Risk Management articles for surveyors
Retainers....sufficient protection?
by Nick Worthington LLB (Hons), Risk Management Consultant
The incidence of professional negligence claims in recent years shows no signs of abating. Increasingly claimants are willing to target their professional advisors. How can surveyors protect themselves against the risk of being sued?
Drafting the retainer
The starting point is for firms to operate with standard retainer letters, which they should use on all new matters. These letters will then be tailored to suit the specific job. The retainer letter will be your basic contract with the client and it should be drafted with care.
You should ensure that you address the retainer to the correct paying client. Importantly, confirm your client’s instructions and the scope of the retainer. Are any areas of work specifically excluded? Highlight any time limits or agreed time scales and don’t forget to diarise them. Remember to include a reference to the firm’s standard terms and conditions of business and attach a copy.
It is vitally important to record and give due consideration to any changes to the retainer as difficulties often arise where variations to the brief (eg. Detailed design or scope of work) are not properly documented.
Although retainers will incorporate various disclaimers and restrictions of liability, don’t get lulled into a false sense of security. Will the courts uphold these clauses? You must also remember your overriding duties to the client. The dangers were well illustrated by the case of Roberts and another v J Hampson & Co [1989].
Duty of care
In Roberts the surveyor undertook a valuation survey for a building society. This level of survey would not allow for moving furniture and lifting up carpets. The surveyor found dampness along a skirting board, noted it, but did nothing further. After completion, the purchaser found a large area of dry rot and sued the surveyor. The judge commented that a surveyor was a skilled professional man with a duty to take reasonable care. The dampness had given grounds for suspicion and the surveyor should, therefore, have taken reasonable steps to follow that trail of suspicion, even if the normal thirty minutes survey time would be exceeded.
What are the client’s instructions?
Where you do a number of similar jobs on similar retainers, it is easy to get complacent. Don’t forget to properly consider the client’s specific instructions. The case of Farley v Skinner [2001] centred on the topical issue of aircraft noise. The Claimant was buying property near Gatwick airport and specifically asked the surveyor whether the property would be adversely affected by aircraft noise. The surveyor failed to make the necessary enquiries, in breach of his obligation to investigate aircraft noise. As this was an important object of the contract, the court awarded the Claimant damages for disappointment.
Conclusion
The best defence to a claim of negligence is obviously to do the job properly in the first place! Failing that you stand a much greater chance of defending your position if your retainer spells out exactly what you have agreed to do. As far as possible you should incorporate any specific instructions, state what you will not do and try to limit your professional duty to a standard of reasonable skill and care.
January 2006
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Surveyors
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Travelers Insurance Company Ltd.