The Court of Appeal has recently dealt with two key issues in professional negligence cases in the case of E.Surv v Goldsmith Williams [2015] EWCA Civ 1147; namely the extent of solicitors’ duties to report facts which may have an adverse impact on the valuation of the lender’s security and the burden of proof that the Claimant must discharge of in contribution claims.

The surveyors settled the lender’s claim against it for negligence valuation of the Property for the sum of £200,000, inclusive of costs and interest, and subsequently brought a contribution claim against the Solicitors in the sum of £100,000.

The solicitor’s duty

The Bowerman duty established in Mortgage Express Ltd v Bowerman & Partners [1996] 2 All ER 836 states that a solicitor has a duty to inform a lender if it discovers, in the course of investigating title, “facts which a reasonably competent solicitor would realise might have a material bearing on the valuation of the lender’s security or some other ingredient of the lending decision”.

The Court of Appeal held that the Bowerman duty is only dispensed of if it is expressly excluded or inconsistent with the terms of the retainer. Therefore, it was held that solicitors instructed on the basis of the CML Handbook still owe the Bowerman duty to lenders.

The Solicitors were therefore under a duty to disclose to the Lender the discrepancy between (i) the valuation and the purchase price; and (ii) the date of the purchase of the Property.

Causation and burden of proof

The appeal was allowed on the ground that the Surveyors failed to prove that the Lender would have reacted if the Solicitors provided the Lender with the information above. The facts of this case were unusual, in that the Lender was already in possession of information from the borrower’s application form which strongly suggested that the valuation of the Property was excessive. It was for the Surveyors to prove that the Solicitors’ breach of duty caused the Lender’s loss. In order to do that, the Surveyors needed to adduce evidence, for example by way of witness summons of a mortgage underwriter.

The Court of Appeal decision makes it clear that there is not a lesser burden of proof in relation to causation when a surveyor or solicitor makes a contribution claim.