What risks does a surveyor face when they take advice from a third party, and bases their survey or valuation on that advice? The point has become particularly topical in recent months, with a new arrangement for the valuation of high-rise buildings agreed jointly by RICS, the Building Societies Association and UK Finance, and the publication of the EWS1 form, due to be covered in a later article.
In the meantime, this article will provide guidance as to when a surveyor may face a claim where they have relied on the advice of a third party, and what they can do to reduce or eliminate that risk. The default position for any professional is that, in performing the service they have agreed to provide to the client they will be liable not only for their own negligence but also for that of anyone to whom they delegate the provision of those services. If a client believes that there has been an error in the survey, or that the property has been overvalued, the starting point will always be to pursue a claim against the surveyor.
However, in circumstances where independent third parties are instructed to undertake specialist tasks on behalf of the professional providing the services – for example, where the surveyor conducting a survey seeks specialist advice from a structural engineer or an asbestos consultant – then if the task to be delegated is outside the professional's normal area of expertise they can argue that they should not have any liability to the client in the event that the advice provided by the specialist is wrong.
The leading case on this is Co-operative Group Limited v John Allen Associates Limited [2010] EWHC 2300 (TCC), which concerned an engineer who relied on specialist advice when proposing the feasibility of using a method of construction involving densely compacted stone columns for a floor in a Co-op store.
The Co-op argued that the engineer could not discharge its duty of care by relying on that specialist advice, which it said constituted a delegation of duty. The judge disagreed, and found that John Allen Associates was able to discharge its duty by relying on the specialist because it had acted reasonably in doing so.
In light of this finding, a surveyor can discharge their duty by relying on a specialist professional, so long as they have acted reasonably in accepting and adopting that advice in preparing the survey or valuation. A surveyor who seeks assistance from a structural engineer will be able to defend a claim for losses caused in the event that the engineer's advice is wrong so long as the surveyor acted reasonably in accepting, and basing any conclusions or recommendations set out in the survey on, the engineer's advice.
- Is assistance taken from an appropriate third-party expert? Has the surveyor considered the qualifications or expertise needed to advise on the specific point, to ensure that the third party from whom they are seeking the advice is competent to give it? This would not require the surveyor to do a significant amount of due diligence on the expert, but they would be expected to check that the expert had the appropriate qualification to advise on the relevant point.
- Is there any information that should lead the surveyor to warn about the reliability of the experts advice? Again, this would not require the surveyor to second-guess the advice received from the expert, but they would have to sense-check the report and consider, for example, whether it is based on all the relevant information and a proper inspection of the property.
- Does the client have a remedy for any losses caused if the expert advice turns out to be wrong? If so, to what extent? A court will always want to protect an innocent client who has agreed to purchase a property or has made a loan secured against a property, relying on incorrect advice. Much will turn on whether the client has a direct route of redress against the expert: either for breach of contract, because the client has a direct contractual relationship with the expert; or for breach of duty of care in tort, because the client can argue that the expert provided their advice knowing that it would form part of a survey or valuation on which the client would be relying, and that if the advice were wrong, the client would suffer a loss.
"A surveyor can discharge their duty by relying on a specialist professional, so long as they have acted reasonably in accepting and adopting that advice in preparing the survey or valuation"
- it was necessary to take advice from the engineer
- the advice received appeared to be reliable
- the client has the option to bring a claim against the engineer
- it was reasonable to instruct the expert, rather than leaving it for the client to do so
In order to reduce the risk of a client attempting to bring such a claim against a surveyor in this situation, the following steps are recommended.
First, surveyors should seek to include a disclaimer formally stating that they are relying on the advice of the third party, and to disclaim liability for any losses arising from the information contained in that advice. Before providing the survey or valuation, the surveyor should agree with the client that, if the surveyor seeks specialist advice on a particular point and then relies on that advice when preparing the survey or valuation, no claim shall be made against them if the advice from the expert turns out to be wrong and that error then causes the client a loss.
Second, the surveyor should always include a copy of the expert's advice with the survey or valuation, so it is clear on what basis the relevant sections of the report are prepared.
Third, it would always be preferable for the surveyor to ensure that the client appoints the expert direct, or that the expert provides some form of warranty to the client, so that, in the event it turns out that the advice provided by the expert is wrong, the client can take action against them directly without having to involve the surveyor. Even if that isn't possible, the surveyor should ensure that the expert knows who the client is and why their advice is sought, so that, even if the client cannot bring a claim for breach of contract, they can provide the necessary evidence for a claim in tort, to avoid the court finding that the only means of redress is through the surveyor.
Related competencies include: Client care, Legal/regulatory compliance