Surveyors — Negligent valuation — Negligent misstatement of prospects of obtaining planning permission — Plaintiff bank making loan in reliance upon representations — Whether plaintiff’s view that planning permission prospects were even higher than stated precluded reliance on misstatements — Judgment for bank — Appeal dismissed
The bank brought proceedings against the defendants for £270,000 arising out of a transaction when the bank granted a loan facility to a company, Bonchurch. The defendants were estate agents, auctioneers and valuers. The litigation came about because of a letter which the defendants wrote to the bank on November 2 1988. The letter dealt first with a valuation in money terms and, second, with the prospects, put as a very high possibility, of obtaining planning permission for the development of an hotel or motel on a site of just over 7 acres of land in Weston on the Green, Oxfordshire. It was admitted that the figures contained in the letter were too high, but the defendants contended that if the letter constituted a valuation, which was not admitted, then it was negligently made and in breach of the defendants’ duty of care. The judge found for the plaintiff and the defendants appealed on the limited ground that an alleged misrepresentation by the bank’s officers that the prospects of obtaining planning permission were even higher than the estimate given by the defendants should disentitle the plaintiff from alleging that it placed any reliance upon the defendants’ statement.
Held The appeal was dismissed.
1. The representation that there was a high possibility of obtaining planning permission was a negligent misrepresentation which was relied upon by the bank. The defendants could be excused only if they could establish that the interpretation placed upon their letter was unreasonable. The test was not what was the correct meaning on the construction of the letter, but what would an ordinary person understand by it. The bank had not been unreasonable in placing reliance upon the representation.
2. The valuation letter had negligently misrepresented that the market value of the property was between £450,000 and £500,000. To suggest that the bank had not relied upon that figure was impossible, and it was not necessary to show that the misstatement was the sole cause of the bank acting as it did: see per Cotton LJ in Edgington v Fitzmaurice (1885) 29 ChD 459 at p481. Even if reliance had been placed by the bank on the defendants’ mistaken view of the prospects of obtaining hotel planning permission, that mistaken view was causative of the loss suffered because the bank would not have made the loan if the defendants had competently given a sensible figure for the market value of the land.
Timothy Sewell (instructed by Williams Davies Meltzer) appeared for the appellants; Thomas Beazley (instructed by Pritchard Englefield) appeared for the respondent.
