There is much litigation pending alleging negligent valuations of property that led to losses suffered by plaintiffs. Issues arise as to whether a duty of care is owed, whether the standard of care was reached and the quantification of damages. A recent case addresses some of these issues.

In Brownrigg v. Leacy (Unreported High Court Heddigan and J 20/9/13) the plaintiff succeeded in such a claim. The plaintiff wished to purchase certain lands (hereinafter the first plot). In order to do this the plaintiff needed to sell lands certain lands (hereinafter the second plot). The first defendant auctioneer valued the second plot at over €10 million in a letter 18/6/07. The second defendant auctioneer valued the second plot at €6.9 million in a letter 20/6/07.

Having furnished the valuations to the bank and gotten loan approval, the plaintiff purchased the first plot for €5.9 million.

The plaintiff was later unable to sell the second plot, was therefore unable to complete the purchase of the first plot and thereby lost his deposit on the first plot in the sum of €590,000. There was already an order for this sum against the plaintiff following summary proceedings.

The plaintiff called a chartered surveyor to give evidence that the proper valuation of the second plot was €2.2 million as at 20/6/07.

The first defendant called a chartered surveyor and an auctioneer to say that the valuation done was reasonable. The second defendant did not appear to defend the case.

The court applied Singer & Friedlander v. John D Wood [1977] 2 EGLR 84, Kenney v. Hall 1976 2 EGLR 29 and Esso Petroleum Co. Ltd. v. Mardon 1976 1 QB 801 . The court's conclusions were as follows:-

  • The first defendant was aware that the plaintiff would rely upon the letter 18/6/07 as a valuation. The court rejected the first defendant's contention that it was no more than a "thinking of selling letter" in response to a vague interest by the receiver in selling. The court pointed to extensive telephone communications between the parties prior to issuing the letter and the plaintiff calling to the first defendant in person to retrieve the letter.
  • The letter was intended to be a valuation. The court pointed to the express wording of the letter and it's failure to state that it was not a valuation.
  • The valuation was prepared negligently. The valuation was not in compliance with "the red book." The court relied heavily on the expert called by the plaintiff.
  • The plaintiff relied on the valuations to his detriment. The valuations of both defendants were relied on equally.
  • There was contributory negligence of 50% because the plaintiff decided to purchase the first plot before selling the second plot and also failed to make the purchase of the first plot conditional on the sale of second plot. Damages were awarded in the amount of the lost deposit plus interest.

Damages were awarded in the amount of the lost deposit plus interest.

Comment

The case provides a useful five stage test which might be utilised in other similar cases.

The fact that a letter is short and not detailed does not prevent the court finding that it was a valuation which was relied on by a plaintiff.

Where a defendant cannot show compliance with the red book, which sets out the principles be applied in reaching a valuation, it may be difficult for a defendant to argue that the valuation was not negligent.

In the case herein, it was clear that the plaintiff relied on the valuation to his detriment. In other cases it might not be so clear - the purchaser might have entered a particular transaction regardless of the valuation.

The case does not address the contentious issue of whether a bank loaning money could sue on foot of a negligent valuation. Issues of duty of care arise in that scenario which didn't arise here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.