Category: Insurance case law · Reviewed by Jake Leat, Associate Director · Last reviewed June 2026
Court of Appeal decision concerning the position of a borrower seeking to rely on a lender’s mortgage valuation in circumstances where the valuation was provided for the lender’s own purposes.
Mr Hubbard applied for a mortgage from the Bank of Scotland plc to finance the purchase of a residential property. The bank instructed a valuer to inspect the property and prepare a mortgage valuation for its own lending purposes. The valuation report was provided to the bank. Mr Hubbard, as is standard practice, was provided with information about the bank’s willingness to lend and the headline valuation figure, but not the full report and not on terms that disclosed responsibility to him.
The mortgage application and accompanying documentation contained the conventional notices that the bank’s valuation was undertaken for the lender’s purposes alone, that the borrower should not rely on it, and that the borrower was recommended to obtain an independent survey before proceeding. The terms of business expressly disclaimed any duty of care to the borrower.
Mr Hubbard proceeded to complete the purchase. He subsequently complained of defects in the property which he said the valuer should have identified, and of a valuation figure which he said was excessive. He sought to recover from the bank, alleging that the bank was responsible — directly or vicariously through its valuer — for the alleged inaccuracies in the valuation, and that the disclaimer should not be treated as effective to exclude any duty.
Procedurally the matter reached the Court of Appeal following a strike-out or summary determination at first instance, the lower court having concluded that the claim was unsustainable in the light of the established case law on duties owed by lenders’ valuers, the disclaimer notices and the application of the Unfair Contract Terms Act 1977.
The principal issue before the Court of Appeal was whether, in the circumstances of a routine residential mortgage application, the borrower had any sustainable cause of action against the lender (and through it the lender’s valuer) in respect of an alleged inaccuracy in the valuation. This required the court to revisit the framework established by Smith v Eric S Bush [1990] 1 AC 831 and refined in subsequent cases, including Scullion v Bank of Scotland plc (trading as Colleys) [2011] EWCA Civ 693, where the Court of Appeal had distinguished buy-to-let purchases from owner-occupier purchases for the purposes of the duty of care.
A subsidiary issue was whether the disclaimer relied upon by the lender was effective and reasonable within the meaning of the Unfair Contract Terms Act 1977, given the borrower’s particular circumstances.
The Court of Appeal upheld the lower court’s decision. The court reiterated the established position that a lender’s mortgage valuation is undertaken for the lender’s purposes; the borrower is on notice of that fact through the conventional disclaimers and recommendations to obtain an independent survey. While Smith v Bush remains good law in its core application to modest owner-occupied properties, the existence and effectiveness of any duty owed to the borrower depends closely on the factual matrix.
The court considered the way in which the bank had presented the lending decision to the borrower, the express disclaimers, and the absence of any direct communication of the valuation report itself to Mr Hubbard. Taken together, these factors meant that the requirements for the imposition of a Hedley Byrne duty — assumption of responsibility and reasonable reliance — were not made out on the facts.
The court also confirmed that the disclaimer relied upon was not unreasonable within the meaning of the Unfair Contract Terms Act 1977 on the facts presented, having regard to the availability and affordability of independent professional advice. The appeal was dismissed.
The duty of care owed by a lender’s mortgage valuer to a borrower under the Smith v Bush principle is fact-sensitive. Where the lender has not communicated the substance of the valuation to the borrower, has issued clear notices that the valuation is for the lender’s purposes only, and has recommended that the borrower obtain independent advice, the borrower will not generally be able to establish the assumption of responsibility and reasonable reliance required by Hedley Byrne. A clearly drafted disclaimer in those circumstances may also satisfy the reasonableness test under the Unfair Contract Terms Act 1977.
For surveyor and valuer PI insurers, Hubbard provides a further marker in the line of post-Smith v Bush authorities that delineate the circumstances in which a duty is, and is not, owed to the borrower. The decision is helpful to insurers and their insured firms in defending claims by borrowers in cases where the lender’s process clearly segregates the lender valuation from the borrower’s decision and where the recommendation to obtain independent advice is given prominence.
In underwriting terms the case reinforces the importance of the insured firm’s standard terms of engagement and the lender’s mortgage offer documentation. PI insurers will commonly ask whether the firm’s valuation reports are accompanied by clear notices and whether the firm undertakes any direct dealings with borrowers. Where direct dealing is more substantial, the residual exposure to borrower claims is greater and pricing should reflect it.
The case is also relevant to lender placed PI and contingent valuation cover, where insurers cover the lender’s onward exposure or step into valuer claims on a subrogated basis. Hubbard helps to clarify the limits of borrower-driven claims that might otherwise complicate subrogation.
By Matt Bartlett, Director, on 2026-06-06. Next review: 2026-12-06.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-06. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
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