unqualified obligation.

Whether or not a professional person had undertaken an unqualified obligation of any kind in any given case would depend on the terms of the contract under which he had agreed to provide his services.

Having regard to the facts known to both parties when the instructions were accepted, the question was whether the professional person assumed an unqualified obligation in relation to the particular matter in question.

Although the court should be cautious before holding that a professional person had undertaken an unqualified obligation in the absence of clear words to that effect, where the language of the contract was clear, there was no reason not to give effect to it.

The question was whether, in the absence of negligence, inspection of the wrong property would amount to a breach of contract. The contract here was typical of the instructions routinely given by prospective mortgage lenders to surveyors and valuers on a daily basis.

The inspection and valuation of a property required the exercise of professional skill and judgment and a surveyor would not normally be expected to assume an unqualified obligation in relation to the manner or extent of his inspection or the assessment of value.

It was not clear, on the other hand, why the surveyor’s obligation to inspect the property to which his instructions related should be qualified in the same way.

In the present case, the valuer’s instructions were couched in clear and unqualified terms.

By accepting instructions to inspect and value 1 Bakers Yard, the valuer undertook an unqualified obligation to inspect that particular property and in failing to do so was in breach of contract.

Lord Justice Rix delivered a concurring judgment; the Master of the Rolls delivered a dissenting judgment.

Solicitors: Walker Morris, Leeds; Glenisters, Eastcote.

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