Professional negligence – Liability – Expert valuer – Appellant seeking damages from respondent valuer for breach of contractual obligations and tortious duties of care – High Court dismissing claim – Appellant appealing – Whether judge applying correct legal test to determine liability – Whether judge wrong to fix wide range for valuation – Whether respondent’s valuation reasonable on evidence – Whether respondent’s valuation falling outside acceptable bracket – Appeal dismissed.
The appellant sought damages from the respondent in relation to his valuation, as expert valuer, of freehold development land formerly forming part of Cotefield Farm, Bodicote, Banbury, Oxfordshire.
There was an option agreement between the appellant and a company, under which the company was entitled to exercise an option to purchase the site at 90% of market value, to be determined, if not agreed, by a third-party valuer. The respondent valuer was appointed and valued the site at £4,075,000.
The appellant contended that the true value was between £7,000,000 and £8,600,000, a margin of 10% above and below £7,800,000. As the respondent’s valuation fell short thereof, the appellant argued that he had a good claim against the respondent for breach of contractual obligations and tortious duties of care. The appellant claimed damages representing the difference between 90% of the true value of the site and 90% of £4,075,000, less agreed costs.
The judge found that the respondent had made a mistake in carrying out one aspect of his valuation and would have been inclined to find that that had been negligent and caused a loss of £495,000 to the appellant. However, the judge determined that the appropriate margin for a non-negligent valuation of the property was anywhere between 10% and 15% either side of the “correct” value. Since the respondent’s valuation had been within 14.15% of the value that the judge determined to be correct, he dismissed the appellant’s claim for damages for professional negligence: [2024] EWHC 631 (Ch). The appellant appealed.
Held: The appeal was dismissed.
(1) This appeal raised the question of the legal and evidential significance of the bracket within which valuations prepared by competent valuers might reasonably differ. The appellant sought to extend the boundaries of the current law, as explained in Merivale Moore plc v Strutt & Parker [1999] 2 EGLR 171. He argued, in effect, that if the challenged valuation was outside the bracket, there was no need for a claimant to go on to prove that the valuer had failed to take adequate professional skill, care and diligence in reaching their valuation. It was, instead, for the valuer to prove he was not negligent. The valuation of land was not a precise science, and careful and competent valuers might reach different results without having breached their duties.
Whilst a valuation outside the acceptable bracket was an indication that something might have gone wrong, a claim in negligence or breach of contract against a valuer could not succeed unless the court was satisfied that the valuer had failed to exercise due and proper professional skill, care and diligence in undertaking the valuation. It was a fundamental “Bolam” requirement that a valuer be found to have acted otherwise than in accordance with practices regarded as acceptable by a respectable body of opinion in the profession, recognising that there was scope for differences of reasonable professional opinion: Bolam v Friern Hospital Management Committee [1957) 1 WLR 582 applied.
(2) The court was bound by the judgment in Merivale Moore which decided that a claimant in a valuer’s liability case had to prove both that the valuation was outside the acceptable bracket as determined the court, and that the valuer breached their Bolam duty. The judge was, therefore, right to hold that it was a pre-condition for the respondent to be liable in negligence that his determination fell outside the bracket as determined by the court. Even if the determination had fallen outside the bracket, the burden would still have rested upon the appellant to show that the respondent had acted negligently in some specific respect in accordance with Bolam principles.
The judge took into account a number of factors that led him to the conclusion that a margin “higher than the norm” was appropriate, even though he accepted that the case might not be properly described as exceptional. Those included the fact that there were a variety of issues that had arisen concerning the valuation of the site that required the exercise of judgment, together with the differing views (a significant margin of appreciation) as to how to provide for abnormals. The judge carried out an entirely appropriate evaluation of the evidence, including the only available expert evidence. He was entitled to reach the conclusion he did: Singer & Friedlander v John D Wood & Co [1977] 2 EGLR 84, Merivale Moore, K/S Lincoln v CB Richard Ellis [2010] EWHC 1156 (TCC); [2010] PLSCS 15 and Dunfermline BS v CBRE [2018] PNLR 13 considered.
(3) The criticism of the judge’s treatment of enhancements and abnormals in reaching his determination was unwarranted. The judge was following the expert evidence and there was no pleaded allegation against the respondent in relation to that aspect of the comparables valuation. There was no clear evidence before the judge as to whether the figure provided included a profit element. Moreover, the judge made no finding either way on the point.
In any event, because of the way in which the comparable valuation was done, even if determined in favour of the appellant, the net result would not have changed the judge’s assessment of the correct valuation of the site to a sufficient extent that the determination would fall outside a bracket of plus or minus 15%.
(4) The judge could not be criticised, still less be found by the appeal court to have gone wrong, in deciding not to embark upon a valuation exercise that none of the experts had done. In the absence of a finding that the judge was wrong not to conduct such an exercise, the suggestion that the appeal court should itself do so was equally misconceived. That contention was not improved by the further suggestion that the appeal court could determine a value by choosing between one of a number of different variables for the unit price of a market plot in nearby roads which (it was submitted) would have the result that the “correct” value of the site could be either about £6.8 million or £7.4 million. The appeal court would have no better basis than the judge to embark upon such an exercise.
Adam Rosenthal KC (instructed by Gowling WLG (UK) LLP) appeared for the appellant; Grahan Chapman KC and Scott Allen (instructed by DAC Beachcroft LLP) appeared for the respondent.
Eileen O’Grady, barrister
