Negligent Survey Claims, Loss and Missing Concrete Evidence

26 August 2018

It is well established that the measure of loss in a claim against a surveyor for a negligent report is the diminution in value of the property, and not the cost of repairs. However, in the recent Court of Appeal case of Moore and another v National Westminster Bank, the court assessed the claimants’ loss by reference to the cost of remedying the defects. This article considers why.

Philips v Ward

The Court of Appeal case of Philips v Ward (1952), established the way in which loss is calculated in negligent survey cases. Even though the cost of remedying the damage to a property caused by a beetle infestation would have been £7,000, had the beetle infestation been properly reported in the survey, the impact on the value of the property would only have been £4,000. The court held that the measure of damages was the difference between the fair value of the property if it had been in the condition described in the defendant’s report, and its value in its actual condition. The court also held that the damages should be assessed at the date when the property was purchased. The claimant could not claim damages for the increase of the cost of carrying out the repairs between that time and the date of the hearing of the action.

Moore v Natwest

In Moore and another v National Westminster Bank, the claimants were awarded damages by reference to the full cost of repairing the defect in the property and not the diminution of value.

The claimants purchased a buy to let. The bank offered a mortgage and, through the bank, the claimants arranged for a home buyers report to be provided. A home buyers report is a thorough survey which provides the valuer’s assessment on the state of the property. The bank failed to obtain a home buyers report and instead obtained a much more basic report. The bank approved the mortgage and the claimants incorrectly thought that a detailed survey had been obtained and that the property was in a sound condition. In fact, extensive repairs were required to the property which the claimants only discovered after the purchase had completed. The claimants assessed the cost of the repair work to be approximately £115,000, a figure they could not afford to pay. It was the bank’s position that the correct measure of loss was the diminution in value of the property and the bank assessed that at £15,000.

First Instance Decision

The judge at first instance held that the bank had acted in breach of contract, that the claimants would not have bought the property, but for the bank’s breach, and that the measure of damages was the cost of the repairs, £115,000.

Court of Appeal

The bank appealed on the basis that the correct measure of damages was the diminution in value, relying on Philips v Ward. The appeal was dismissed and the court confirmed that the claimants were entitled to the cost of the repairs, £115,000.

However, it is important to note that the Court of Appeal did not find that the assessment of damages by reference to the diminution of a property’s value was incorrect. The judge, Birss J, confirmed that Philips v Ward was clearly applicable, even though the dispute was about the bank’s failure to provide a report and not about a negligently prepared report. Further, whilst it may have been correct that the claimants would not have bought the property but for the bank’s breach, the claimants had bought the property and it was an asset with value.

A key issue in this case was the availability of evidence about the value of the property. The judge found that, at the first instance trial, the bank had failed to provide convincing evidence to support its assessment that the diminution of the property’s value was no more than £15,000. The court of first instance had rejected this figure as being too low and the Court of Appeal confirmed that this was a finding which the lower court was entitled to make:

“From his judgment, it is obvious that the [lower court] judge was sure that £15,000 did not represent a fair assessment of the diminution in value, and was too little. The judge was clearly entitled to take that view. The only other concrete sum he had to go on was £115,000. On other occasions a judge in that situation might arrive at an intermediate sum, doing the best he or she can. However, if the appellant was not prepared to propose an intermediate sum, I do not believe that the judgment is undermined for not taking an intermediate approach.”

The judge held that, owing to the lack of evidence, the court was entitled to assess the diminution of value in the same sum as the cost of repair, as such a figure was not necessarily different from the diminution in value and it was the only practical indicator available to the court.


Had the bank put forward evidence about the diminution value which was acceptable to the court, the outcome may well have been different.

The Court of Appeal’s judgment highlights the importance of putting forward a primary and an intermediate position. Though advancing an intermediate position could be viewed tactically as weakening a party’s position during negotiations, if a dispute proceeds to court, and an intermediate position is not adopted, the result could be costly.

This article is for information purposes only and should not be relied upon in place of legal advice.

Image sourced from Pexels.

The Dispute Adviser

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