Category: Insurance case law · Reviewed by Matt Bartlett, Director · Founder · Last reviewed June 2026
First-instance decision of Park J holding that a surveyor instructed by a building society to value a property for mortgage purposes owes a duty of care in tort to the purchaser, despite the absence of any contract between them.
Mr and Mrs Yianni applied to the Halifax Building Society for a mortgage to purchase a property in north London for approximately £15,000. In accordance with its usual practice the building society instructed Edwin Evans & Sons, a firm of surveyors and valuers, to inspect and value the property. The fee for the valuation, which the building society passed on to the borrowers as part of the mortgage application costs, was modest.
The surveyors inspected the house and reported that it was suitable security for a loan in the sum requested. The Yiannis were sent a notice in the conventional form, recommending that they should obtain their own independent survey, and warning that the building society’s valuation should not be relied on. They did not obtain an independent survey. They had, in evidence later accepted by the judge, treated the willingness of the building society to advance the loan as confirmation that the property was sound.
Shortly after completion serious structural defects emerged. The house suffered from settlement and required significant remedial works costing several thousand pounds. The defects had been reasonably discoverable on a competent inspection and the surveyors accepted, for the purposes of the trial, that the report had been negligent. The Yiannis sued the surveyors in tort. They had no contract with the firm, the contract being between the building society and the surveyors. The question was whether they could nevertheless recover for the diminution in value of the property they had bought in reliance on the report.
The central issue was whether a duty of care in tort was owed by a surveyor, instructed and paid by a mortgage lender, to a prospective purchaser of a modest dwelling who relied on the surveyor’s valuation in deciding whether to proceed with the purchase. The case required application of the Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 principle to a tripartite arrangement.
A subsidiary issue was whether the standard form warning that purchasers should obtain their own survey was sufficient to defeat reliance, and whether the disclaimer in the application form was effective to exclude any duty that might otherwise arise. The case was decided before the major appellate development of the law in Smith v Eric S Bush [1990] 1 AC 831 and Caparo Industries plc v Dickman [1990] 2 AC 605.
Park J found in favour of the purchasers. The judge accepted evidence that, on the lower end of the residential market, the great majority of purchasers did not commission an independent survey and proceeded in reliance on the fact that the building society had been willing to advance a mortgage on the strength of its valuer’s report. The surveyors knew, or ought reasonably to have known, that this was the practical position.
Given that knowledge, the surveyor had assumed responsibility to the purchaser. The Hedley Byrne principle was not confined to representations made directly between the careless party and the claimant; it extended to a representation which the maker knew would be passed to a third party and acted upon by that third party.
The judge held that the standard warning that purchasers should obtain their own independent survey did not, on the facts, displace reliance. The warning was a formal piece of language in a routine document and did not in practice change the behaviour of the typical purchaser at this end of the market. The disclaimer was treated as ineffective to negative the duty in those circumstances.
Damages were assessed by reference to the diminution in value of the property at the date of purchase, that is, the difference between the price paid and the true value taking account of the undisclosed defects.
A surveyor instructed by a mortgage lender to carry out a valuation of a modest dwelling, who knows or ought to know that the prospective purchaser is highly likely to rely on the valuation rather than commission a separate survey, assumes responsibility to that purchaser and owes a duty of care in tort under the Hedley Byrne principle. The fact that the contractual relationship is between the surveyor and the lender does not preclude the existence of a parallel tortious duty to the purchaser. A standard warning advising independent survey will not, of itself, defeat reliance in such circumstances.
Yianni v Edwin Evans was the first English decision to establish, at first instance, that surveyors carrying out residential mortgage valuations could be sued by purchasers with whom they had no contract. It marked the start of a body of authority later confirmed and refined by the House of Lords in Smith v Eric S Bush. From an insurance perspective, the decision opened a significant new category of claims under surveyor PI policies and required the market to recognise duties to two distinct claimants — the lender and the purchaser — arising from a single valuation instruction.
For underwriters this duality of duty is now embedded in surveyor PI pricing, particularly for high volume residential valuation books. Aggregation language, dishonesty exclusions and the treatment of “one or a series” of valuations all derive from the recognition, beginning with Yianni, that a single negligent valuation can generate concurrent claims from different parties. The case is also commonly cited in coverage disputes about whether the policy responds to claims by non-contractual third parties — modern wordings tend to make the position explicit.
For brokers, the case underpins the routine recommendation that surveyor firms placing PI cover should disclose their full valuation portfolio, including the proportion of work carried out for lenders, since the latent liability to purchasers is part of the underwriting equation.
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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