Negligence — Estate agents — Whether agents negligent in advising the vendor as to the price to accept in the open market
On July 1 1988
the plaintiff, Brian Christopher Muldoon, entered into a contract to sell his
freehold property, 5 Chaddesley Wood Road, Canford Cliffs, Poole, Dorset, to a
Mr and Mrs Scanlon at a price of £125,000. From about May 1988 the defendants,
Mays of Lilliput Ltd, acted for the plaintiff and advised him to put the
property on the market at £125,000. In the summer of 1987 Mr Croker, of the
defendants, valued the property at £94,000, a figure confirmed by another
agent. In May 1988 Mr Croker valued the property at £125,000. On May 27 1988 Mr
and Mrs Scanlon’s offer of £125,000 was accepted by the plaintiff. Under the
contract, completion was to be on July 11 1988, but after contracts were
exchanged, the plaintiff was informed by property owners in the area of a
possible development, which might give the properties a considerably higher
value. The plaintiff alleges that the defendants were negligent and that the
true minimum market value of his property at which he should have been advised
to sell was £173,000.
had been included in any development scheme. Evidence of offers made to
purchase the plaintiff’s property at a time when he was contractually bound to
sell to Mr and Mrs Scanlon was thoroughly unsatisfactory and as not accepted as
genuine. It was accepted that there was a rising market through 1988, and that of
the comparables relied on by the plaintiff’s expert, only one was truly
comparable. If property values increased by 35%-40% between 1987 and 1988, in
relation to the 1987 value of £94,000, such a rise would suggest a valuation in
May to July 1988 of £126,900 to £131,600. On the evidence there was no material
available during the period upon which a competent surveyor, exercising
reasonable care and skill, would have arrived at a conclusion that the sum of
£125,000 was outside the bracket into which the proper valuation should have
fallen.
The following
case is referred to in this report.
Singer
& Friedlander Ltd v John D Wood & Co
[1977] EGD 569; (1977) 243 EG 212 & 295, [1977] 2 EGLR 84
This was a
claim by the plaintiff, Brian Christopher Muldoon, for damages against the
defendants, Mays of Lilliput Ltd, in relation to advice as to the sale price of
5 Chaddesley Wood Road, Canford Cliffs, Poole, Dorset, which the plaintiff
contracted to sell on July 1 1988.
Patrick
McCahill (instructed by Edge & Ellison Calow Easton, of Birmingham)
appeared for the plaintiff; the defendants were present in court by two of its
directors, Michael Halpern and John Croker, but were not otherwise represented.
Giving
judgment, JUDGE ZUCKER said: On July 1 1988 the plaintiff, Mr Brian
Christopher Muldoon, entered into a contract to sell his freehold property, 5
Chaddesley Wood Road, Canford Cliffs, Poole, Dorset, to a Mr and Mrs Scanlon.
The contract price was £125,000. The defendants, Mays of Lilliput Ltd, are
estate agents who carry on business at a number of addresses, including an
address at Poole. They acted for Mr Muldoon from about May 1988 in the sale of
his property. They had advised him to put the property on the market at
£125,000. Mr Muldoon’s case is that in so doing they were negligent; the true
minimum market value of which he should have been advised was £173,000. By this
action Mr Muldoon claims damages for the loss he has suffered as a result of
that alleged negligence.
I should say
at the outset that, although a defence was filed and the defendants have, until
recently, been represented by solicitors and counsel, they parted company with
their solicitors shortly before the trial. The result was that neither
solicitors nor counsel have been present on the defendants’ behalf during the
hearing before me. The defendants’ directors, Mr John Croker [FNAEA] and Mr
Michael Halpern [ACIS], have been in court. At the outset they applied to
represent the defendants. I ruled that they were not entitled to do so. They
did not wish to accept my indication that I would adjourn the case so that the
defendants could be properly represented. The result is that they have not been
represented. It follows that I have heard no evidence or argument on behalf of
the defendants. I regard that as highly regrettable in the circumstances of
this case.
Mr Muldoon
lives in Birmingham. He has a wife and four children, who are now aged between
15 and 22. In 1978 he bought 5 Chaddesley Wood Road as a holiday home. That
property was built about 60 years ago. It is a semi-detached chalet-style house
with a living room, kitchen and one bedroom on the ground floor and two
bedrooms on the first floor. It has no garage but a hard standing on which
three to four cars can be parked.
In the summer
of 1987, because some of his children (who were by then in their teens) no
longer wished to go to the property for holidays, Mr Muldoon decided to place
the property on the market and to sell it by way of an auction. He sought a
valuation from Mr Croker. Mr Croker valued the property at £94,000. Mr Muldoon
went to another estate agent, who confirmed that figure. Prior to the auction
he received an offer in the sum of £94,000. Mr Muldoon, however, withdrew the
property as he believed he could obtain £100,000. Neither Mr Muldoon nor anyone
on his behalf has suggested that £94,000 was an unreasonable valuation of the
property in the summer of 1987.
In October
1987 Mr Muldoon let the property to a Mrs Carika. In about March 1988 she asked
Mr Muldoon if he would sell her the property. Mr Muldoon considered that
£115,000 would be a fair price, but he put forward a figure of £125,000. He met
Mr Carika, who initially said that price was acceptable, but within a fortnight
Mr Carika decided not to go ahead.
On May 21 1988
Mr Muldoon instructed Mr Croker that he wanted to sell 5 Chaddesley Wood Road
and to buy instead a larger and more expensive property nearby, 26 Shore Road,
called ‘Channel Breeze’. He asked Mr Croker to value his property. Mr Croker
came back with a figure of £125,000. Mr Muldoon felt he could confidently rely
on Mr Croker because his valuation of £94,000 the previous summer had been
matched by an offer in that sum, and because £125,000 was the figure he had had
in mind.
On May 26 1988
Mr and Mrs Scanlon, who lived locally, offered £120,000. The following day they
increased their offer to £125,000.
Scanlon. Completion was to be on July 11 1988. Mrs Muldoon had all along been
unhappy with the sale price of £125,000. She thought it was worth more. To make
matters worse, within a day or two of contracts being exchanged Mr Muldoon had
a telephone conversation with Mr Percival, the owner of 5A Chaddesley Wood
Road. Mr Percival told him he had been offered £135,000 for his house. It was
smaller than no 5. Mr Muldoon also learned from Mr Percival that developers
were interested in developing a site, which included a number of houses in the
vicinity of which his property was one. I add in parenthesis that there is no
evidence that a sale of number 5A Chaddesley Wood Road at the price of
£135,000, or any price, in fact materialised.
Mr Muldoon
then spoke to Mr Fagg who owned 24 Shore Road nearby, which would also have
been included in the proposed development. Indeed, Mr Fagg was one of the
moving forces seeking to bring about the development. He was also employed by
another local firm of estate agents, Rebbeck.
On July 5 1988
Mr Fagg provided Mr Muldoon with a written valuation. It was in these terms:
Valuation as
private residence £220,000 to £235,000. Valuation as development site £265,000
to £275,000.
These figures
led to a serious disagreement between Mr and Mrs Muldoon. She left the
matrimonial home in Birmingham with her children and went to live at 5
Chaddesley Wood Road. She caused a caution to be placed on the property. The
result was that Mr Muldoon could not complete on July 11 1988. On July 11 1988
Mr and Mrs Scanlon’s solicitors served a notice to complete. On August 25 1988
they issued a writ in the Chancery Division seeking specific performance of the
contract of sale. Mr Muldoon resisted specific performance on the ground that
there was collusion between Mr Croker and Mr and Mrs Scanlon. He reported the
matter to the fraud squad of the Dorset Constabulary. That action was settled.
Mr Muldoon completed the sale on February 23 1989 and paid Mr and Mrs Scanlon
the sum of £5,000 in full and final settlement of their claim for damages for
non-completion.
In para 16 of
the amended statement of claim there is, inter alia, a claim to recover
the sum of £5,000 paid to Mr and Mrs Scanlon, and £5,520, the fees of Mr
Muldoon’s solicitors in that action. That part of the claim has been abandoned.
Mr Muldoon has not pursued before me allegations of connivance or of fraud
against the defendants.
Before coming
to the expert evidence, I have to refer to a number of documents which are in
the trial bundle and which came into existence between July 14 1988 and October
6 1988 at a time when Mr Muldoon was resisting specific performance by Mr and
Mrs Scanlon. On p130 there is a letter from a company called Manway Homes Ltd.
It is addressed to another local firm of estate agents, Andrew Key &
Partners:
Dear Sirs,
Re: 5
Chaddesley Wood Road, Sandbanks, Poole
We are
prepared, as principals, to offer £210,000 (Two Hundred and Ten Thousand
Pounds), for the freehold interest in the above property, subject to contract
and vacant possession.
According to
Mr Muldoon, he knew nothing of Manway Homes Ltd. He had not instructed Andrew
Key & Partners to act on his behalf. This document was pushed through his
door. It is an odd document because, if Andrew Key & Partners were the
agents for the developers, it might be queried why the offer should be made in
those terms to their own agent.
At p132 is a
letter dated July 29 1988 simply headed ‘Strathavon’ to Andrew Key &
Partners:
Dear Sirs,
Re: 5
Chaddesley Wood Road, Sandbanks, Poole
I write to
confirm my offer, subject to contract, of £215,000 (Two hundred and fifteen
thousand pounds).
Precisely the
same comments apply to that document as to the previous one. On p133 dated
August 2 1988 on Andrew Key’s notepaper and addressed to Mr Muldoon, there is
this letter:
Re: 5
Chaddesley Wood Road, Sandbanks
I write to
confirm that after careful consideration and taking the present market
conditions into account we would value the above property at a figure of
£210,000 (Two hundred and ten thousand pounds) subject to contract.
Mr Muldoon did
in fact obtain that valuation from Andrew Key & Partners. He exhibited it
to his affidavit in the Chancery action.
On p134 is a
letter dated September 29 1988 from Andrew Key & Partners to Mr Muldoon at
his Birmingham address:
Re: 5
Chaddesley Wood Road
We have
pleasure in enclosing Details of Sale in connection with the above proposed
sale, Subject to Contract.
Details have
also been sent to all other parties concerned and no doubt a draft contract
will be prepared as soon as possible.
If you have
any queries, please do not hesitate to contact us.
That is
clearly written as Mr Muldoon’s agent. There follows the details of the sale of
5 Chaddesley Wood Road by Mr Muldoon to MJL Associates at a price of £200,000.
Mr Muldoon
told me that he really knew nothing about these matters. Andrew Key &
Partners were not acting on his behalf.
On p136 also
dated September 29 there is a copy of the letter to Mr Muldoon which is on
p134, though this time addressed to his solicitors. On p137 there is a letter
dated October 6 1988 from MJL Associates to Mr Muldoon:
I write to
advise you that following negotiations through Andrew Key Estate Agents in
respect of my Company’s proposed purchase of your property I have instructed my
Lawyers to request your Solicitors’ draft Contract and ancillary documentation,
requesting my Lawyers to deal with the matter with all expedition.
I therefore
hope to be in a position to exchange Contracts very shortly although I would
mention as a matter of courtesy that it is my intention to exchange Contracts
simultaneously with exchange of Contracts in the purchases of other property so
as early exchange of Contracts will very much depend as to how soon all the
solicitors involved can forward to my Lawyers the draft Contracts and ancillary
documentation.
I will of
course do all I can to bring an early exchange of Contracts to fruition and
until then matters of course remain subject to Contract.
Mr Muldoon
repeated that he had not instructed Andrew Key to negotiate on his behalf. P138
is a letter from Town & County Estate Agents in Bournemouth dated October 6
1988. It is addressed to Mr Muldoon’s solicitors:
Re: 5
CHADDESLEY WOOD ROAD, SANDBANKS, POOLE, DORSET
We understand
that you act on behalf of Mr B Muldoon, Vendors of the above property and would
like to advise you that we have arranged a sale, Subject to Contract on their
behalf.
As the
Vendors’ Agents, we have pleasure in enclosing copies of the Sales Particulars,
printed details and confirmation letter to the Vendor, so that you may proceed
accordingly.
It would be
appreciated if you would acknowledge receipt of these details.
There follows
particulars of a proposed sale in which the vendor is Mr Muldoon, the purchaser
is a company called Sky High Ltd and the agreed price is £225,000.
On p140, also
dated October 6 1988, there is a letter from Town & County, confirming the
matter to Mr Muldoon personally. Mr Muldoon said in effect that he knew nothing
about any of these offers.
Mr Keeling, a
partner in Andrew Key, said that his firm was retained by the development
companies referred to in his firm’s letters. He said Mr Muldoon was actively
engaged in selling his property through Andrew Key. He had spoken to Mr Muldoon
on the telephone. The documents that went through his firm’s hands were all
genuine documents. There is a complete conflict of evidence between Mr Muldoon
and his own witness, Mr Keeling. Counsel for Mr Muldoon sought to place some
reliance on the figures contained in those documents as showing what the value
of the property would have been to a developer and seeking to apply a discount
to show its value without development potential. The documents are also
referred to in the report of the plaintiff’s expert, Mr Nigel Holtom [ARICS],
to which I shall come.
The fact is
that the property has not been included in any development scheme. I have been
given no proper explanation of any of the offers contained in any of the
documents I have referred to. All the offers were made at a time when Mr
Muldoon was contractually bound to sell the property to Mr and Mrs Scanlon. The
evidence in relation to them is thoroughly unsatisfactory. I am not satisfied
that any of them were genuine.
Mr Fagg gave
evidence to justify the valuation set out in his letter of July 5 1988, to
which I have referred. He was not relied on by the plaintiff as an expert
witness in this case. Even his lower valuation of the property as a private
residence, that is the bracket of £220,000 to £235,000, is far above the figure
now put forward on behalf of the plaintiff. As Mr Fagg hoped to involve his own
property in any development he had an interest in placing as high a value as
possible on Mr Muldoon’s property. I gain no assistance from Mr Fagg’s evidence
or from his valuation of July 5 1988.
The expert
evidence the plaintiff did rely upon was that of Mr Holtom of Black Horse
Agencies, Rumsey & Rumsey, who had premises in Poole. Mr Holtom qualified
as a chartered surveyor in September 1985, but he has had practical experience
since 1976. He inspected the property on September 20 1988 and his report
values it as at May 27 1988. The substance of his report is as follows:
The property
has been neglected over a period of time and is in need of modernisation and
refurbishment. The general condition is largely consistent with its type and
age, however, we would comment as follows:
The plain
tile roof cladding is in minor disrepair and will warrant a degree of continual
attention. Furthermore, isolated beetle infestation is evident to the timber
roof framework.
The chimney
stack has a slight lean and warrants minor repair.
Outer main
walls appear superficially in satisfactory order, however, the sub floor
ventilation is inadequate. We noted deflection, and loose boards to the ground
floor bedroom floor. Full investigation of all the sub floor timbers is
necessary. Inadequate ventilation may lead to decay which is costly to
eradicate.
Internally,
as mentioned previously modernisation of all services, appliances, fixtures and
fittings is ideally required, together with internal and external redecoration.
GENERAL
REMARKS AND VALUATION
The Sandbanks
peninsula and the neighbouring area of Canford Cliffs are regarded as one of
the foremost residential locations within the Poole/Bournemouth conurbation.
The subject property whilst in a somewhat indifferent and tired condition is
located in a prime spot within easy walking distance of Poole Bay beaches,
together with several well established Yacht Clubs. To realise its full
potential, the property requires complete modernisation. It is ideally suited
for use as a retirement or holiday home or a weekend retreat.
We are of the
opinion that the property with vacant possession freehold tenure has an open
market value as at 27 May 1988 in the region of £173,000 (one hundred and
seventy three thousand pounds).
The value of
the property as per the date of our inspection 20 September 1988
— Mr Holtom
here refers to an earlier inspection by another member of his firm —
was we believe
in the region of £180,000 (one hundred and eighty thousand pounds). The
difference between the two figures representing the market trend during this
time. This was calculated by analysing the sales during the relevant period of
both second hand and new build properties. The difference equating generally to
between 3-5%. For the purposes of this valuation we adopted approximately 4%.
Our opinion
of value is subject to the following qualifications:–
We understand
that a Building/Structural Survey of the property was not required and
therefore our valuation assumes that the property is structurally sound and
free from defects, other than those mentioned in the report.
We have not
been supplied with any documents relating to the freehold title in the above
property and our valuation is on the assumption that a good freehold title can
be shown and that it is not subject to any easements, wayleaves, restricted
covenants or encumbrances.
Our opinion
as to the value of the property reflects a figure that it might have been
reasonably expected to be sold at by private treaty as at 27 May 1988
assuming:–
a. A willing
vendor.
b. A
reasonable period of time in which to negotiate sale.
c. That
values remained static during that period.
d. The
property would have been freely exposed to the market, and
e. That no
account would have been taken of any higher price which have been paid by a
purchaser with a special interest.
Mr Holtom then
turned to comparable evidence under three heads: address, sale price and
completion:
1. Portside,
14 Shore Road, Sandbanks — Major structural problems to include attention to a
floor slab. £170,000. 23.08.88.
2. Flat 1
Beach Walk, Banks Road, Sandbanks. Ground Floor Flat. £175,000. 23.09.88.
3. Flat 6,
Sandhills, 40 Banks Road, Sandbanks — First Floor Flat. £137,000. 13.09.88.
4. Flat 5,
Fourwinds, 32 Banks Road. Second Floor Flat. £142,500. 6.05.88.
5. Flat 6,
Seapoint, Martello Pk, Canford Cliffs. £196,000. 8.03.88.
The Sandbanks
area comprises a large diverse mixture of properties many of which are used
solely for second homes, investments and/or holiday lettings.
Sandbanks,
the peninsula and the adjoining area of Canford Cliffs are regarded as one of
the foremost residential locations along Britain’s South Cost. Within a short
distance the beaches in Poole Harbour provide extensive sail boarding and
yachting facilities. The subject property is centrally located for all these
amenities. In addition, Chaddesley Wood Road is private thereby residents enjoy
convenient parking in the height of the summer season.
Given the
unique location and popularity, numerous older properties with large gardens or
a number of adjoining properties are being converted in the majority of
instances to flat developments. No property has therefore the preferred
comparables and given the select nature of the area, the number of sales are
small in number. The above comparables reflect a general trend in values
whereupon purpose built flats are predominant.
We understand
that a price was agreed for the subject property with a then tenant of
£125,000. The period of the time being February/March 1988. This therefore
indicates that given the buoyant market, this value would be significantly
higher in the May of that year. Given increases of 35 to 40% during the period
January-September, this would realise £168,750–£175,000.
I can leave
out paragraphs dealing with sales advice and development potential as no
reliance on development potential has been made in this case. I come to market
conditions during 1988:
The
residential market during February — August 1988 experienced significant
increases in value of some 35-40%. Properties were being sold very rapidly and
in countless instances gaz-zumping was experienced together with Dutch Auctions
arising. The rapid pace of the increase made valuation of property difficult.
This we believe increased the margin of error in valuation and was further
compounded by the individual nature of the Sandbanks area.
From the
information provided negotiations to purchase the property commenced at
£120,000 before finally agreeing the asking price of £125,000. I do not feel
that once the asking price had been secured there should be any delay in the
disposal of the property. Mr Muldoon had I assume agreed the marketing price at
which the agent had produced the purchaser at the price required. There would
be no reason to delay. If any interested party had arrived prior to the
exchange of contracts with a higher offer, then the vendor must be notified.
Furthermore, the property should be actively marketed until that time.
I find it
very hard to believe that Mays had no knowledge of the development potential of
the area in question.
Then he goes
on to deal with the question of development. He goes on:
The valuation
letter provided by Mr Fagg of Messrs Rebbecks does not give the impression of a
formal valuation. It does give in our opinion a market appraisal whereupon, if
the property were to be actively marketed one would be talking at the submitted
figures of:–
Valuation as
private residence £220,000–£235,000, Valuation as development site
£265,000–£275,000.
In our
opinion these figures would appear to be very bullish but not unusual given the
prevailing market conditions.
Andrew Keys
would appear to have genuinely arranged a sale on this property and have
interest from a number of developers who are prepared to offer £200,000 plus.
CONCLUSION
Valuation of
residential properties is not a precise science and is very much an art. One
cannot therefore be in a position to specifically calculate a set price and a
degree of flexibility must be adopted. Matters as explained previously with
regard to the individual nature of the Sandbanks area makes valuation more
onerous.
In our
opinion of value a wider than normal variation must be adopted on any valuation
figure. This in this instant and applicable to both the May and July dates
should range from 15-20%.
From this, we
believe it is evident that the sale price of £125,000 is significantly below
the market value at that time. The impression is that the Defendants were
negligent in valuing the property at the said sale price.
In evidence Mr
Holtom expanded that part of his report, which said that between February and
August 1988 a significant increase in value in the residential market of
between 35% and 40% was achieved. He said that the market started to take off
at the end of February and by May an increase of 30% had been achieved.
Before I turn
to my conclusions in this case it may be convenient to recite the principles of
law which I must apply. The onus of proof is dealt with in Jackson and
Powell on Professional Negligence, 3rd ed, para 3-352 at p219:
The onus of
proof rests ‘fairly and squarely’ upon the plaintiff in an action for
professional negligence against a surveyor. It is not enough to prove that he
was wrong. Negligence must be distinctly proved. It may even be difficult to
prove he was wrong by showing that the defendant’s valuation was significantly
higher or lower than another surveyor’s valuation or the price actually
achieved or that his estimate of individual items making up the calculation was
on the high side. It must be shown that his valuation and calculations were
such that they could not have been arrived at by the exercise of reasonable
care and skill. Although it is sometimes stated that the onus of proof in a
professional negligence action is a heavy one, the standard is no more than
that applicable to civil actions generally, namely proof on a balance of
probabilities.
At para 3-42
on p211 the standard of care and skill required is dealt with:
In common
with other professional persons and in the absence of an express term to the
contrary the standard required of a surveyor is that of the ordinary skilled
man exercising the same skill as himself. He is variously described in the
cases as the ‘reasonably skilled’, ‘competent’, ‘prudent’ or ‘average’
surveyor.
At para 3-43
at p212 the text reads as follows:
The standard
is not relaxed if the required task is carried out in unusual circumstances,
for example a valuation in a market showing signs of deep depression or of
unusual buoyancy or volatility. Whether the standard is complied with in a
particular case, however, must be determined having regard to the circumstances
and knowledge current at the time when the surveyor was required to carry out
his instructions. The court must be careful ‘not to be wise after the event’.
Yet guarding against hindsight may be difficult where a long time has elapsed
between the allegedly negligent act and trial or where the state of knowledge
at a particular time is in issue.
There are very
helpful dicta in the judgment of Watkins J in Singer & Friedlander Ltd
v John D Wood & Co (1977) 243 EG 212, [1977] 2 EGLR 84. At p213 the
learned judge said:
The valuation
of land by trained, competent and careful professional men is a task which
rarely, if ever, admits of precise conclusion. Often beyond certain
well-founded facts so many imponderables confront the valuer that he is obliged
to proceed on the basis of assumptions. Therefore, he cannot be faulted for
achieving a result which does not admit of some degree of error. Thus, two able
and experienced men, each confronted with the same task, might come to
different conclusions without any one being justified in saying that either of
them has lacked competence and reasonable care, still less integrity, in doing
his work. The permissible margin of error is said by Mr Dean [one of the
experts in that case], and agreed by Mr Ross [the other expert], to be
generally 10 per cent either side of a figure which can be said to be the right
figure, ie so I am informed, not a figure which later, with hindsight, proves
to be right but which at the time of valuation is the figure which a competent,
careful and experienced valuer arrives at after making all the necessary
inquiries and paying proper regard to the then state of the market. In
exceptional circumstances the permissible margin, they say, could be extended
to about 15 per cent, or a little more, either way. Any valuation falling
outside what I shall call the ‘bracket’ brings into question the competence of
the valuer and the sort of care he gave to the task of valuation.
On the same
page, but further on in the judgment Watkins J said:
If a
valuation is sought at times when the property market is plainly showing signs
of deep depression or of unusual buoyance or volatility, the valuer’s task is
made more difficult than usual. But it is not in such unusual circumstances an
impossible one. As Mr Ross said, valuation is an art, not a science. Pinpoint
accuracy in the result is not, therefore, to be expected by he who requests the
valuation. There is, as I have said, a permissible margin of error, the
‘bracket’ as I have called it. What can properly be expected from a competent
valuer using reasonable skill and care is that his valuation falls within this
bracket.
The only way
the plaintiff’s claim is now put is that the minimum market value which a
competent surveyor should have placed on the property was £173,000. As Mr
Croker valued it at £125,000, the plaintiff’s loss is £48,000. This is not a
case where any specific allegation of omission or commission is now made
against Mr Croker. The plaintiff’s case rests principally, if not entirely, on a
consideration of sale prices obtained in the case of properties which Mr Holtom
says are comparable.
Of Mr Holtom’s
five comparables only two were sold prior to the exchange of contracts on July
1 1988. I take that date rather than May 27 1988, when Mr Muldoon accepted Mr
and Mrs Scanlon’s offer of £125,000, because, if the market had risen before
July 1 1988, it would of course have been Mr Croker’s duty to inform Mr Muldoon
of that rise. I am quite certain that, if the value of his property had increased
before July 1 1988, Mr Muldoon would have withdrawn.
Comparable 5,
Flat 6, Seapoint, Martello Park, was sold for £196,000 on March 8 1988. The
estate agent’s particulars prior to the sale describe it as a luxury
second-floor flat built eight years earlier, two of the three bedrooms having
luxury en-suite bathrooms. I note that at the beginning of the 1988 season,
before the market had taken off, it was put on the market at £205,000. All
those factors indicate to me that this was a superior property and not a true
comparable. Comparable 4, Flat 5, Fourwinds, 32 Banks Road: completion of its
sale was on May 6 1988 at £142,500. It is described as a spacious, three
bedroomed, second-floor flat with extensive views over Poole Harbour. That had
been marketed at £140,000. Mr Croker should have known of this sale. Comparable
1, Portside, 14 Shore Road, Sandbanks, was sold by auction on July 26 1988 for
£170,000. Comparable 3, a two-double-bedroomed flat at 6 Sandhills, 40 Banks
Road, Sandbanks, achieved a sale price of £137,000. Completion was on September
13 1988. It was marketed on a date about which there has been no evidence for
£139,000. Finally, comparable 2, a flat at 1 Beach Walk, Banks Road, Sandbanks,
described as a three-bedroomed, ground-floor, luxury apartment built in 1987,
was marketed on a date unknown for £190,000. The sale was completed on
September 23 1988 for £175,000.
Of course, the
fact that higher prices were subsequently achieved for other properties may be
evidence that a surveyor’s valuation was such that it could not have been
arrived at by the exercise of reasonable care and skill. But, in a rising
market, what actual indication would Mr Croker have had that a value of
£125,000 for a property which Mr Holtom described as neglected and requiring
complete modernisation was outside a reasonable bracket? On the evidence, he would only have had
comparables 4 and 5, of which no 5, I have held, is not truly comparable.
There are two
other relevant facts which have emerged from the evidence. The first is the
offer price prior to auction in the summer of 1987 of £94,000. It has not been
suggested that that was not a reasonable value to put on the property at the
time it was made. If one takes that figure as the base for an increase of 35%
to 40% for the following year, it suggests a valuation in May-July 1988 of
£126,900 to £131,600. £173,000 would represent an 84% increase.
The second is
the fact that Mr Muldoon was willing to accept £125,000, despite his wife’s
misgivings that it was too low. The strong impression I received from Mr
Muldoon’s evidence is that he was very alive to the state of the property
market in this area: see, for example, his withdrawal of the property from
auction in the summer of 1987 because he thought the property was worth £100,000
and not £94,000. I bear in mind that Mr Muldoon is not an expert and would not
have had all the information that would have been available to Mr Croker. But,
if Mr Muldoon had any reason to believe that £125,000 could in any way have
been bettered, I am sure he would have acted upon if.
Mr Holtom
states in his report that, because of the state of the market in 1988, a wider
than normal variation must be adopted on any valuation figure. He suggests that
the range is 15% to 20%. If one takes £125,000 as being at the bottom of the
range, the upper bracket would be £143,650 to £150,000. I am not satisfied on
the evidence I have heard that this property was worth even £143,750 in May to
July 1988. Nor am I satisfied on the evidence that during that period, and not
by way of hindsight, there was any material then available upon which a
competent surveyor, exercising reasonable care and skill, would have arrived at
a conclusion that the sum of £125,000 was outside the bracket into which any
proper valuation should have fallen.
In the
circumstances the plaintiff has not made out his claim on the evidence that I
have heard and I dismiss it.
Mr McCahill, I
propose subject to what you say, to dismiss the claim and award the defendants
its costs.
Claim
dismissed with costs.
