You can, but you've provided a good opening for me to share what I've learned (the hard wayYou can sue someone who has professional indemnity insurance.
) regarding the difference between a tort remedy - against a third party to the contract for professional negligence - and a contract remedy (damages) against the vendor.Let us assume that you're considering buying a property, because you feel prices are about to boom in a certain town. You expect that the house you're considering buying for $400K will be worth $600K in one year. A building and pest inspection by XYZ Pty Ltd reveals that the property has no problems (other than trivia), and you proceed to purchase for $400K.
One year later, the property is valued at $600K, and you find a buyer. The buyer commissions a B&P inspection from ABC Pty Ltd, which reveals a major problem that XYZ Pty Ltd should have detected, and which is expected to cause the house to have to be demolished within 5 years. You are ultimately able to sell again for your purchase price of $400K, and plan to seek redress against XYZ Pty Ltd, because you know they have professional indemnity insurance.
Presuming the problem is something that XYZ should have detected (ie you can demonstrate negligence), and that they have professional indemnity insurance etc, you'll still get a BIG FAT ZERO, even though you probably perceive that they've "cost" you $200K.
Why? I'll use these two theoretical scenarios for the original contract to purchase, to make my explanation clear (even though the second scenario rarely/never happens):
1) The usual route - you paid XYZ Pty Ltd to do a building and pest inspection for you as the prospective purchaser, and on the basis that there's nothing wrong with the property, you proceed to purchase.
2) You ask the vendor to commission the building inspection, and insert a clause in the sale contract saying something like "The vendor warrants that the building inspection report provided by XYZ Pty Ltd is accurate."
Under the first (usual) scenario, the person against whom you have a cause of action - XYZ Pty Ltd - is a third party to the contract. As such, your remedy is against XYZ as a tort related to their professional negligence. Under tort law, you are entitled to be restored to the position you would be in if XYZ Pty Ltd had not been negligent. Now, you could try arguing that if XYZ had found the fault, you would have negotiated the price down to, say, $250K, and thus try for the $150K "extra" that you paid, but the Court's not going to engage in this kind of speculation, as to how much the price would have been dropped had the fault been found. They'll almost certainly instead argue that what would have happened is that you wouldn't have bought the property, and thus you'll be entitled to be restored to the position you'd be in if you'd never bought, ie make neither a profit nor a loss on the property. Given that you bought for $400K, and sold for $400K, the Court will argue that that's the position you're already in, and thus you'll get zippo. Obviously if values have dropped and you sell for less than $400K, you may get some satisfaction with regard to a deficiency (if it's worthwhile navigating the many obstacles between a cause of action and a judgement
).Under the second scenario, you have a cause of action against the vendor, with whom you had a contract, and as such, you're entitled to be restored to the position that you contracted for, which is to purchase a non-faulty house for $400K. If you'd been successful in getting a clause like this inserted, then you (at least theoretically) have a cause of action against the vendor for the $200K that the structural fault has "cost" you.
Unfortunately the vendor doesn't have a cause of action against XYZ, because again, the action between vendor and XYZ is a tort, not a contract issue, and the structural flaw was already there, it's just that the vendor didn't know about it when they sold the house. If the flaw had been revealed, they would have "lost" this amount a year ago when they sold to you, rather than now (when it's detected). So the Court won't view that the vendor has lost anything in having to pay you the $200K. This is why no smart vendor's solicitor would allow them to accept the insertion of such a warranty clause.
Sorry this is so long; I just wanted people to be aware that your redress against third parties to a contract - building inspectors, solicitors, surveyors, etc - is not as powerful as your "common sense" might suggest. In particular, you can be somewhat assured that their negligence shouldn't cause you to incur an absolute loss, but it can certainly cause you to lose all the profits you thought you'd make, without access to remedy.
[We found this out the hard way. Searches revealed a problem with the title that cost us about $150K. Solicitor neglected to tell us search results. Solicitor admitted negligence but argued zero damages because the market - and our renovation - had added more than $150K to the value of the property, so we "lost" nothing. Couldn't believe the law was such an ***, so we paid a second barrister $10K to give us the same advice that the first one gave us, thus resulting in us throwing another $20K away.
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