Valuer Corby Kane Howard Partnership has been ordered to pay more than £1m in damages. A judge found that, in valuing two Cumbrian hotels, a Morecambe hotel and a Blackpool flat and leisure club development, it had got it “egregiously wrong”.
Hart J did however make a 20% reduction in the damages sought by Speshal Investments Ltd, which had relied upon the valuations when making a £1.9m loan on the security of the properties to enable a company to buy them, to reflect its contributory negligence. He said that Speshal should have realised that there was a “serious possibility” that Corby Kane’s valuations were unreliable.
This was because of a “wild discrepancy” between the level at which Corby Kane had valued the properties – nearly £3m – and the amount the borrower was set to pay for them, which was a little over half that amount.
The judge awarded Speshal just over £1.1m of the £1.38m it was seeking, after hearing that it had relied upon Corby Kane’s valuation in advancing the four-month loan to Cheyne Lodge Investment Ltd.
Cheyne failed to keep up repayments and Speshal duly appointed receivers, but the four properties were sold for a total of only £875,000.
The judge said that there were only two possible explanations for the “wild discrepencies” between the £1.6m that Speshal knew Cheyne was paying for the properties, and the £2.99m that Corby Kane had said they were worth: either Cheyne had a “fantastic bargain on its hands”, or the valuer had “got it wrong”.
Speshal Investments Ltd v Corby Kane Howard Partnership Ltd (t/a HBSV) Chancery Division (Hart J) 5 March 2003.
References: PLS News 5/3/03
