A VALUER instructed by a prospective mortgagee to carry out a valuation of a modest house, for the purpose of deciding whether or not to grant a mortgage on it, owed a duty to the mortgagor to exercise reasonable skill and care in carrying out the valuation, if he was aware that the mortgagor would probably buy the house in reliance on the valuation without an independent survey.
The Court of Appeal (Aldous LJ dissenting) dismissed the appeal of John R H Babb against a decision that he was liable to Diana Eileen Merrett in respect of a negligent mortgage valuation report.
The defendant was a professionally qualified surveyor and valuer who was employed by a firm of surveyors and valuers, Clive Walker Associates. In June 1992 the firm received instructions from a building society asking them to inspect a property and to prepare a report, using valuation forms which were attached. The instruction form stated that the building society was considering an application for a mortgage on the property from the claimant and her mother.
The defendant inspected the property and prepared a mortgage valuation report, which he signed, giving his name and professional qualifications, and the name and address of the firm. The report was provided to the claimant and her mother in a form which omitted all references to the defendant and the firm.
In August 1994 a bankruptcy order was made against the principal of the firm, and the firm ceased business. the firm's professional indemnity insurance was cancelled by the trustee in bankruptcy in September 1994 without run off cover, and the defendant was not insured personally.
In November 1997 the claimant commenced proceedings against the defendant personally, claiming damages for negligence in preparing the mortgage valuation report. The judge held that the report had been negligently prepared and awarded damages to the claimant. …