No responsibility for loss despite negligent valuation - Lexology Page 1 of 1

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No responsibility for loss despite negligent valuation

Gowling WLG

United Kingdom August 31 2012

There must be a causal link between the breach of duty of care and the loss sustained for a claim in negligence to
succeed. Even if there has been a breach, but the loss is not attributable to that breach, the defaulting party will
not be liable for the loss sustained.

This was the High Court's finding in Platform Funding Ltd v Anderson & Associates Ltd in which the claimant
made a loan to a purchaser of a flat in a new development in reliance upon the defendant's valuation. The
borrower never occupied the flat and defaulted on the loan. The flat was repossessed and sold at a loss. The
claimant brought proceedings against the defendant alleging the valuation was negligent.

The court held that the valuation was negligent as it was not carried out in compliance with the RICS Red Book.
The surveyor had failed to identify any incentives offered on the new development, had not sought out any new-
build comparables in adjacent blocks or made other enquiries such as seeking out comparables from estate agents.
However, even if the valuation had been carried out with proper skill and care, the court found that, on a balance
of probabilities, the valuation was likely to have been the same.

The defendant was not therefore responsible for the claimant's loss. That had arisen due to the vendor having sold
the flats significantly above market price to purchasers who took out sub-prime mortgages. Further, the valuers
had been misled into providing over-valuations using erroneously over-valued comparable data manufactured by
the vendor.

The loss had been caused by the vendor's dishonesty, the collusive manner in which the claimant's solicitors had
conducted the conveyancing and the failure of the company marketing the flats to provide any comparables to the
defendant other than those supplied by the vendor.

Things to consider

There was a break in the chain of causation which enabled the defendant to avoid having to pay damages to the
claimant, despite having been found negligent. The claimant will have to look elsewhere to recover its losses.

Gowling WLG - Greg Standing and Ian Weatherall

https://www.lexology.com/library/detail.aspx?g=5d3e9243-eeb9-4bf5-9a49-16cf146… 20/10/2017