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EMMET THOMAS SCULLION v BANK OF SCOTLAND PLC (T/A COLLEYS)

The proposition established in Smith v Eric S Bush (A Firm) (1990) 1 AC 831, that the duty of care owed by a property surveyor to a mortgagee to prepare its valuation report with skill and care extended to the purchaser of the valued property, did not apply where the transaction concerned an investment in a buy-to-let property rather than an ordinary domestic householder purchasing his home. There was no inherent likelihood that a purchaser, buying property for the purpose of letting it out, would rely on a valuation provided to the mortgagee rather than obtaining his own valuation.

27 June 2011

The appellant bank, to whom the business of a firm of property surveyors (V) had been transferred, appealed against a decision that V had owed and was in breach of a duty of care to the respondent (S) in respect of a property valuation, and against the decision ((2010) EWHC 2253 (Ch)) that V's negligence had caused S loss, entitling him to damages. S had decided to invest in the residential buy-to-let property market by buying a flat and the mortgagee had engaged V to value it. V produced a valuation report setting out its open market value and an indication of the monthly rental that could be achieved. After completion, S discovered that the flat could not be let for the amount predicted by V or the amount required to meet the mortgage payments. S sold the flat within four years but a significant shortfall remained due to the mortgagee, and S sought damages from V. The judge found that the valuation had been negligently high and that S had relied on it when deciding whether to purc...

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