Smith v Eric S Bush

JurisdictionUK Non-devolved
JudgeLord Keith of Kinkel,Lord Brandon of Oakbrook,Lord Templeman,Lord Griffiths,Lord Jauncey of Tullichettle
Judgment Date20 April 1989
Judgment citation (vLex)[1989] UKHL J0420-2
CourtHouse of Lords
Smith (A.P.)
Eric S. Bush (A Firm)
Harris (A.P.) and Another (A.P.)
Wyre Forest District Council and Another

[1989] UKHL J0420-1

Lord Keith of Kinkel

Lord Brandon of Oakbrook

Lord Templeman

Lord Griffiths

Lord Jauncey of Tullichettle


Lord Keith of Kinkel

My Lords,


My Lords, I have had the opportunity of considering in draft the speeches to be delivered by my noble and learned friends Lord Templeman, Lord Griffiths and Lord Jauncey of Tullichettle. I agree with them, and for the reasons they give would allow the appeal in Harris v. Wyre Forest District Council and dismiss that in Smith v. Eric S. Bush.

Lord Brandon of Oakbrook

My Lords,


For the reasons set out in the speeches to be delivered by my noble and learned friends, Lord Templeman, Lord Griffiths and Lord Jauncey of Tullichettle, I would allow the appeal in Harris v. Wyre Forest District Council and dismiss the appeal in Smith v. Eric. S. Bush (a firm).

Lord Templeman

My Lords,


These appeals involve consideration of three questions. The first question is whether a valuer instructed by a building society or other mortgagee to value a house, knowing that his valuation will probably be relied upon by the prospective purchaser and mortgagor of the house, owes to the purchaser in tort a duty to exercise reasonable skill and care in carrying out the valuation unless the valuer disclaims liability. If so, the second question is whether a disclaimer of liability by or on behalf of the valuer is a notice which purports to exclude liability for negligence within the Unfair Contract Terms Act 1977 and is therefore ineffective unless it satisfies the requirement of reasonableness. If so, the third question is whether, in the absence of special circumstances, it is fair and reasonable for the valuer to rely on the notice excluding liability.


In Harris v. Wyre Forest District Council, [1988] Q.B. 835 the first appeal now under consideration, Mr. and Mrs. Harris wished to purchase 74, George Street, Kidderminster, and needed a mortgage. They applied to the council. By section 43 of the Housing (Financial Provisions) Act 1958 (as amended by section 37 of the Local Government Act 1974), the council were authorised to advance money to any persons for the purpose of acquiring a house, provided that:

“(2) … the local authority … shall satisfy themselves that the house … to be acquired is … or will be made in all respects fit for human habitation… 3( e) The advance shall not be made except after a valuation duly made on behalf of the local authority …”


Mr. and Mrs. Harris signed the application form supplied by the council and that form contained the following declaration and notice:

“I/We enclose herewith valuation fee and administration fee £22. I/We understand that this fee is not returnable even if the council do not eventually make an advance and that the valuation is confidential and is intended solely for the benefit of Wyre Forest District Council in determining what advance, if any, may be made on the security and that no responsibility whatsoever is implied or accepted by the council for the value or condition of the property by reason of such inspection and report. (You are advised for your own protection to instruct your own surveyor/architect to inspect the property). I/We agree that the valuation report is the property of the council and that I/we cannot require its production.”


The council decided to carry out their own valuation and for that purpose instructed their employee, the second respondent, Mr. Lee. After receiving Mr. Lee's valuation, the council made a written offer to advance £8,505 to Mr. and Mrs. Harris to be secured on a mortgage of the house and subject to their undertaking to carry out within 12 months the works detailed in the schedule to the offer. The schedule was in these terms:

“Essential repairs

1. Obtain report for district council from Midlands Electricity Board regarding electrics and carry out any recommendations. 2. Make good mortar fillets to extension.”


Mr. and Mrs. Harris assumed from the council's offer that, as was the case, the house had been valued at £8,505 at the least, and that the valuer had not found serious defects and they therefore accepted the offer and entered into a contract to purchase the house for £9,000. Three years later, Mr. and Mrs. Harris discovered that the house was defective; one builder quoted £13,000 to carry out work to make the house safe. Another builder refused to tender for the work which he regarded as impractical and unsafe. The damages suffered by Mr. and Mrs. Smith, including interest up to the date of trial, were agreed at £12,000. The trial judge was satisfied that Mr. Lee did not exercise reasonable skill and care and that the council, as his employer, were vicariously liable for Mr. Lee's failure and he therefore ordered the council to pay £12,000. The Court of Appeal allowed the appeal of the council on the grounds that by the notice contained in the application form signed by Mr. and Mrs. Harris the council had avoided incurring liability. Mr. and Mrs. Harris now appeal.


In Smith v. Eric S. Bush (a firm) [1988] Q.B. 743, the second appeal now under consideration, Mrs. Smith wished to purchase 242, Silver Road, Norwich, and needed a mortgage. She applied to the Abbey National Building Society. By section 25 of the Building Societies Act 1962, now section 13 of the Building Societies Act 1986, the Abbey National was bound to obtain “a written report prepared and signed by a competent and prudent person who is experienced in the matters relevant to the determination of the value” of the house, dealing with the value of the house and with any matter likely to affect the value of the house. Mrs. Smith paid to the Abbey National an inspection fee of £36.89 and signed the application form which contained the following declaration and notice:

“I accept that the society will provide me with a copy of the report and mortgage valuation which the society will obtain in relation to this application. I understand that the society is not the agent of the surveyor or firm of surveyors and that I am making no agreement with the surveyor or firm of surveyors. I understand that neither the society nor the surveyor or the firm of surveyors will warrant, represent or give any assurance to me that the statements, conclusions and opinions expressed or implied in the report and mortgage evaluation will be accurate or valid and the surveyor's report will be supplied without any acceptance of responsibility on their part to me.”


The Abbey National instructed the appellant firm, Eric S. Bush, to carry out the valuation. The appellants valued the house at £16,500 and the report contained the following paragraph:

“11. Repairs recommended as a condition of mortgage: No essential repairs are required. We noted a number of items of disrepair in the building which we have taken into account in our valuation, but which are not considered to be essential for mortgage purposes.”


A copy of the report was supplied to Mrs. Smith by the Abbey National.


In reliance on the report, Mrs. Smith accepted an advance of £3,500 from the Abbey National and entered into a contract to purchase the house for £18,000. Eighteen months later, bricks from the chimneys collapsed and fell through the roof into the loft and the main bedroom and ceilings on the first floor. The collapse was due to the fact that two chimney breasts had been removed from the first floor, leaving the chimney breasts in the loft and the chimneys unsupported. Mr. Cannell, who carried out...

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