Ann Marie Hubbard (Appellant/Claimant) v Bank of Scotland Plc (Trading as Birmingham Midshires) and Another (Respondent/Defendant)

Court:Court of Appeal
Docket Number:Case No: A2/2013/1564
Judge:Lord Justice Floyd, Lord Justice Kitchin, Lord Justice Sullivan
Judgment Date:24 Mar 2014
Jurisdiction:England & Wales
Neutral Citation:[2014] EWCA Civ 648

[2014] EWCA Civ 648




Royal Courts of Justice

Strand, London, WC2A 2LL


Lord Justice Sullivan

Lord Justice Kitchin

Lord Justice Floyd

Case No: A2/2013/1564

Ann Marie Hubbard
(1) Bank of Scotland Plc (Trading as Birmingham Midshires)
(2) Bank of Scotland Plc (Trading as Colleys)

Stephen Hockman QC and Mr James Harris (instructed by Direct Access) appeared on behalf of the Appellant

Mr Ian Clarke (instructed by Addleshaw Goddard) appeared on behalf of the Respondent

Lord Justice Floyd

This is an appeal from the judgment of His Honour Judge McKenna, sitting as a High Court Judge in Birmingham on 22 May 2013. By his order, the judge dismissed an action brought by the appellant, Mrs Ann Marie Hubbard, against the Bank of Scotland ("the Bank") arising out of an allegedly negligent survey carried out by the bank's employed surveyor.


Mrs Hubbard is the owner of Ashton House, which is on Pattingham Road, Perton Ridge, Wolverhampton ("the Property"). The Property is a large, post-war, four-bedroom detached house in a private residential area said to be one of Wolverhampton's finest locations. The plot is at the top of a ridge and slopes moderately steeply down towards the south west. Prior to 1884, the land had been quarried. The quarry had been filled in by 1959, but the rock wall of the former quarry ran across the land. In 1979, when the house was built, it was located on its plot in such a way that it straddled the quarry wall underneath, so that the side of the house facing the road was built on rock but the garden side built on soft infill material.


Mrs Hubbard purchased the Property with the assistance of a loan provided by the Bank under their trading name, Birmingham Midshires. The survey which is the focus of this action was carried out by Mr RJ Handley FRICS, a surveyor employed by the Bank, albeit this time under their trading name of Colleys. These different trading names of the Bank account for the fact that there are two names on the pleadings but there was in reality only one defendant, namely the Bank.


Mrs Hubbard paid a fee of £715 for her survey and valuation report and it was addressed to her.


Mr Handley carried out his inspection of the Property on 14 October 2005. Mr and Mrs Hubbard were present at the Property when the valuation inspection took place. Mr Handley was not called as a witness at the trial, but his notes of the inspection included the following:

"NB* Rear bedroom window frame distorted, stepped crack to side wall. Category 0: no RMNFA (no recent movement, no further action – brickwork displaced slightly and slight cracks to rear elevation category 0. Repaired on rear wall also."


The judge was faced with the task of establishing what was in fact the condition of the Property in 2005 at the time of Mr Handley's inspection. He had evidence from later instructed experts, such as a Dr Rutherford, but Dr Rutherford first inspected the Property in 2010 and was having to work backwards from the condition of the Property at that date. The judge concluded in the end that Mr Handley's notes provided the best evidence available of what was visible in 2005 in terms of cracking at the Property. Those notes had the benefit of being contemporaneous. In addition, there was a contemporaneous photograph showing evidence of cracking, identified as photograph B364. The cracking shown in that photograph reflected Mr Handley's notes.


Mrs Hubbard had, in her oral evidence, accepted that she had only seen one crack, albeit she had at one time contended for the existence of very much more extensive cracking. Photograph B364 does indeed show the cracking that Mr Handley records in his notes and also supports his view that there was some distortion of the window. The cracking to the right of the window as one faces it is a little difficult to see on the photograph, which was before the judge, which may account for the fact that Mrs Hubbard saw only one crack. Mr Handley clearly saw them both. At the inspection when Mrs Hubbard specifically called the attention of Mr Handley to the cracking which she could see, she had asked Mr Handley if this was okay and Mr Handley had told her that the cracks were old and nothing to worry about.


Mr Handley's inspection was intended to, and ultimately did, produce a valuation report. However, before the valuation report was received, Mr Hubbard received a telephone call from the broker following the inspection to say that the valuation had been received and was okay. It is on this basis ultimately that Mrs Hubbard contended that she had relied on the report to purchase the Property, saying that she had known of the content of her husband's phone call. Even that case on causation suffered some further damage during her cross-examination, when Mrs Hubbard said that the full extent of her understanding of the position was that the mortgage was going ahead. That, of course, told her little, if anything, about the detailed content of the report.


Mr Handley's valuation report is dated 17 October 2005. It is common ground that it was not and did not purport to be a full structural survey. He valued the Property at some £690,000 in its present condition and in the current state of the market. Under the heading "Matters affecting value", he reported the following:

"The property is in acceptable condition for lending purposes. My valuation reflects the fact that there is wear and tear to some items and that maintenance, repair or upgrading would be required.

The property has suffered previous movement but I saw no evidence to suggest this is ongoing."


The valuation report contained guidance notes on the front page and reproduced again on the second page. They say this:

"You have chosen a valuation report which is a limited inspection of the property highlighting only those items which we consider will materially affect value. It is prepared on instructions from Birmingham Midshires in accordance with the RICS Mortgage Valuation Specification a copy of which is available on request.

Valuers cannot see through solids or see things that are hidden by wall and floor coverings. They will not move furniture or obstructions inside or outside, lift carpets, crawl under floors, climb ladders outside or go on roofs or fully enter roof spaces. Valuers will look at the outside of the property from the garden and adjacent public areas.

You still have the option to request a more detailed report and we would be pleased to help you with this.

If you wish to discuss any technical aspects of this report please contact the valuer.

Do not forget to read the Advice for Applicants section – it is important."


The third page of the valuation report is the "Advice for Applicants" section. The third and fourth bullet points read:

"• Problems or issues may have been highlighted and you should get your own independent advice. You may require reports and estimates. When obtaining these we would suggest you use a reputable contractor with an insurance backed guarantee and if applicable adequate professional indemnity insurance and who is preferably a member of a trade organisation.

• When reports and estimates are being obtained, your contractor may go further than the valuer, for example lifting carpets and floorboards, and may reveal more serious problems."


As indicated in the guidance note, it is common ground that the RICS Mortgage Valuation Specification ("the MVS") applied to the carrying out of this survey. Under the heading "The Valuer's Role", the MVS provides at paragraph 2.2:

"The role of the valuer, who must have knowledge of and experience in the valuation of the residential property in the particular locality, is:

• to advise the lender of the Market Value, usually excluding development value at the date of inspection;

• to advise the lender as to the nature of the property and any factors likely to affect its value…"

Paragraph 5.2 contains a list of relevant factors. Amongst the relevant factors are, not surprisingly:

"The apparent general state of and liability for repair, the construction and apparent major defects, liability to subsidence, flooding, and/or other risks. Particular care must be taken with non-traditional construction."

Paragraph 6 deals with the report. Paragraph 6.2 is in the following terms:

"If it is suspected that hidden defects exist which could have a material effect on the value of the property, the valuer should advise of this and recommend more extensive investigation by the intending borrower before entering into a legal commitment to purchase … It may be appropriate, in exceptional circumstances, to defer making a valuation until the results of the further investigations are known."


Contracts for the sale and purchase of the Property were exchanged on 18 November 2005 and the sale of the Property was completed on 16 December of that year. Following completion, Mrs Hubbard noticed cracking at the rear left-hand corner of the Property, which led her to raise the issue with the Bank in March 2007. She later made a claim on her insurance and received a payment. It was common ground that the Property has now suffered from differential subsidence. Adjacent to the area where cracking was observed, there were drains running beneath the extension which were leaking. In 2008, in addition, there was a significant burst water main at the Property and this had led to underpinning work being carried out and paid for by insurers.


By 2010, Mrs Hubbard and her husband had...

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