Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2012] CSOH 169
A82/11	OPINION OF LORD GLENNIE in the cause KARL PHIMISTER Pursuer; against DM HALL LLP Defenders: ________________

Pursuer: Beynon; Lefevre Litigation

Defenders: Duthie; Simpson & Marwick

26^th October 2012

Introduction

[1] In this action the pursuer, Karl Phimister, sues the defenders for professional negligence in respect of a mortgage valuation report carried out at his request over subjects at Puttingbrae, Drybridge, Buckie, Aberdeenshire ("the subjects"). The report was prepared in support of the pursuer's application for a residential mortgage in connection with his proposed purchase of the subjects. The defenders duly provided a report. The report valued the subjects at about £230,000. The pursuer does not aver on record that that valuation was necessarily wrong, let alone negligent, or at least he does not do so directly. His complaint is that the mortgage valuation report noted that the total area of the subjects - being a farmhouse, various outbuildings and an area of garden and surrounding land - was said to extend to approximately 1.12 acres, whereas in fact it extended to no more than about 0.65977 acres. The pursuer's case is that the defenders owed to the pursuer a duty to check the area as part of their valuation, and they were negligent in failing so to do. While the area of the subjects may or may not have affected the valuation of the subjects for residential purposes, and he makes no averment on record in this regard, the smaller area severely restricted his opportunity to develop the site. It is on that basis that he brings this claim.

[2] It is not disputed by the defenders that a surveyor who provides a mortgage valuation report may, in certain circumstances, owe a duty of care to the purchaser of the property valued. That duty may be owed in contract, where the surveyor is instructed by the intended purchaser, or in delict, or both. Where a surveyor is aware that a purchaser may rely upon his valuation in determining whether to purchase the property, he owes the purchaser a duty to exercise reasonable skill and care in carrying out the valuation. In the instant case, the defenders accept that they owed the pursuer such a duty. But the scope of the surveyor's duty to a purchaser is, they say, no greater than the scope of the duty owed to a lender. His job is limited to assessing the adequacy of the security. If the valuation is a reasonable one, the surveyor has discharged his duties. Only defects which have a material effect on valuation are relevant to that assessment and to his report. In this case they dispute liability on the basis that they were only instructed to provide a valuation for a residential mortgage, and that is what they did. They did not make any representation about the area of the site. And, in any event, whilst inaccurate measurement of the area of the site might or might not be material to a proposal to develop the site, it made no difference to a valuation for residential purposes where the value attaching to the farmhouse and other buildings was of prime significance.

The facts
[3] The pursuer is a fisherman by occupation. His work takes him away from home for about two weeks, and this is followed by about two weeks at home. In early 2007, at the time of the events with which this action is concerned, he was interested in undertaking a business venture with his uncle, Alexander ("Sandy") Phimister, whose job in the offshore oil and gas industry meant that he too had blocks of time at home and away from home. They both had a considerable amount of spare time, which gave them time to dabble in property development. They had already undertaken a number of development projects, purchasing land in the Buckie area and re-selling it after carrying out residential development and/or refurbishment. In early 2007, they were seeking to purchase further land for such purposes. They kept their eyes open for development opportunities, using the internet, estate agents advertising sites and the local paper. They had also discussed matters with Ewen Chisholm, of Messrs Antons, Solicitors. The pursuer gave evidence, which was not disputed, that he previously told Mr Chisholm that he was looking for about an acre of land in the Buckie area so that he could create three sites of about a third of an acre each. Mr Chisholm had nothing on his books at the time. However, about two to three months later, the subjects came up for sale.

[4] The pursuer first saw the subjects advertised in the window of Antons Estate Agency Limited ("Antons Estate Agents"). That was a separate entity from Antons, Solicitors, being run by the spouses of the partners in the solicitors firm, and it has since been dissolved. The pursuer asked Mr Chisholm about the property and was told that if he could get it at the right price, it would be a good opportunity - it "fitted the bill". He obtained the sales particulars from Antons Estate Agents. They described the subjects as a "traditional dwellinghouse and steading" and sought offers over £219,000. The subjects were described in more detail on the first page as comprising a large dining kitchen, a lounge, a cloakroom, five bedrooms, a study/computer area and a family bathroom. The site was said to be a "1.12 acre plot with superb views". It included an old dairy, a huge steading, three garages and various outhouses and coal sheds. That summary concluded by describing it as a "Fantastic development opportunity". The particulars gave photographs of each of the rooms within the house, with a text caption describing the room, and then added the following:

"Further complimented (sic) by a generous fully enclosed and private area of garden ground (1.12 acres) with a large range of outbuildings to include:

The old dairy; huge steading (110 foot); 3 garages; various outhouses & coal sheds.

Fantastic development opportunity with expired consent for a separate 2 bedroomed cottage; 3 B & B units and parking, however could easily suit those looking for a large steading conversion family home".

[5] The pursuer went with his uncle Sandy to view the property. They spent about one to two hours there and met the sellers, Mr & Mrs Samuel. There was a fence around the western, southern and eastern boundaries of the site, but at the north end there were two areas belonging to the neighbouring farmer over which the owners of the subjects had access. After they left, they discussed the pros and cons. The question of access was potentially an issue if they were to develop the site. They asked Mr Chisholm for advice about this. Upon receiving confirmation from him that there were no difficulties in this regard, the pursuer phoned Mr Chisholm and made an offer of £220,000 for the property. That offer was rejected. Others were said to be interested in the subjects. The pursuer and his uncle increased their offer to £240,000. That offer was accepted.

[6] To finance the purchase, the pursuer and his uncle proposed to put in £25,000 each of their own money and to borrow the balance from the Halifax with whom they had had prior dealings. They knew that a mortgage valuation report would be needed for this purpose.

[7] There was some uncertainty on the evidence as to whether it was the pursuer who instructed the mortgage valuation from the defenders or whether Mr Chisholm did so on his behalf. The pursuer thought that he had asked Mr Chisholm to obtain it. Mr Chisholm was uncertain. However, I heard evidence from Norma Innes, the office manager at the defenders, who dealt with requests for mortgage valuation reports. She had completed a job sheet for this request. The job sheet was dated 16 July 2007. The "Instructor Details" showed that the instruction came from the pursuer himself. Ms Innes explained that if the request had been from the solicitor, then the solicitor's name would have appeared on the form as the Instructor. I accept that evidence. Ms Innes, on behalf of the defenders, sent a letter to the pursuer dated 16 July 2007 confirming his instructions.

[8] Two points of importance emerge from the job sheet prepared by Ms Innes. First, the form is headed "Residential Instruction", indicating that the instruction for a mortgage valuation report was for a residential property. Ms Innes said that if she had been told that the land was wanted for a development, she would have asked one of the valuers to phone the pursuer. Secondly, it was noted on the form that the instruction was for a "Repeat" report. This meant that a report had already been prepared for another interested party; and it was a repeat of that report which would be sent to the pursuer. That made it cheaper for him. Ms Innes was clear that by the end of the conversation the pursuer would have known that he was going to be given a repeat report, because this affected the price and the price would have been agreed before the end of the conversation. I accept that evidence. The fee agreed was £184, discounted from £230. The pursuer accepted that he knew that he was getting a copy of a report prepared for someone else. These points are of importance because they suggest that the pursuer could not have been under any illusion that the report which he was going to receive from the defenders was tailored to his development intentions. Michael McDonald, a chartered surveyor in the employ of the defenders who prepared the mortgage valuation report, said that if he had been told that the report was wanted in respect of a purchase for commercial development, he would have referred the request to a different office. I accept that evidence. It seems to me plain, and this was not really disputed by the pursuer, that whether it was the pursuer or Mr Chisholm who gave the instruction to the defenders - and I am satisfied that it was the pursuer himself who did so - the defenders were not told that the proposed purchase was other than for residential purposes. They were not told that a commercial development was intended.

[9] I should note, though this is jumping ahead slightly, that the mortgage offer from the Halifax, contained in a letter to the pursuer dated 31 July 2007, had, as one of its conditions, a requirement that the pursuer confirm to them that "the property will not be used for commercial purposes". As far as the Halifax were concerned, what was proposed was a residential mortgage. The pursuer gave evidence that he told the Halifax that he was buying the subjects for development purposes, with the possibility of setting up a development company to carry out and exploit the development. I do not accept this evidence. Apart from the fact that the loan documentation indicated that the loan was for a residential property, it seems to me unlikely that the Halifax would have agreed to lend for a commercial development without insisting in advance on having a commercial development appraisal carried out.

[10] The mortgage valuation report prepared by Mr McDonald was dated 16 July 2007. It came after the pursuer had had his offer of £240,000 accepted. It made it clear that the date of inspection was 26 June 2007, i.e. before the pursuer's request for the report. It was addressed to the pursuer and identified him as the client. At the top of the report, it was stated that the inspection had been carried out in accordance with the RICS Guidelines for Mortgage Valuations, and that the principles of those Limitations and Conditions were outlined at the end of the report. The property was described as comprising "a detached one and a half storey farmhouse" and its location as "an attractive elevated rural situation a short distance from the village of Drybridge", with a range of amenities within a range of four miles and an open outlook over the Moray Firth coastline. The house was said to be approximately 100 years old, and there was a description of the house as being of essentially solid stone construction. There was then a description of the accommodation within the house and a summary of the garage and outbuildings. It was noted that there was a garden. The report went on to deal with services and then described in some detail (that I need not set out here) the general condition of the house. It was noted that the majority of outbuildings were in poor condition and would require substantial refurbishment. The existing owner had begun to refurbish one of the outbuildings to form a self-contained two bedroom cottage, but planning permission had lapsed for that development and the building had fallen into a state of disrepair. If the building was to be converted to residential accommodation, then planning permission would require to be re-applied for, and the building works would have to be started from scratch.

[11] Towards the end of the report certain observations were made. I set out below the relevant parts of these observations:

"It is understood that the entire site extends to approximately 1.12 acres.

As previously stated, it is understood that the Planning Permission once existed for conversion of the main steading to one self contained two bedroomed cottage and three bed and breakfast letting rooms. Planning Permission has now lapsed. The steading building does however offer scope for future development and has an outstanding open outlook over the Moray Firth. An element of hope value has been included in the valuation in order to reflect this.

...

The property offers scope for enhancement of value by upgrading and modernisation. As previously stated the outbuildings offer potential for conversion to further residential accommodation and the property has been valued on this basis."

The report concluded by giving a "market value for mortgage purposes" of the subjects in present condition of £230,000; and, upon completion of certain timber/ damp-proofing work, of £232,000.

[12] The report ended with a clear instruction, in capital letters and in bold, directing attention to the Terms and Conditions attached. They included the following:

"(1) A valuation for mortgage purposes is a limited inspection and report produced for Building Societies, Banks and other Lenders to enable them to make a lending decision. The Firm reserves the right to make the mortgage information available to other parties, lenders, or prospective borrowers. IT IS NOT A SURVEY. ...

(2) The report is used to guide the lender on the market value of the property for mortgage purposes, and is carried out for this purpose alone. Although the inspection will be carried out by a valuer who will usually be a qualified surveyor, it is not a detailed inspection of the property, and only major visible defects will be noted. ...

...

(4) Many people rely on the Mortgage Valuation Certificate in the mistaken belief that it is a detailed survey. The report is often made available to house buyers by lenders, but this does not mean that it should be relied upon as a report of the condition of the building.

...

(8) The Valuer shall, unless otherwise expressly agreed, rely upon information provided by the Client and/or the Client's legal or other professional advisors relating to tenure, leases and all other relevant matters.

...".

[13] I was referred to the RICS Appraisal and Valuation Standards (referred to in evidence as the "Red Book"), and in particular to UK Appendix 3.2 entitled "RICS mortgage valuation specification". That specification, which applies to inspections carried out on or after 1 May 2003, was jointly prepared by the RICS and the Council of Mortgage Lenders, and applies to the valuation of residential property for mortgage purposes on behalf of Building Societies, Banks and other lenders, unless varied by the lender's standard terms of engagement and standard report form. Section 2 describes "the valuer's role". Para 2.2 provides that the role of the valuer, who must have knowledge of and experience in the valuation of the residential property in the particular locality, is to advise the lender of the Market Value "usually excluding development value at the date of inspection". Development value is, of course, to be distinguished from hope value. The valuer is also required to advise the lender as to the nature of the property and any factors likely to affect its value. Section 4, which is entitled "the valuer's inspection", requires the valuer to inspect the property to be valued and to undertake a visual inspection of as much of the exterior and interior of the property as is accessible without due difficulty. Finally, for these purposes, section 5, which is entitled "The Valuation", provides that the basis of valuation is Market Value, which is defined, and specifies that unless otherwise instructed, "any value for development that either has, or requires, planning permission should be excluded from Market Value".

[14] Mr McDonald specialised in the valuation for mortgage purposes of residential properties in the Moray area. He explained, by reference to his inspection notes, that he originally received instructions to prepare a valuation of the subjects for a Mr & Mrs Smith, who were interested in purchasing them. Prior to issuing that report to them, he obtained the sales particulars from Anton's Estate Agents. He described the subjects as not being in great condition, but a lot of the work which was needed was cosmetic. The farmhouse was habitable with few essential repairs needed. It offered the buyer scope for buying it as a house, living in it and possibly developing into the outbuildings. To that extent it had development potential. Someone could take the outbuildings and do something with them. His report to Mr & Mrs Smith was in the same terms as his report to the pursuer. The reference, under the heading "Observations" to it being understood that the entire site extended to approximately 1.12 acres, came from the sales particulars. When he carried out his inspection, the whole of the subjects was available for him to see, but he did not take any measurement of the dimensions of the site. He could not say simply from looking at it that it was clearly not 1.12 acres in area - it was difficult to assess accurately the area of a site when there are buildings on it. Had he picked up the discrepancy between the sales particulars and the actual size of the site, he would perhaps have made a note and reported it for someone to check later. But when valuing subjects for residential purposes, he was more concerned with the buildings. He tended to carry out thirty or forty valuations each month as part of his routine work, and he did not think that he had measured the area of the land for any of those valuations. It was not the ordinary practice for a surveyor to measure. He had assessed the value by reference to comparables. He referred to his notes where he had set out some details of three comparable properties which had recently been sold or offered for sale. On the basis of those comparables, he had assessed the value of the farmhouse and the immediately adjoining outbuildings at the subjects at about £180,000, with an additional £50,000 for the other buildings, making a total of £230,000. This represented an element of "hope value" but excluded any consideration of development value. If he had appreciated that the site was smaller than the area stated in the sales particulars, it would not have effected his valuation. He valued what he saw on the day, which was essentially the house and outbuildings together with the surrounding land. He accepted that the acreage on the site might be relevant to development value, if the buyer was proposing to knock down some or all of the existing buildings and create a number of plots of a minimum size each, but it was not relevant for valuing the subjects as a residential property.

[15] The pursuer went ahead with the purchase of the subjects. He said he did so on the basis that the mortgage valuation report confirmed the information in the sales particulars that the site was 1.12 acres in area. I consider this part of his evidence later. In any event, he set up a mortgage with the Halifax. Missives were concluded in his name. I accept the evidence that he was sent the title deeds at some point before completion. They gave the true area of the site, though in hectares. However, I also accept that the pursuer did not look at them in any detail if at all, and I see no reason why he should have done so unless some discrepancy had been pointed out to him. After completion, the pursuer instructed architects to prepare plans for three plots of one third of an acre each, combined with keeping the cottage and possibly all or part of the original steading. Two or three weeks later the architects telephoned him to say there was a problem - there was not enough land, it was only 0.6 or so of an acre. That made the proposed development impracticable and financially unviable. Had he not had the re-assurance in the mortgage valuation report that the site was 1.12 acres as represented in the sales particulars, the pursuer would have asked for a detailed measurement, and would not have gone ahead with the purchase had he been told the correct figure. Even if he had looked carefully at the title deeds, he did not know how to convert hectares to acres, and he would not have realised that the area of the site was not as represented. I accept that last part. If the pursuer assumed from the sales particulars that the site was 1.12 acres in area, and had no reason to doubt that information, there was no reason for him to struggle with the conversion from hectares to acres on the title deeds to double check. The same would be true if he was reinforced in that assumption by the mortgage valuation report, but that of course is the question at issue here.

[16] I should at this stage make it clear that I found all the witnesses of fact to be credible witnesses, doing their best to assist the court. There was little between them as to the primary facts. Where I prefer, or have preferred, one account to another, that preference has been based on my perception of where the probabilities lay, supported by the documentary evidence.

Expert evidence
[17] The pursuer called Henry Gordon Stewart, a chartered surveyor with Messrs Rydens, as his expert. He was instructed to give a valuation of the property as at June 2007. He inspected the premises in mid 2008, almost a year later, at which time it was unclear to what extent the buildings had been allowed to deteriorate further. He described the property (by which I think he meant the main house and the immediately adjacent buildings) at the date of his inspection as "in fair order" albeit that it would "benefit from a fair degree of modernisation". He valued the subjects as a whole as at June 2007 at in the region of £140,000. He described the site in his first report as being about 0.8 acres in area. He considered that if the site area had indeed been 1.12 acres, as it had been represented to be, the value could be fairly stated to lie in the region of £210,000. His view was that in assessing "the viability of any property for potential redevelopment", the size of the site was of "paramount importance". In his supplementary report he agreed that an ordinarily competent Chartered Surveyor exercising reasonable skill and care would not under "normal" circumstances undertake detailed size measurements for the purpose of a Mortgage Valuation Report. However, in this case it was clear that the property fell "outwith the bounds of normality due to both its state of repair and development potential". In such circumstances, "the extent of the site was an important factor to be taken into account". In his oral evidence he said that while Mr McDonald clearly wanted to try to assess the property as a dwellinghouse, his own view was that the proper approach would have been to value it as a development opportunity. He would assess what could be built on a site, here perhaps a couple of new houses and the existing house, estimate what they would sell for, and deduct the cost of development work. That would give an indication of the value. For this purpose the size of the site was important since it dictated what could be done with it in terms of the number of units. In cross examination he accepted that the purpose of a mortgage valuation report was to provide a valuation for mortgage purposes. The primary purpose of such a report was not to check the acreage of the site. Nor was it the appropriate tool to assess development potential - to do that he would have recommended that the purchaser get a development appraisal carried out. He accepted that a mortgage valuation report was the correct tool if the valuation was for residential and not development purposes. It was no part of a duty of a surveyor instructed to undertake a mortgage valuation report for a residential mortgage to advise on development potential. He thought that the discrepancy in the size of the site would have been obvious to each and every surveyor undertaking such a survey, but he accepted that a would-be developer should do rather more homework than simply rely upon a mortgage valuation report for this purpose. He should instruct a development appraisal, have measurements carried out, or instruct an architect. It would be unwise, even shoddy, to buy the subjects for development without taking steps to obtain a development appraisal. He agreed that a development appraisal and a mortgage valuation report were different exercises ("apples and oranges"). He accepted that it was legitimate for Mr McDonald to hold the view that a residential evaluation would not be affected by the precise acreage. At the end of his cross examination he appeared to accept that someone like Mr McDonald was in a better position to advise on the valuation of the subjects than a development appraiser from Aberdeen, such as himself.

[18] The expert instructed by the defenders was Alan Kennedy of J&E Shepherd, Chartered Surveyors. In his experience of inspecting and valuing residential properties in the area over 20 years, it was not common practice for detailed site measurements to be taken. A visual inspection would usually suffice. He thought it unlikely that the exact extent of the site would have been readily apparent by visual inspection, in part because of the topography and the extent and layout of the buildings but also because the site boundaries were unclear in some places. He thought that it would not be unreasonable for a surveyor, in such circumstances, to rely upon the information as to the area of the site provided by the selling agents, though he considered that the valuation report should have spelled out the source of the information. His own valuation of the subjects was hampered by the fact that when he visited the site in October 2011 the property was derelict; it had been burnt to a shell. However, taking into account the comparables relied on by Mr McDonald (and possibly others), he came to a value for the subjects as at July 2007 of between £210,000 and £230,000. It was reasonable to put a value of about £50,000 on the steading having regard to hope value. Hope value attached to the buildings, particularly the outbuildings, rather than the land as a whole; Mr Stewart's approach of looking at the site as being suitable for demolition and development went beyond hope value. It might, as Mr Stewart suggested, have been an obvious development opportunity, but the defenders were not asked to value it on that basis. Mr Kennedy did not consider that the discrepancy of about 0.5 acres in the extent of the site would have any material effect on the value of this property for mortgage purposes, since the value pertaining to the land would be negligible in relation to the overall value of the subjects. In the context of a mortgage valuation report for residential property, the bulk of the value attached to the buildings; he would not use the same methodology for a development appraisal. He criticised Mr Stewart for having used a development value approach, which was not a valid method of producing a mortgage valuation report - Mr Stewart's approach was contrary to the guidance in the Red Book. A reasonably prudent buyer, purchasing for development purposes, should take advice from architects and lawyers and instruct a development appraisal. If acreage mattered, the client should ask for it to be measured.

[19] I shall come back to consider certain aspects of the expert evidence in due course, but I should say that generally I preferred that given by Mr Kennedy. In his report lodged in process he addressed the issues on the basis, which seemed to me to be the relevant basis, that the defenders were instructed to carry out a valuation for mortgage purposes, and for a residential mortgage at that. Mr Stewart, by contrast, appeared to start from the assumption that a surveyor in the position of the defenders ought, on their own initiative, to have assessed the value on the basis that the land was being purchased for development. It was only in his oral evidence, so it seemed to me, that he came to address the issues against the background of what the defenders had been instructed to do, and then it was not entirely clear that he was able to separate out the two different situations. In addition, I thought that he was inclined to be rather nit-picking in some of his comments on Mr Kennedy's report, focusing on the precise words used by Mr Kennedy, rather than on the substance of what he was saying (for example, he sought to make some point out of the fact that Mr Kennedy had said that what the defenders had done "would appear to have been" - rather than "were" - in accordance with good practice). To this extent the criticism might be made of Mr Stewart that he strayed from the role of expert into that of advocate, but I would not wish to make too much of this point. I found the evidence of both of them helpful, but where they differed I was inclined to prefer that of Mr Kennedy.

Discussion
[20] It may be appropriate to start by making it clear that it is not the pursuer's case that the defenders negligently misrepresented the area of the site. At one point in his evidence, I understood the pursuer to be suggesting that he relied upon a representation by the defenders as to the area. For example, he said in his evidence in chief, according to my notes, that when he read the defenders' mortgage valuation report, "the detail of the size (1.12 acres) - i.e. the detail of the size given in the report - confirmed that given in the particulars, so I went ahead on that basis". At certain points in his evidence Mr Stewart appeared to read the mortgage valuation report as containing a representation by the defenders that they believed the area given in the sales particulars to be correct. But this line was not foreshadowed in the pursuer's pleadings. Nor was it insisted upon in argument, and rightly so. In my opinion, any such argument would have been bound to fail. The language used in the report ("it is understood that ...") makes it clear that the surveyor's understanding of the area of the site comes not from his own measurement but from elsewhere. Since the figure of 1.12 acres was the figure used in the sales particulars, which the pursuer had both seen and would have expected the surveyor to have seen (this is apparent from his understanding that the surveyor was confirming the figure in the sales particulars), it must have been obvious to anyone interested in the matter that the figure used in the mortgage valuation report came from those sales particulars. But the source of the figure does not ultimately matter. It was clearly not a figure resulting from any measurement by the surveyor; and nothing in the language of the report could reasonably have caused anyone reading it to conclude that the surveyor was giving his own imprimatur to it. If the pursuer believed that the report was confirming the size of the site - and I have no reason to doubt that he was telling the truth on this matter - he was mistaken in that belief, and obviously so. He had no reasonable basis for so believing.

[21] The pursuer's case in his pleadings, and as developed in argument, was this. A surveyor instructed to prepare a mortgage valuation report was under a duty to visit the site. I do not think that that was disputed in this case, though it may not apply to all situations. On such a visit, it would have been obvious to him that the area of the subjects was considerably smaller than that stated in the sales particulars. He should have noted in his report that the subjects appeared to be smaller than the 1.12 acres stated; and he should have recommended that the area of the site should be measured. Had this been done, and had a detailed measurement been carried out which showed the area of the site to be only some 0.65977 acres, the pursuer would not have proceeded with the purchase. An esto line of argument was to the effect that even if the surveyor was not readily able to determine the extent of the subjects and the existence of the discrepancy, he should at least have made that clear in his report and recommended that the area should be measured.

[22] To succeed in his primary case, the pursuer seeks to establish that the discrepancy between the actual acreage and that represented in the sales particulars should have been "obvious" to a surveyor carrying out his valuation with reasonable care. The problem, to my mind, is that that begs the question as to the type of survey being carried out. To take one extreme, if the surveyor was instructed to survey the subjects with a view to ascertaining whether there was room, having cleared the site, for building a certain number of houses on plots of 0.2 to 0.3 acres each, he would obviously require, in the exercise of reasonable care, to assess the area of the subjects. Whilst he might start from the information given by the estate agents in the sales particulars, he would no doubt look carefully to see that it seemed about right even if he did not measure the site exactly for himself. In such circumstances, it is likely that a discrepancy between 1.12 acres and 0.66 acres would be "obvious" to him. But if, at the other extreme, he was instructed to value the subject as a house, outbuildings and garden, being purchased for residential purposes, I do not consider it to be so obvious that he ought to be making that assessment of the accuracy of the statement in the particulars as to the acreage of the site. In the present case, for reasons I have already set out, I am satisfied on the evidence that the defenders were instructed to carry out a mortgage valuation for subjects being purchased for residential purposes. There was no mention of development in the sense described above. The pursuer made much of the fact that the sales particulars describe the subjects as affording a "fantastic development opportunity". But read as a whole, they are clearly referring to the opportunity open to a prospective buyer to refurbish, do up or convert the existing buildings; they do not suggest the possibility of developing the site as a whole by demolition and re-building. So too the mortgage valuation report refers to the possibility of refurbishing the outbuildings to form a self-contained cottage or other residential accommodation, but the development contemplated is limited to the development of the existing buildings. In those circumstances, while it was right that the valuation should have added something for hope value, it would have been wrong for the defenders to have interpreted their instructions as being other than to value the subjects for residential purposes. I do not accept Mr Stewart's evidence that they should have assessed the value of the subjects as a commercial development venture.

[23] I accept the evidence given for the defenders by Mr McDonald and Mr Kennedy that in carrying out a residential mortgage valuation for a property of this sort the main value lies in the buildings. Although they were not in good condition, they were capable of being done up and lived in. The work needed on the farmhouse itself was largely cosmetic. More work might have been required on the other buildings. But whatever the extent of the work to be done, the anticipation would be that the purchaser would aim to re-furbish the farmhouse and live in it, and use or improve the other buildings. Both experts were agreed that the purpose of a mortgage valuation report was not to check the acreage of the site but to provide a valuation for mortgage purposes. Mr Stewart accepted that a mortgage valuation report was not the appropriate tool to assess development potential; if the purchaser wanted such an assessment, he should instruct a development appraisal to be carried out. Of course, if the acreage of the site was a relevant factor in assessing the value for mortgage purposes, the surveyor would have to take care to make an accurate measurement, or check a measurement given by another. But where, as here, the value lay in the buildings and not in the size of the plot, there was no reason to place such a burden on the surveyor. The matter is one of judgement for the surveyor. I reject the submission that Mr McDonald should have paid particular attention to the size of the site. I reject too the contention that the discrepancy in the size of the site ought to have been obvious to a surveyor carrying out that particular task assigned to him. He would not have been looking at the site through measuring eyes. I am not persuaded that a surveyor carrying out a residential mortgage valuation on a site with buildings standing on it would necessarily have been expected to notice that the site was considerably smaller than 1.12 acres.

[24] Although Mr Stewart gave a different value for the subjects, he produced no supporting material to enable me to prefer his valuation to that given by Mr McDonald or Mr Kennedy. Mr McDonald identified comparables he had taken into account in reaching his valuation. Mr Stewart was unable to say that they were not relevant and appropriate. I see no reason not to accept Mr McDonald's valuation as being a reasonable valuation of the subjects for the purpose for which he was instructed. Indeed, to return to a point I made at the beginning of this Opinion, it is a striking feature of this case that the pursuer's case on record does not criticise Mr McDonald's valuation.

[25] For these reasons, I have come to the conclusion that the pursuer's case on liability must fail.

[26] Had I found in favour of the pursuer, I would have had to deal with issues of causation, quantum and contributory negligence. Dealing with these issues presents some difficulties, since it is difficult to pin down the assumptions on which they should be considered. Clearly I have to proceed on the basis that, contrary to the decision which I have reached, the defenders were obliged to take care to observe any obvious discrepancy between the area of the site and the acreage represented in the sales particulars, whether or not that affected their opinion on the adequacy of the security for a residential mortgage, and to bring that discrepancy to the attention of the pursuer. On this basis their fault lay not in what they said but in what they did not say; they were silent when they should have spoken. But that speaking could have taken many forms. They could have said: there is an obvious discrepancy. Or, as the pursuer acknowledged in his evidence, they could simply have said: we have not measured or otherwise assessed the area of the site. The question is: what loss if any was caused to the pursuer by that silence as contrasted with what the defenders should have said.

[27] There are a number of stages in identifying the loss suffered on that hypothesis. First, the pursuer has to show that he went ahead with the purchase of the subjects in reliance on the defenders' silence. On this issue I regret that I am unable to accept his case. It seemed to me that, on a fair assessment of his evidence, he had made up his mind to purchase at the purchase price on the basis of what he had seen and what he had been told in the sales particulars. I do not accept that he would have hesitated or backed out of the deal if the mortgage valuation report had simply said: we have not measured or otherwise assessed the area of the site. But even if he did proceed on the basis of the defenders' silence, that is not the end of the matter. The question of causation, whether approached in delict or in contract, is wrapped up with the question of reasonable foreseeability. The defenders could not, to my mind, have reasonably foreseen that the pursuer, not having instructed a development appraisal or a detailed site survey, would make a decision to proceed with the purchase simply on the basis that the mortgage valuation report which he had instructed did not question the assertion in the sales particulars that the site was of 1.12 acres. He had not asked the defenders to report on the area of the site. He had not told them that he was interested in the site for development purposes. Even if the defenders owed a duty of care as alleged, I do not consider that they could reasonably have anticipated that the absence of comment in their report would cause the pursuer to proceed as he did. It was not reasonably foreseeable. In contractual terms, the loss suffered by the pursuer did not arise in the ordinary course of things, nor did it arise out of anything made known by the pursuer to the defenders. Accordingly, I do not find causation to be established at that initial stage.

[28] But the matter does not stop there. The decision to proceed with the purchase is only the first stage of the pursuer's case that he suffered loss as a result of the defenders' negligence. But the purchase itself did not cause the pursuer any loss. The loss, if any, was caused by his inability to develop the site as he had intended. But since he had not told the defenders of that intention, that special use for the subjects cannot be taken into account in assessing damages. Any loss suffered under that head was wholly unforeseeable. However Mr Beynon, for the pursuer, perhaps recognising the difficulties, did not put the case on the basis of a loss of development opportunity. He invited the court to approach the question of loss on conventional lines, taking the difference between the valuation given by Mr McDonald (£230,000) and the valuation as a development opportunity given by Mr Stewart (£140,000). But that will not do in this case, for the simple reason that there was no effective challenge to the residential valuation given by Mr McDonald. The pursuer's case proceeds upon a theory that the subjects can have a value for development purposes which is lower than the value of the same subjects for residential purposes. That is a fallacy, since if there is a buyer willing to pay the residential value, why would the seller sell for development at a lower value? The failure effectively to put in issue Mr McDonald's valuation of the property for residential purposes means that, whether he wanted it or not, what the pursuer bought was a property which was worth approximately what he paid for it. He might not have been able to develop it as he wished but, on the evidence, he could have sold it on without loss, since that was its market value. If he chose to let it deteriorate once he discovered that it was not suitable for development (and there was no clear evidence on this), that was his decision and not something that can be laid at the door of the defenders. There might, I suppose, have been a claim for wasted expenditure (legal and estate agent's fees, architects' fees, etc.) but the case was not advanced on this basis and no figures were put in to support such a claim. Accordingly I would have found that the pursuer suffered no loss even if the defenders were in breach of duty.

[29] Had I had to make an award of damages, I would have found the pursuer to have been contributorily negligent to the extent of 75% for proceeding with the purchase with a view to development simply on the basis of the absence of comment in a residential mortgage valuation report, without first obtaining a development appraisal or more detailed measurement. I agree with Mr Stewart's description of this conduct as "unwise" or "shoddy".

Disposal
[30] For the reasons given, I find that the pursuer's claim fails. I shall give effect to this by sustaining the second, third, fourth and fifth pleas in law for the defenders, repel the pursuer's pleas in law, and assoilzie the defenders from the conclusions of the summons. I shall reserve all questions of expenses.