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In Scullion v Bank of Scotland [2011] EWCA (Civ) 693. The decision in Scullion v Bank of Scotland plc (trading as Colleys)[1] is very welcome at a time when the surveying profession is already under attack from lender claims.

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Introduction

The decision in Scullion v Bank of Scotland plc (trading as Colleys)1 is very welcome at a time when the surveying profession is already under attack from lender claims. The first instance decision extended the scope of a valuer's duty, paving the way for disappointed amateur (non-professional) investors to seek to recover shortfalls on a property from the valuer. Buy-to-let investors were prevalent and were very active in the property market in the 'noughties' prior to the credit crunch. From 1999 to 2006, the number of residential mortgages grew from 60,000 - with a value of �3.6bn - to 940,000 and worth �108bn.2 In light of this growth in the market and the high likeliness that many will have suffered losses following the downturn, the first instance decision of Scullion could potentially have given rise to a plethora of claims. Duty of care The issue in question in Scullion was whether a land valuer providing a report to mortgagee had a duty of care towards mortgagor and whether he was liable for negligent misstatement to him. Duty of care has been defined widely and has even tried to encompass people other than professionals implying that professionals have a higher degree of liability. Lord Reid in Hedley Byrne & Co. Ltd. V. Heller & Partners Ltd3 had a view that liability need not be confined to statements made or advice given in the exercise of a profession involving the giving of such advice but also to 'all those relationships where it is plain that the party seeking information or advice was trusting ...read more.

Middle

For these reasons, the Court of Appeal unanimously held that there was no "inherent likelihood that a purchaser, buying a property for the purposes of letting it out, would rely on a valuation report prepared for the lender", rather than obtaining his own valuation advice on the rental and capital values of the Flat. Liability of professionals The majority of professionals are aware that the provision of negligent advice or a negligent misstatement may expose them to liability. However, such professionals may not be aware of the extent of their potential liability. After Scullion land valuers will only be liable to third-parties for valuation of owner-occupation properties and not buy-to-let purchasers. It raises several doubts about how efficient and careful should professionals be in giving advice. Should their level of advice depend on who has asked them to give valuation? It would give rise to double standards and such ruling would be further said to be lenient on professionals who are supposed to have a high degree of skill and expertise in their work. The judge's finding in Scullion as regards to the surveyor's valuation was that the surveyor had taken account of inappropriate comparables and had even excluded from his consideration, a two-bedroom flat on the same floor of the development. The valuation was, as a result, found to have substantially exceeded the maximum that could have been attributed to a similar property by a competent surveyor. If the test were to be applied as mentioned by Lord Templeman in Smith with regard to the performance of the average skilled valuer it may be argued that the valuers failed to perform up to the standard. ...read more.

Conclusion

However modest a buy-to-let transaction it is better not to consider it similar to a residential purchase and there should not be any exception for the particular circumstances of a buy-to-let purchaser. Thus, the law in this area can be said to have developed consistently by providing a clear demarcation between residential and investor buyers. Conclusion In conclusion, a finding of a duty of care seems to be directed principally by practical solutions and policy considerations. Though Scullion might be seen as an unfair decision and a formidable obstacle to claims in tort by property investors it gives clarity to the law in land valuation by setting boundaries to the characteristics of people able to rely on such claim but, as ever, facts decide cases and care will always be necessary to check whether or not the individual facts of any case might warrant a different outcome. 1 [2011] EWCA Civ 693 2 Naomi Park, 'Surveyors duties: buy-to-let properties' (Professionals@risk, Nov 2011) < http://www.melvilleburbage.co.uk/assets/Zurich-Insurance-Professionals-at-Risk-Nov-2011.pdf> last accessed on 23 March 2012 3 [1964] A.C. 465 4 [1990] 1 A.C. 831 5 [1990] 2 W.L.R. 358 6 Sarah Mawbey et al, 'Valuers: no duty of care to buy-to-let purchaser' (Devonshire Claims Service Newsflash, June 2011) < http://www.dcsclaims.co.uk/files/Newsflash-June2011.pdf> last accessed on 23 March 2012 7 [1982] QB 438 8 [2011] EWCA Civ 693 9 RICS Residential Mortgage Valuation Specification clearly states that a valuer should fully research, document and retain comparable rental evidence, and that the comparable evidence relied upon should be as robust as that obtained in support of the capital valuation. 10 [2011] EWCA Civ 693 ?? ?? ?? ?? ...read more.

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