The case involved a professional negligence claim against a (now retired) Chartered Surveyor, Richard Large, following a pre-purchase Homebuyers Survey RICS Level 2) that he had carried out for Mr and Mrs Hart who were buying a newly refurbished house on the Devon coast. 

The Court awarded damages in favour of Mr and Mrs Hart for the negligence of Mr Large who failed to spot major issues in the building.

Unusually, the Judge awarded damages amounting to the reconstruction cost of the building. The level of compensation in previous similar cases had been assessed as the diminution in the value of the property at the time, resulting from the defects that the Surveyor had failed to identify (Watts v Morrow (1991)).

The award of damages against Mr Large was significant (£750,000). However, solicitors and architects (who were involved in the renovation of the property) reached an out of court settlement for part of the amount, reducing the sum to be met by the Surveyor and his insurers to £374,000. In addition, an award of £15,000 was made for inconvenience and distress.

Circumstances

Prior to Mr Large’s Survey and Hart’s purchasing the property in 2011, the building had been the subject of significant alterations and refurbishment. Work included excavation and damp proofing of a basement and modifications to the roof and elevations. A Building Regulation Completion Certificate to confirm compliance with Building Regulations had been issued but there was no Professional Consultants’ Certificate (PCC).

PCC’s can be issued by Architects and Surveyors with professional indemnity insurance, involved in specifying and overseeing building works. They can stand in place of a Warranty (providing the professional’s insurance policy for the client to claim against, rather than serving as an insurance backed warranty covering defective building work). 

The principal benefits of a PCC for major refurbishment/extensions for those able to rely on it are as follows:

1. A PCC shows that a professional was involved in designing and overseeing the works. 
2. The professional responsible for the design had inspected the works at suitable intervals and
3. The works had been substantially completed in accordance with the specification and relevant drawings. 

Having a PCC also demonstrates that appropriate project procurement and management processes were followed. The alternative would be to allow the builder a free rein in the design and execution of the works with occasional inspection by Building Control but without independent professional scrutiny. This might result in hidden defects that only come to light many years later. 

A claimant would need to prove a case for negligence against the Professional in order to successfully claim under a PCC. There can be challenges due to the costs of bringing such a claim and the delay of litigation against the professional as well as the risk that the claim is successfully defended. Whereas, with an insurance policy, a claim could simply be made for defects, provided the policy covered those particular items. 

A PCC may be capable of being transferred to purchasers who can then rely on it, should major defects come to light after their purchase. 

Is a PCC always needed where building work has been carried out?

A thorough Building Survey will often be essential for the purchaser, their Surveyor and Legal Team to assess whether a PCC would have been expected and where the purchaser may be taking on risks if there has been no professional supervision of recent significant building works. 

There are no definitive limits or industry guidance but in assessing whether a PCC would have been expected, the following criteria will be considered:

1. The date that building work was completed.
2. The size and complexity of the building work in relation to the original construction.
3. The likely contract value for the building work.

For straightforward, low value building work, a PCC may not be required or expected but some form of professional supervision is usually thought beneficial with any building work. 

PCC’s for Purchasers, their Solicitors and Surveyors

Where buildings have been the subject of (major) alterations and refurbishment, including extension/loft conversion/basement/internal reorganisation, Surveyors and Solicitors acting for purchasers will now be carefully assessing the property and any substantial alterations and asking whether a PCC should have been obtained. 

This will apply especially where the works have been carried out within the previous six years (this is the usual length of benefit conferred by a PCC). 

It is important for the purchaser to fully understand the building that they are purchasing and the extent of alterations and extensions that have been made. A robust Building Survey will often be necessary to fully understand the extent of work and whether a PCC would have been expected.

Homeowners looking to alter and extend their homes

Homeowners looking to embark on a building project to significantly alter and extend their home would be well advised to carefully consider whether they would benefit from employing professional supervision from the outset, such that their advisers will issue a PCC upon completion of the project.

This will be particularly important if they are planning to sell within the next 6 years where purchasers, their Solicitors and Surveyor might expect a PCC to have been obtained, especially considering the decision in Hart v Large.

Finding and engaging an appropriately qualified and experienced professional to advise on the need for a PCC will be as important as ever and forms part of our Lewis Building Survey.

The typical conversation goes like this:

Client: I'm afraid that I'm in a bit of difficulty. We are having an extension built and I'm not happy about the final amount of money the builder claims is owed. Also, the quality of the finish is not what we agreed and there are elements that don't seem properly built.

Me: Did you have a Surveyor or independent professional to help you specify and oversee the work?

Client: No, we were recommended to the builder and they came up with a quote that we thought was reasonable.

Me: And what contract and paperwork do you have?

Client: The Builder provided the contract and we signed that. We have made some changes to the work as well, which the builder priced verbally but we have nothing in writing to confirm those variations. Also, we had to pay a lot of money in advance and now, we don't want to pay any more because we think the work hasn't been done properly and we've already spent our budget.

Me: Has the builder kept up to date with the Building Regulation process and arranged the necessary site visits with the Building Control Officer?

Client: We're not sure. The Building Inspector did come when the foundations were being excavated but we haven't seen them since. The Builder agreed to obtain Building Regulations and we don't know any more than that.

In summary, with this scenario, which is fairly typical of the cases I come across:

1. There is no professional oversight of the work being provided by a qualified independent surveyor, without which, the builder is at liberty to proceed as they wish.
2. There is no detailed specification to set out the full extent of the work, which lays down the necessary British/European Standards and best practice for the builder to work to. Without details being set out and agreed of the precise type of roof or floor tiles and how they are to be laid, the builder is left with a fairly wide scope and can make their own choice to suit their budget, which is likely to differ to the client's preference.
3. There is no detailed contract. The contract provided by the builder is heavily weighted in their favour and there is probably no provision for an agreed dispute resolution mechanism.
4. There are no priced variations resulting from agreed changes to the project, agreed between the Contractor and the Client, that properly amend the contract sum.
5. There is no requirement on the builder to obtain the Completion Certificate to ensure compliance with Building Regulations. This will be essential when the Client comes to sell or re-mortgage. Any purchaser of the property will expect to see this in place.

Professional Assistance

The above scenario can easily be avoided by the Client taking the appropriate steps at the outset to appoint an independent Building Surveyor who will:

1. Carefully specify the works to include everything the client expects from the work, from foundations to the type of Kitchen worktops and paint finishes.
2. Use an appropriate form of contract between the client and the builder that sets out the obligations of each party, including when payments are due, how contract instructions and variations are to be dealt with and how disputes are to be handled, amongst other aspects.
3. Monitor the work periodically to ensure the specification is being followed, the Building Regulations and Planning Consent are being complied with, inspections are being made by the Building Control Officer at the appropriate stages and that a Completion Certificate is issued at the end.
4. Be on hand to provide guidance to the client and builder where unforeseen issues arise during the works to ensure the most appropriate and reliable solution is implemented and at the appropriate cost.
5. Ensure that any Party Wall Matters are handled in a timely way to avoid causing delays to the progress of the project.

Although the fees to employ a professional on such projects seem like adding unnecessarily to the overall cost, the benefits of having an independent professional will seem like money that would have been very well spent once you're faced with mounting legal costs and a protracted dispute with your builder, as well as an incomplete building project that could take months to resolve.

If you have found this article useful and you think it might be relevant to any of your friends, family, colleagues or clients, please feel free to share. I would prefer to have fewer of these conversations in the future.