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court backs surveyor in another Merrett v Babb negligence claim

25 July 2014

Surveyors have claimed another significant victory after the courts dismissed a Merrett v Babb personal liability claim against a professional formerly employed by an Essex-based practice, Walker & Company Surveyors Ltd.

The decision handed down by the Southend County Court today (25 July 2014) in Mavis Russell v (1) Walker & Co (2) Robert Chisnall and others follows a similar ruling in February when the courts on that occasion dismissed a personal liability claim against former Ashdown Lyons surveyor, Fraser Maldoom, because the facts could not be reconciled with the milestone 2001 Court of Appeal decision in Merrett v Babb.

In 2013, Mrs Russell issued professional negligence proceedings in respect of a Homebuyers Report that had been undertaken by Mr Chisnall whilst he was still an employee of Walker & Co back in 2007.

However by the time that Mrs Russells proceedings had been served, following the issuing of proceedings by Mrs Russell, Walker & Co had become insolvent and the company no longer carried professional indemnity insurance.

In response Mrs Russell decided to target Mr Chisnall. Pointing to the principles in Merrett v. Babb, she alleged that Mr Chisnall - in his personal capacity - owed her a duty of care for preparing the report, despite his being merely an employee of Walker & Co at the time.

Browne Jacobson, acting on Mr Chisnalls behalf, applied for summary judgment against Mrs Russell, arguing that her personal duty of care allegation stood no real prospect of succeeding at trial.

District Judge Molineaux dismissed the claim and ruled in Mr Chisnalls favour. The central reasons why the Court decided against Mrs Russell were that:

  1. there was no evidence of dealings between Mrs Russell and Mr Chisnall, which might indicate Mr Chisnall was assuming a personal financial responsibility for the report if things subsequently happened to go wrong. On the contrary, Mrs Russells engagement in the first instance was of the employer company, her payment was to the company and her understanding was always that the report would be produced by, and on behalf, of the company specifically;
  2. the fact that Mrs Russell had contracted with a limited company (as opposed to a firm or a sole principal) was highly significant also. This meant that Mrs Russell had all the rights she could possibly need against the employer company as the main defendant and there was simply no justification, for public policy reasons or at all, to resort to imposing liability upon the individual surveyor in line with Merrett v Babb;
  3. on the facts of her case, Mrs Russell could not overcome the 1998 House of Lords decision in Williams v Natural Life Health Foods or the High Court ruling in Bradford and Bingley Plc v Martin Hayes, a case decided very shortly after Merrett v Babb in July 2001.

On instructions from the RICS, lawyers at Browne Jacobson have been advising on a number of similar such personal liability claims over the last few years.

Nik Carle, the Browne Jacobson Partner who acted for Mr Chisnall and the RICS said:

"This is another measured and sensible decision in support of employed professional advisers. Mr Chisnall found himself uninsured in respect of Mrs Russells claim and was naturally very anxious about the prospect of this litigation proceeding against him personally. Encouragingly, the courts seem prepared to keep the wings of Merrett v Babb firmly clipped for now, particularly where the employer business happens to be a limited company."

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Lakhbir Rakar

Lakhbir Rakar

PR Manager