No.5 - Merrett v Babb

Ten cases every consulting engineer should know

Merrett v Babb [2001] EWCA Civ 214

In summary

A professional giving advice in his particular field of expertise can owe a personal duty of care in tort to any recipient of that advice.

Facts:

A valuation report on a property was prepared by a surveyor for a lender client. The report was signed by the surveyor in his own name along with his professional qualifications and the name and address of his employer firm. 

The report was presented to the borrower in a redacted form which did not identify either the surveyor or his employer. Nevertheless, the borrower paid a fee for the report and relied on it in making her purchase. 

The valuation had been prepared negligently and a few years later the borrower sued the surveyor in his personal capacity.  This was because the surveying firm had ceased trading and no longer existed.  Its principal had gone bankrupt, and contrary to the relevant RICS regulations his trustee in bankruptcy had failed to continue to arrange professional indemnity insurance for a period of run off. 

The court at first instance held according to the House of Lords’ earlier decision in Smith v Bush ([1990] 1 A.C. 831) the surveyor owed a personal duty of care to the borrower but regardless of this he would still have assumed a duty of care to the borrower by signing the report in his own name. 

The surveyor appealed the decision to the Court of Appeal who dismissed his appeal.

The Court of Appeal held that: 

The surveyor was personally liable in negligence to the borrower for the negligently prepared valuation report since (1) he had known that the borrower would rely on the report and (2) he had signed it in his personal capacity. 

The surveyor had assumed a personal duty of care to the borrower by signing the report in his own name and was liable to the borrower exclusively as a result of doing so. 

The case highlights the risks to professional employees of signing reports in their own name.  Whilst a duty of care in contract can attach only to one who is party to the contract itself (the surveying firm in this instance) the individual surveyor in this instance owed a duty in tort.