Karl Phimister V. D.m. Hall Llp
| Jurisdiction | Scotland |
| Judge | Lord Glennie |
| Neutral Citation | [2012] CSOH 169 |
| Court | Court of Session |
| Published date | 26 October 2012 |
| Year | 2012 |
| Date | 26 October 2012 |
| Docket Number | A82/11 |
| OUTER HOUSE, COURT OF SESSION [2012] CSOH 169 | |
| A82/11 | OPINION OF LORD GLENNIE in the cause KARL PHIMISTER Pursuer; against DM HALL LLP Defenders: ________________ |
Pursuer: Beynon; Lefevre Litigation
Defenders: Duthie; Simpson & Marwick
26th October 2012
Introduction
[1] In this action the pursuer, Karl Phimister, sues the defenders for professional negligence in respect of a mortgage valuation report carried out at his request over subjects at Puttingbrae, Drybridge, Buckie, Aberdeenshire ("the subjects"). The report was prepared in support of the pursuer's application for a residential mortgage in connection with his proposed purchase of the subjects. The defenders duly provided a report. The report valued the subjects at about £230,000. The pursuer does not aver on record that that valuation was necessarily wrong, let alone negligent, or at least he does not do so directly. His complaint is that the mortgage valuation report noted that the total area of the subjects - being a farmhouse, various outbuildings and an area of garden and surrounding land - was said to extend to approximately 1.12 acres, whereas in fact it extended to no more than about 0.65977 acres. The pursuer's case is that the defenders owed to the pursuer a duty to check the area as part of their valuation, and they were negligent in failing so to do. While the area of the subjects may or may not have affected the valuation of the subjects for residential purposes, and he makes no averment on record in this regard, the smaller area severely restricted his opportunity to develop the site. It is on that basis that he brings this claim.
[2] It is not disputed by the defenders that a surveyor who provides a mortgage valuation report may, in certain circumstances, owe a duty of care to the purchaser of the property valued. That duty may be owed in contract, where the surveyor is instructed by the intended purchaser, or in delict, or both. Where a surveyor is aware that a purchaser may rely upon his valuation in determining whether to purchase the property, he owes the purchaser a duty to exercise reasonable skill and care in carrying out the valuation. In the instant case, the defenders accept that they owed the pursuer such a duty. But the scope of the surveyor's duty to a purchaser is, they say, no greater than the scope of the duty owed to a lender. His job is limited to assessing the adequacy of the security. If the valuation is a reasonable one, the surveyor has discharged his duties. Only defects which have a material effect on valuation are relevant to that assessment and to his report. In this case they dispute liability on the basis that they were only instructed to provide a valuation for a residential mortgage, and that is what they did. They did not make any representation about the area of the site. And, in any event, whilst inaccurate measurement of the area of the site might or might not be material to a proposal to develop the site, it made no difference to a valuation for residential purposes where the value attaching to the farmhouse and other buildings was of prime significance.
The facts
[3] The pursuer is a fisherman by occupation. His work takes him away from home for about two weeks, and this is followed by about two weeks at home. In early 2007, at the time of the events with which this action is concerned, he was interested in undertaking a business venture with his uncle, Alexander ("Sandy") Phimister, whose job in the offshore oil and gas industry meant that he too had blocks of time at home and away from home. They both had a considerable amount of spare time, which gave them time to dabble in property development. They had already undertaken a number of development projects, purchasing land in the Buckie area and re-selling it after carrying out residential development and/or refurbishment. In early 2007, they were seeking to purchase further land for such purposes. They kept their eyes open for development opportunities, using the internet, estate agents advertising sites and the local paper. They had also discussed matters with Ewen Chisholm, of Messrs Antons, Solicitors. The pursuer gave evidence, which was not disputed, that he previously told Mr Chisholm that he was looking for about an acre of land in the Buckie area so that he could create three sites of about a third of an acre each. Mr Chisholm had nothing on his books at the time. However, about two to three months later, the subjects came up for sale.
[4] The pursuer first saw the subjects advertised in the window of Antons Estate Agency Limited ("Antons Estate Agents"). That was a separate entity from Antons, Solicitors, being run by the spouses of the partners in the solicitors firm, and it has since been dissolved. The pursuer asked Mr Chisholm about the property and was told that if he could get it at the right price, it would be a good opportunity - it "fitted the bill". He obtained the sales particulars from Antons Estate Agents. They described the subjects as a "traditional dwellinghouse and steading" and sought offers over £219,000. The subjects were described in more detail on the first page as comprising a large dining kitchen, a lounge, a cloakroom, five bedrooms, a study/computer area and a family bathroom. The site was said to be a "1.12 acre plot with superb views". It included an old dairy, a huge steading, three garages and various outhouses and coal sheds. That summary concluded by describing it as a "Fantastic development opportunity". The particulars gave photographs of each of the rooms within the house, with a text caption describing the room, and then added the following:
"Further complimented (sic) by a generous fully enclosed and private area of garden ground (1.12 acres) with a large range of outbuildings to include:
The old dairy; huge steading (110 foot); 3 garages; various outhouses & coal sheds.
Fantastic development opportunity with expired consent for a separate 2 bedroomed cottage; 3 B & B units and parking, however could easily suit those looking for a large steading conversion family home".
[5] The pursuer went with his uncle Sandy to view the property. They spent about one to two hours there and met the sellers, Mr & Mrs Samuel. There was a fence around the western, southern and eastern boundaries of the site, but at the north end there were two areas belonging to the neighbouring farmer over which the owners of the subjects had access. After they left, they discussed the pros and cons. The question of access was potentially an issue if they were to develop the site. They asked Mr Chisholm for advice about this. Upon receiving confirmation from him that there were no difficulties in this regard, the pursuer phoned Mr Chisholm and made an offer of £220,000 for the property. That offer was rejected. Others were said to be interested in the subjects. The pursuer and his uncle increased their offer to £240,000. That offer was accepted.
[6] To finance the purchase, the pursuer and his uncle proposed to put in £25,000 each of their own money and to borrow the balance from the Halifax with whom they had had prior dealings. They knew that a mortgage valuation report would be needed for this purpose.
[7] There was some uncertainty on the evidence as to whether it was the pursuer who instructed the mortgage valuation from the defenders or whether Mr Chisholm did so on his behalf. The pursuer thought that he had asked Mr Chisholm to obtain it. Mr Chisholm was uncertain. However, I heard evidence from Norma Innes, the office manager at the defenders, who dealt with requests for mortgage valuation reports. She had completed a job sheet for this request. The job sheet was dated 16 July 2007. The "Instructor Details" showed that the instruction came from the pursuer himself. Ms Innes explained that if the request had been from the solicitor, then the solicitor's name would have appeared on the form as the Instructor. I accept that evidence. Ms Innes, on behalf of the defenders, sent a letter to the pursuer dated 16 July 2007 confirming his instructions.
[8] Two points of importance emerge from the job sheet prepared by Ms Innes. First, the form is headed "Residential Instruction", indicating that the instruction for a mortgage valuation report was for a residential property. Ms Innes said that if she had been told that the land was wanted for a development, she would have asked one of the valuers to phone the pursuer. Secondly, it was noted on the form that the instruction was for a "Repeat" report. This meant that a report had already been prepared for another interested party; and it was a repeat of that report which would be sent to the pursuer. That made it cheaper for him. Ms Innes was clear that by the end of the conversation the pursuer would have known that he was going to be given a repeat report, because this affected the price and the price would have been agreed before the end of the conversation. I accept that evidence. The fee agreed was £184, discounted from £230. The pursuer accepted that he knew that he was getting a copy of a report prepared for someone else. These points are of importance because they suggest that the pursuer could not have been under any illusion that the report which he was going to receive from the defenders was tailored to his development intentions. Michael McDonald, a chartered surveyor in the employ of the defenders who prepared the mortgage valuation report, said that if he had been told that the report was wanted in respect of a purchase for commercial development, he would have referred the request to a different office. I accept that evidence. It seems to me plain, and this was not really disputed by the pursuer, that whether it was the pursuer or Mr Chisholm who gave the instruction to the defenders - and I am satisfied that it was the pursuer himself who did so - the defenders were not told that the proposed purchase was other than for residential...
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