Countrywide Surveyors, the UK’s largest residential survey firm, has fought off a negligence claim brought by a mortgage lender.
The High Court has dismissed allegations by Preferred Mortgages that the surveyor had priced a residential property in Norfolk at almost twice its actual value.
Preferred Mortgages had advanced a mortgage to the property owner based upon Countrywide’s £65,000 valuation, but, following the repossession of the house, claimed that it had been worth only around £35,000.
However, deputy judge Edward Bartley-Jones QC said that the true value of the property at the time of Countrywide’s report in 1998 had been around £57,000, and that the surveyor’s valuation, although “high”, fell within a 15% tolerance bracket.0
He said that Preferred Mortgages’ valuation approach, whereby it devalued a recent valuation to reflect increases in house prices in the period since Countrywide’s report, involved “a misuse of hindsight” and carried the “clear possibility of creating a figment of retrospective historical imagination”.
“The retrospective valuation must be based upon information available at the relevant date,” he said. “It seems astounding to fix a value at an earlier date by devaluing from a later valuation.”
The judge added that the lender’s reference to the nationwide index for house prices was insufficient because the index applied to the entirety of East Anglia, and any average trends over such a large area might be “wholly inapposite” to a specific trend for the particular village.
Preferred Mortgage commissioned the valuation report from Countrywide in 1998, prior to granting homeowner Pierre Wilson a £55,000 loan for the converted chapel, known as The Old Methodist Chapel, at Walpole Cross Keys, near King’s Lynn.
After Wilson defaulted on the loan, Preferred Mortgages repossessed the house and, despite carrying out substantial repairs, sold it at a loss for £59,995 in May 2002.
It claimed that Countrywide’s report had been negligently prepared in breach of the surveyor’s duties in both contract and tort.
However, Bartley-Jones said: “I cannot see how the report was negligent, or in breach of contractual duty, in reaching its valuation within the accepted tolerance bracket.
Preferred Mortgages Ltd v Countrywide Surveyors Ltd Chancery Division (Mr Edward Bartley-Jones QC, sitting as a deputy judge of the division) 25 July 2005.
Grant Crawford (instructed by Clarke Wilmott, of Southampton) appeared for the claimant; Tom Grant (instructed by Breachcroft Wansbroughs, of Leeds) appeared for the defendant.
References: EGi Legal News 26/07/05
