Valuation — Valuation used as bargaining tactic — Plaintiff losing bargain — Valuation too low — Whether reliance on valuation
When a family company was being liquidated, following a breakdown of relations between the appellant and his brother, the liquidator had to dispose of an important property asset in Muswell Hill, London. The liquidator gave first refusal to each of the two brothers, and in November 1982 the appellant made an offer to purchase for £640,000, which the liquidator agreed to. The appellant then withdrew from the bargain, believing he had first offered too much, and resolved to make a lower offer. He enlisted the assistance of the respondent, Mr Douglas Garrod, an estate agent, who wrote a letter advising him, inter alia, “Taking into account the present condition of the premises and the market conditions prevailing, I consider that a realistic value for your purposes in the long term is £400,000”.
The appellant’s solicitors, on the basis of the letter, made an offer to the liquidator to purchase at the figure of £400,000. The liquidator did not accept and sold the property to someone else for £730,000. The appellant claimed that the respondent’s letter misled him as to the true value of the property; he had lost a bargain and sought damages in negligence against the respondent. In the court below (Mr Francis Ferris QC, sitting as a deputy High Court judge, April 3 1987) accepted the respondent’s answer that whatever the letter might have said, it was never intended to express an independent valuation; the appellant knew this well and never placed any reliance on it. The letter was designed as a bargaining counter in projected negotiations; the appellant’s tactics misfired and this was not due to any professional negligence on the part of the respondent.
Held The appeal was dismissed. The letter could be considered only against the background in which it had been written. During the period of negotiations over the property, the respondent had provided a number of valuations and figures for the family company and the two brothers. The outcome of the trial was a contest of credibility. Although the respondent’s letter might appear to anyone else as containing a valuation, it was written as a “tactically jaundiced letter”; on the respondent’s own evidence it was a “spoof” to be used to bargain with. That might cast doubt on the respondent’s professional objectivity; but it put a meaning to the letter which was supported by the evidence, such as the respondent’s earlier valuations. The judge was entitled to find that the appellant had not relied on the valuation; his claim had been properly rejected.
Victor Levene (instructed by Derrick & Co) appeared for the appellant; and William Crowther QC and Roger Hetherington (instructed by Berrymans) appeared for the respondent.