Valuation of land for division of inherited assets between two brothers – Each brother instructing valuer – Agreed valuation of £70,000 – Land sold two years later for £750,000 – Judge finding valuer negligent in failing to recognise development potential – Whether valuation negligent – Appeal allowed
The plaintiff’s father owned 84 acres (the Felsted land) near the village of Felsted, Essex, and 12 miles east of Stansted Airport. The Felsted land was bounded to the north by a disused sugar beet factory and had been used for dumping sludge produced during the washing of sugar beet, a process which created good quality topsoil for which there was a ready market. By 1980 the factory and the Felsted land were derelict. The Felsted Village Policy Statement, issued in 1980 and still extant in September 1986, stated that proposals for light industrial development on the site would receive favourable consideration. The Essex structure plan, published in August 1986, contemplated for the first time airport-related housing to the east of the airport. In 1986, on the death of their father, the plaintiff and his brother inherited, inter alia, the Felsted land. As part of an agreement to divide the assets between them, the plaintiff agreed to sell his share in the Felsted land to his brother. An agreed valuation was required. In September 1986 M, a partner in the defendant firm instructed by the plaintiff, and his opposite number in John D Wood, the firm instructed by the plaintiff’s brother, agreed that the Felsted land had a value of £70,000. The Felsted land passed to the plaintiff’s brother who sold it in September 1988 to a property developer for £750,000.
The plaintiff sued the defendant alleging that the valuation was negligent on the grounds that the Felsted land had a significant development potential for housing use, which had been ignored. He contended that the Essex structure plan had indicated, for the first time, development east of the airport, and although nothing in the planning documents pointed in favour of the Felsted land, a competent surveyor ought to have appreciated its potential. The defendant contended that the Felsted land had no development potential at the material time and, even if it did, it was not negligent to fail to recognise it. A competent surveyor could have properly taken the view that it had none. The judge held that the valuation was negligent because M ought to have concluded that the land had significant potential for housing development. The defendant appealed. The Court of Appeal heard argument on liability alone.
Held The appeal was allowed.
The relevant planning documents available at the time of the valuation gave no comfort or encouragement to anyone considering housing development on the Felsted land. Although the plaintiff’s expert witness had recognised this, he had given evidence, which the judge had accepted, that a competent surveyor ought nevertheless to have recognised its potential. However, by asking the question whether the Felsted land had significant development potential in the autumn of 1986, and treating it as a question of fact, the judge had erred. The question was not one of fact, but of opinion. And it was a question upon which two comptetent valuers might form different views. It was only if no reasonably competent valuer, acting carefully, could have formed the view that it had no development potential, that the defendant could be held liable. By treating the question as one of fact, the judge had allowed himself to be influenced by hindsight as to what actually happened. It did not follow that because M was mistaken, he was therefore negligent. The finding of negligence was unsubstantiated and could not stand.
Andrew Bartlett QC and Oliver Ticciati (instructed by Berrymans) appeared for the appellant; Piers Ashworth QC and Daniel Worsley (instructed by Birkett Long, of Colchester) appeared for the respondent.