In a recent judgment by Sheriff O'Carroll at Edinburgh Sheriff Court – Comino Properties Ltd v DHKK Ltd [2025] SC EDI 78 – the pursuer's case against a firm of surveyors for alleged deficiencies in a Home Report was dismissed for failure to plead a relevant case. DAC Beachcroft Scotland LLP represented the successful defender.
Background facts
The pursuer purchased an Edinburgh residential property in 2022. Prior to purchase, and in terms of the Housing (Scotland) Act 2006, the seller instructed a Home Report, prepared by the defender, which the purchaser, the pursuer, saw and relied upon.
After taking entry, the pursuer instructed renovations which revealed certain structural defects in the property. The pursuer claimed that the Home Report must have been prepared negligently given that remedial works amounting to £70,000 were allegedly required, and that the delay caused in carrying those out would also result in a loss of profit to the pursuer of around £74,000 for the inability to rent out the property as quickly as originally expected.
The claim
The pursuer sought damages under Article 3 of the Housing (Scotland) Act 2006 (Consequential Provisions) Order 2008 ("the 2008 Order") which provides a statutory right, which would probably not otherwise exist under common law, against the writer of a Home Report, to a party (other than the seller who instructed the report) who has relied on a copy of a Home Report and who has suffered a material loss. Article 3 states that the Home Report must be fair and unbiased and have been prepared with reasonable skill and care. It goes on to state that material loss has been suffered when the market value of the house on the date of the Home Report is materially lower than the value given in the prescribed survey report and the buyer has paid more than the market value of the house.
The defender sought dismissal on the basis that the pursuer had failed to plead a relevant case against the recognised tests applicable to claims for professional negligence. Further, the pursuer had not produced an expert report to support its case of professional negligence and the pursuer’s pleadings lacked specification and were irrelevant.
The defender argued that, in relation to the requirement of the 2008 Order for the Home Report to be prepared with reasonable skill and care, this should be understood as an implicit reference to the common law standard. As such, the usual and well developed law regarding professional negligence and the legal tests for professional negligence had to be read into that requirement. The relevant standard of reasonable care and skill was that which was to be expected of a chartered surveyor (the only professional who is authorised to prepare a Home Report) and not any other professional as was suggested by the pursuer. Although the pursuer had a report from a structural engineer who had identified the alleged defects in the structure of the property, the pursuer had no pleadings relating to the usual and normal practice of chartered surveyors when carrying out Home Reports, nor of the defender having deviated from such a practice in a way that no chartered surveyor of ordinary skill and experience would have done.
In relation to the alleged loss, the defender argued that the pursuer had to offer to prove what the market value of the property was on the date of the Home Report yet the pursuer had failed to do this. The pursuer's case made no mention of any difference between market value and the valuation brought out in the allegedly negligent Home Report. The closest the pursuer came to this was to set out the cost of repairs which the defender argued could only be used as a cross-check, not the primary measure of loss.
The defender also argued that the pursuer ought to have lodged an expert report in relation to the allegations of negligence.
The pursuer countered by arguing that the 2008 Order obviated the need to prove the existence of a duty of care. The pursuer acknowledged that there were no pleadings dealing with the standard of professional negligence and that no relevant expert report had been lodged or would be lodged if the matter proceeded to proof because none was needed. It was argued, instead, that if the impugned actions or inactions of the defender were, as here, so obviously negligent or involved an oversight or neglect which was not the product of professional judgement, the court would be entitled to find negligence established on ordinary principles, on suitable evidence being advanced, without also requiring evidence from a suitably qualified professional concerning the usual tests for professional negligence. Extreme examples were cited: a claim alleging that a surveyor had surveyed the wrong property or failure to notice a missing roof or that a doctor had amputated the wrong leg.
In relation to damages, it was argued that the 2008 Order did not require the pursuer to specify the exact market value of the property because the court could infer that from the evidence concerning cost of repairs. The pursuer argued that the legislation did not specify the measure of damages: rather, it acted as a gateway which, once opened, allowed the pursuer to claim damages arising from the breach on an unrestricted basis.
The court's decision
The court dismissed the pursuer's case, noting that carrying out an inspection and preparing a Home Report is a core function of a chartered surveyor. In doing so, the surveyor can be taken to have employed professional skills, qualifications and experience, both in making the observations and in reporting on them; which includes the exercise of professional assessment and judgement. In doing so in this case, the surveyor was clearly performing one of his usual professional duties. The court continued that, in making a visual assessment of the property, the surveyor was not engaged in an ancillary exercise to his professional functions. The surveyor’s assessment may or may not have been accurate but, even if wrong, it did not necessarily follow that the surveyor was negligent. The court stated that proof of negligence would require the pursuer to set out how the surveyor had fallen below the requisite standard, yet there were no pleadings to that effect.
The court was not persuaded that because a civil engineer had identified certain defects some months later, in the course of invasive works, a chartered surveyor ought to have noticed the same defects and reported on them. Civil engineers and surveyors perform different roles for different purposes.
The court held that the pursuer's pleadings did not come close to establishing a relevant case that the defender was negligent. The action as a whole therefore fell to be dismissed.
The court went on, however, to consider the correct measure of damages in Home Report claims, and confirmed that, as in common law cases, the starting point is diminution in value i.e. the difference between the purchase price paid and the true value of the property assessed at the date of valuation on the basis of a non-negligent Home Report. The court went on to say that the pursuer had to set out and prove the market value of the property on the date of the Home Report. The court rejected the proposition that the remedial costs could be used as the primary measure of loss rather than merely a cross-check.
The court rejected the pursuer's argument that the 2008 Order permitted recovery of damages other than in accordance with standard common law principles applicable to cases of negligently prepared Home Reports. As such, the court held that the pursuer's averments concerning consequential loss arising from loss of rent were irrelevant.
As a matter of law, absent a clear assumption of responsibility, there is no question of a surveyor owing a duty of care to a purchaser not to cause pure economic loss whether as regards negligent actions (and omissions) or negligent statements. It is for a pursuing purchaser to specify facts upon which an assumption of responsibility can be inferred. In this case, the pursuer failed to aver any facts from which it could be inferred that the defender voluntarily assumed responsibility towards the pursuer and, as such, the defender could not be liable for the lost rental claim.
Commentary
The court's judgment raises several points of interest for practitioners in relation to professional negligence claims against surveyors, particularly in relation to the preparation of Home Reports. The judgment appears to be one of the first cases in Scotland in relation to the application of the 2008 Order and in relation to negligent preparation of a Home Report.
It provides helpful (and, for surveyors and valuers, welcome) guidance on what is required to establish such a claim and confirms that, beyond establishing a duty care that would not otherwise exist between the writer of a Home Report and the party ultimately relying on it, the 2008 Order largely restates or codifies, but does not relax, the requirements that apply under common law.
Although the decision also confirms the long held understanding that the remedies available under the 2008 Order largely mirror the common law remedies, in ruling out the loss of rental claim even at the debate stage, the sheriff arguably excluded a head of loss that might have at least been entertained in a common law claim. If that can be taken to suggest that the only recoverable loss under the 2008 Order is diminution in value, it might be taken to also exclude, for example, any claim for alternative accommodation costs and storage costs where remedial work is required. In other words, rather than replicating the common law remedies, does the 2008 Order restrict those? Of course, for all that that may have been the position in this case, it remains to be seen whether a more fully pled case for consequential loss, whether under the 2008 Order or at common law, might have survived at least the debate stage.
