Scullion v Bank of Scotland (t/a Colleys) [2011] EWCA Civ 693 marked a limit on the residential valuer's duty of care. Mr Scullion bought a flat as a buy-to-let investment in reliance, he said, on a valuation prepared for the lender. The valuation included a rental figure that proved optimistic. He sued the valuers when the investment failed.
The Court of Appeal held that no duty of care was owed to Mr Scullion. Unlike the modest owner-occupier in Smith v Eric S Bush, a buy-to-let purchaser is closer to a commercial investor. It was not reasonable to assume such a buyer would rely on a lender's valuation rather than take independent advice, and the social justification that underpinned Smith, protecting ordinary home buyers of limited means, did not apply.
Scullion draws the boundary of the third-party duty established in Yianni and Smith. The residential valuer's duty to the buyer is grounded in the buyer being a consumer of modest means who foreseeably relies on the report. Move the buyer into an investment context and the duty may fall away.
Scullion is a useful counterweight to Smith and Yianni: the duty is real but not unlimited. Apex sets out the cover implications of valuation work on its surveyors' PI guide, and the connected agency exposures on the estate and letting agents' PI guide. Understanding where the duty begins and ends is part of arranging cover that fits the work a firm actually does.
The distinction Scullion draws is not always obvious at the point of instruction. A property can be bought by an owner-occupier or an investor, and the valuer may not know which. The safer approach is to be clear in the terms of engagement about who the report is prepared for and who may rely on it, so that the question of reliance is addressed rather than left to be argued about years later.
For cover, the case is a reminder that exposure is shaped by the type of work a firm takes on. A practice concentrated on buy-to-let and investment valuation faces a different claimant profile from one doing owner-occupier mortgage work, even though the underlying task looks similar. The lender remains a client in both cases and retains its own rights, so the removal of the buyer's duty in an investment context narrows, but does not eliminate, the firm's exposure. Understanding that pattern is part of placing cover that matches the book of work rather than a generic assumption about residential valuation.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.