In this chapter of our Annual Insurance Review 2022, we look at the main developments in 2021 and expected issues in 2022 for surveyors.
Key developments in 2021
Last year, we reported on the first instance judgment in Hart v Large and the guidance it provided regarding the scope of a surveyor's duty and the assessment of damages. Mr Large was granted permission to appeal the judge's finding on the issue of the measure of damages and the Court of Appeal handed down its judgment in January 2021.
At first instance, the Court had awarded damages calculated as the difference between the value of the property as it had been reported by Mr Large and its value incorporating all the defects affecting the property, including those that Mr Large could not have been expected to identify when undertaking his inspection. On appeal, Mr Large contended that damages should be limited to those reflecting only the defects he ought to have noted and reported in the Homebuyer's report.
The Court of Appeal upheld the first instance decision, concluding that the measure of loss applied by the trial judge was appropriate and that any other measure would not have compensated the Claimants for Mr Large's negligence. This was the case even though Mr Large could not reasonably have identified all of the defects on his inspection. He should, however, have "seen enough to give rise to a trail of suspicion" and to recommend obtaining a Professional Consultant's Certificate ("PCC"), which, if obtained, would have provided the Claimants some protection against the risk of latent defects. While an unusual case on the facts, the Court of Appeal concluded that this was an 'advice' rather than an 'information' case and that, but for Mr Large's failure to recommend that the Claimants seek a PCC, the purchase would not have gone ahead.
Surveyors will need to ensure they properly report any need for further investigations, and consider what documents a purchaser might want to request, with a failure to do so being potentially costly for both them and their insurers.
What to look out for in 2022
The Fire Safety Act 2021 ("the Act"), anticipated to come into force in early 2022, will impose new fire safety obligations in relation to multi-occupancy residential buildings and clarify who is responsible for assessing, managing and reducing fire risks.
The Act widens the scope of the Regulatory Reform (Fire Safety) Order 2005 ("the FSO") to apply to the structure, external walls (including balconies, windows and doors) and common parts of, and doors between units within, a multi-occupancy building, i.e. one which contains two or more domestic premises. It will extend the role of those considered the “Responsible Person” under the FSO (who may be the owner, landlord and/or the managing agents) and will require them to make sure that the building's fire risk assessment and overall fire safety strategy apply to all of these aspects and to update the strategies accordingly. The Responsible Person will need to take steps to identify any dangerous cladding on the buildings (regardless of height) and implement interim measures and remedial works to ensure that the building can be occupied safely.
Managing Agents and their insurers will need to be aware of this extension to their responsibilities under the FSO, with enforcement action against and/or prosecution of any Responsible Person who fails to comply with the FSO potentially leading to unlimited fines and/or criminal prosecutions
Written by Felicity Strong.
Download our full Annual Insurance Review 2022 for more insights.