Surveyors

In this chapter of our Annual Insurance Review 2018, we look at the main developments in 2017 and expected issues in 2018 for surveyors.

Key developments in 2017

The Supreme Court handed down its judgment on 29 November 2017 in the case of Tiuta International Ltd. v De Villiers Chartered Surveyors, on appeal from the Court of Appeal.

Readers may recall that the point under appeal was causation, and the issue arose as a result of the manner in which the lender, Tiuta, structured a re-mortgage. Tiuta had obtained an original valuation from De Villiers and had advanced a loan based on that valuation. It subsequently obtained an updated valuation from De Villiers but, rather than amending the original loan terms based on the revaluation, Tiuta redeemed the original loan and replaced it with a new loan.

At first instance, the court held that De Villiers was not liable for the majority of the loss, because it had been “caused” by the original loan, not the second loan (Tiuta did not criticise De Villiers’ original valuation). Following its earlier decision in Preferred Mortgages Ltd. v Bradford & Bingley Estate Agencies Ltd. [2002], the Court of Appeal decided otherwise, and held De Villiers liable for the whole loss.

The Supreme Court has, fortunately, restored order and has found that De Villiers can only be liable for the additional (modest amount of) money lent in reliance of the second valuation, and not the monies that Tiuta had already lent in reliance of the original valuation.

The Supreme Court concluded: “different considerations might arise were it to be alleged that the valuers were negligent in relation to both facilities.” We will no doubt see such a case before the courts next year…

What to look out for in 2018

For over a year now, the Royal Institution of Chartered Surveyors has been working with relevant stakeholders, including RPC, to produce an update of the guidance note first published in 2013, which covers liability and insurance in residential and commercial valuation work.

The updated note is to be published in early 2018. The underlying message of the guidance note is that,while the economic conditions may be less challenging than they were in the period following the so called credit crunch (although that may change as interest rates rise and the economy works through the implications of Brexit), valuers should still be ensuring their risk management is robust. This includes putting in place – and continuing to keep updated – carefully drafted terms and conditions, designed to protect their own interests (and, by extension, those of their professional indemnity insurers).

Download our full Annual Insurance Review 2018 for more insights.