Surveyors and Valuers of residential property and Conveyancing Solicitors are facing an increasing number of claims from property owners alleging that the professionals negligently failed to identify the presence of Japanese Knotweed during pre-purchase investigations. Alexandra Anderson from Reynolds Porter Chamberlain and Kevin Reynolds, Howden claims director, explain the trend.
Most of the claims are being brought by two firms of solicitors. Such claims can be time-consuming to defend and, until recently, there were no decisions setting out the extent of the duty owed by the professionals to identify the presence of Japanese Knotweed when carrying out pre-purchase investigations.
The Courts had, in the recent case of Williams v Network Rail, considered the extent to which a neighbouring landowner might be liable in nuisance for the spread of Japanese Knotweed. Now, a County Court Judgment has been handed down that considers the scope of the duty of care owed by Surveyors and Valuers to purchasers of property affected by Japanese Knotweed and, also, the calculation of loss for successful claims.
Japanese Knotweed is not a new phenomenon. The problem, and the damage the plant can cause, has been widely known for many years. The RICS first issued an Information Paper on the subject in 2012. It is not in doubt that the plant is invasive and can cause damage when it grows in close proximity to the property. Whether a surveyor or valuer is liable for failing to identify the presence of Japanese Knotweed is likely to depend, amongst other things, on what was visible at the time of the pre-purchase inspection and whether there had been any concealment by the vendor.
In October 2018, Birmingham County Court heard a claim brought by Michele Davis (the Claimant) against Marshalls (Plumbing and Building Development) Limited (Marshalls) and Connells Surveying and Valuation Limited (Connells). The Claimant had purchased a property in Cannock in March 2015 for £115,000. In doing so, she relied on a residential mortgage valuation of the property prepared by Connells for her lender.
Shortly after moving in, Ms Davis found Japanese Knotweed growing both at her property and on the adjoining property. She sued Marshalls, as the owner of the adjoining property, for the losses she had suffered as a result of her property being affected by Japanese Knotweed. That claim was brought in nuisance but was discontinued prior to trial. She also sued Connells for her losses.
The claim against Connells alleged that they had been professionally negligent in:
1. Failing to inspect the adjoining property where the growth of Japanese Knotweed along the boundary fence between the adjoining property and the Claimant’s property was clearly visible, alternatively, if the adjoining property had been inspected, failing to identify the presence of Japanese Knotweed on it.
2. Failing to identify Japanese Knotweed growing on the property itself.
The Claimant sought to recover the costs of treatment to remove the Japanese Knotweed, along with compensation to reflect the diminution in value to her property caused by the presence of the plant, and general damages for distress and inconvenience. Her claim exceeded £45,000.
At the start of the trial, the second allegation of negligence was abandoned, the Claimant accepting that, at the time Connells conducted the valuation (December 2014), there was nothing to indicate that Japanese Knotweed was present on the Claimant’s property. Consequently, the Court was left to consider the first allegation, being effectively that Connells, when carrying out their inspection for the purpose of preparing the residential mortgage valuation for the lender, should have inspected the adjoining property and identified the existence of Japanese Knotweed there.
Connells accepted that they owed the Claimant a duty of care but the parties disagreed as to the scope of that duty and whether Connells had breached it. The Connells’ surveyor accepted that he had not inspected the adjoining property and said that this was outside the scope of his duty when preparing a residential mortgage valuation report.
The Court heard evidence from expert surveyors for both the Claimant and Connells. Having considered this evidence, the requirements of the Red Book as regards the preparation of mortgage valuation reports and the RICS Information Paper on Japanese Knotweed, the Court found that it was not part of Connells’ duty when preparing the residential mortgage valuation to inspect the adjoining land. Absent a surveyor observing something that put them on notice of the need for further investigation, because it might affect the value of the subject property, the Red Book did not impose any obligation on a surveyor preparing a residential mortgage valuation to inspect adjoining properties.
The Court was particularly drawn to the submission made on behalf of Connells, that there could be no duty on the part of a surveyor to trespass onto neighbouring private land in order to prepare a residential mortgage valuation. The fact that the Claimant’s own expert had failed to inspect the land adjacent to her property, other than the southern boundary, also did not assist her case on this point.
The Court recognised the limitations of the valuation report both in terms of time and cost and that the primary purpose of such a report was to advise the lender on the value of the property and whether this was sufficient for the proposed loan. However, the Court did still point out that the level of the fee did not dictate the standard of care, and noted that the surveyor was still obliged to “do what is required for a RMV [Residential Mortgage Valuation] with reasonable skill and care, even if the work required to do so goes beyond the expectation of the fee”. The Court commented in passing that the extent of the inspection which the surveyor was obliged to undertake would be different if he had been retained to provide a more comprehensive report such as a HomeBuyers Report or a full structural survey.
Although it was not necessary for the Court to do so, it also provided its views on the damages to which the Claimant would have been entitled, had she been able to show that Connells had breached the duty they owed to her. The Court assessed the cost of remediation at £2,245.50 and residual diminution in value at £6,900, being the figure arrived at by Connells’ expert valuer. In this case, it was accepted that the reduction in value after treatment was fairly represented by a total contingency of 6% in the unaffected market value of the property of £115,000 (3% for disclosure on re-sale and 3% for “neighbour cooperation” to address the Japanese Knotweed).
The Court also found that the Claimant would have been able to recover a small amount of damages for the physical distress and inconvenience she had incurred when treating the Japanese Knotweed herself. Connells argued that the Claimant could only recover such damages if the distress and inconvenience had been caused by the physical consequences of Connell’s alleged failure to advise on the presence of the Japanese Knotweed, relying on the case of Watts v Morrow, a 1991 case which remains the leading authority on the question of the measure of damages for a negligent survey. However, the Court concluded that the Claimant’s distress at discovering the problem and then the inconvenience of having to treat the Japanese Knotweed were akin to physical consequences, so that it would have awarded (modest) damages for distress and inconvenience, had the claim not failed on the issue of liability.
As with most litigated claims, the outcome and its impact on future claims is fact specific. If Connells had carried out a form of inspection that obliged them to consider neighbouring land, it is likely that the Court would have found that there had been a breach of a duty of care.
This case gives some guidance as to the duties a surveyor or valuer will owe in connection with identifying Japanese Knotweed on an inspected property. It seems clear that for a claimant to be successful in establishing that a surveyor negligently failed to identify the presence of Japanese Knotweed, it will have to prove not only that Japanese Knotweed was present at the time of the inspection, but also that it was readily discoverable by the surveyor at that time.
The presence of Japanese Knotweed does not necessarily make a property unmortgageable. The measure of damages where a professional has negligently failed to identify the presence of Japanese Knotweed comprises the cost of appropriate treatment so as to render the property free of Japanese Knotweed, together with the residual diminution in value of the property arising from the blight caused by the property having been affected by it.
Michele Davis v Marshalls (Plumbing and Building Development) Limited and Connells Survey and Valuation Limited, Case No: C32YY908.