Alleged negligent valuation – Defendant valuer reporting to bank providing finance for development – Developing company requiring finance from plaintiff – Whether defendant owing duty of care to plaintiff – Preliminary issue
The plaintiff, a savings bank based in Bremen, provided finance to Bolsped Services Ltd, Bolsped, a UK company, for the purpose of acquiring land for development as a base for freight forwarding activities on two associated plots of land, the Denton land and the Dargate land at Gravesend, Kent. In early 1990, furnished with property valuations from the defendants, two partners in a firm of chartered surveyors, the land was acquired, but further finance was required to carry out the development. This was raised partly by sale of the Dargate land. Bolsped was a customer of the Gravesend branch of Barclays Bank, Barclays, and the defendants were regularly instructed by that branch to provide advice and valuations in connection with proposed loans. On December 19 1989 a meeting took place at the Denton site between the Branch manager, the first defendant, and a director of Bolsped. Later that day the first defendant drafted a report to Barclays in which, inter alia, he concluded that “the ground leasehold interest to be held by Bolsped would, on completion of the project in accordance with the information and assumptions described in this report, have an open market value for security purposes in the region of £1,100,000”. On January 10 1990 Barclays wrote to Bolsped stating the conditions upon which further loans would be made and identifying, by inference, the plaintiff as mortgagee of the freehold. On February 7 a meeting took place attended by Bolsped’s solicitors, a director of Bolsped, the Branch manager of Barclays and representatives of the plaintiffs, to arrange an apportionment of security between the two banks. On February 8 Barclays wrote to the first defendant advising that they were “no longer proceeding with helping Bolsped finance its proposed development at Denton Wharf . . . Should you conduct any further work on this project then I presume it will be on behalf of the company direct who will be responsible therefore for payment of your fees”.
The plaintiff by writ issued in December 1995 claimed damages from the defendants as partners in the firm alleging that the defendants had provided property valuations to enable it to decide whether to provide finance to Bolsped for the purpose of carrying out development on the Denton land, and that those valuations were negligent. The defendants denied negligence and denied that they owed any duty of care to the plaintiff, and a trial was ordered of that contention as a preliminary issue. The plaintiff contended that as a copy of the report of December 19 had been sent to Barclays and forwarded to Bolsped, with a view to Bolsped sending it to the plaintiff as a potential lender, the defendant owed a duty of care to the plaintiff.
Held The plaintiff’s claim was dismissed.
1. The purposes for which the report was prepared specifically included a valuation for the purpose of assessing the potential security for a loan. However, on the facts, on the balance of probability, the defendant did not know, actually or inferentially, that his report would be communicated to the plaintiff for that purpose. Nor could it be found that the first defendant’s report was likely to be acted upon by the plaintiff for that same purpose without independent inquiry. The report was commissioned by Barclays who paid for it and who remained the defendants’ clients until February 8, after the inferred date of disclosure of the report to the plaintiff.
2. The letter of February 8 was a contemporaneously prepared document which had been sent on or about that date, and the defendants were never under a duty of care to the plaintiff with respect to the report.
Peter Brunner (instructed by Constant & Constant) appeared for the plaintiff; John Greenbourne (instructed by Cameron McKenna) appeared for the defendants.
