Plaintiff agreeing to sell to his brother his half-share of jointly owned land – Agents instructed to agree a price – Agents agreeing valuation of £70,000 – Plaintiff selling share to brother – Brother selling land two years later for £750,000 – Plaintiff claiming agent had negligently valued land – Judgment for plaintiff
The plaintiff’s father purchased an 84-acre plot which was situated three quarters of a mile to the west of the village of Felsted, bounded to the south by the River Chelmer and to the north by a disused sugar beet factory. The land was east of Stansted Airport. It had been used for dumping the sludge produced during the washing of sugar beet, a process which created good quality topsoil for which there was a ready market. The factory had become derelict and in 1984 a village policy statement was published, which stated that proposals for light industrial development on the site would receive favourable consideration. In August 1986 Essex County Council published their structure plan which indicated that some of the Stansted housing demand would be accommodated within an area west of the airport. On the death of the plaintiff’s father the plaintiff and his brother inherited equal shares in freehold lands which included the 84 acres in Felsted. As part of an agreement to divide the lands between them, the plaintiff agreed to sell his share in the 84 acres to his brother. The plaintiff instructed the defendant and the brother instructed John D Wood & Co. In September 1986 the defendant valued the land at £70,000 and the brother’s agent agreed to the valuation. The plaintiff sold his share to his brother for £35,000. In September 1988 the brother sold the land to a third party for £750,000.
The plaintiff issued proceedings against the defendant and claimed that it had failed in its duty by failing to inform the plaintiff that the land had had significant development value for both industrial and housing use which the agreed valuation of £70,000 had wholly ignored. The plaintiff contended that although the Essex structure plan had indicated development west of the airport, development east of the airport for airport-related housing development had not been ruled out, which included the relevant land. The defendant contended that the land had no significant potential development value in autumn 1986, and that it had reached the conclusion which any competent valuer would have reached on the basis of the information and material then available. The defendant submitted that the subsequent offer of £750,000 was an unforeseeable aberration.
Held Judgment was given for the plaintiff.
1. In September 1986 the 84 acres had had significant housing potential and the defendant’s valuation failed to recognise it or take it into account, and was accordingly an incorrect valuation. On the open market the land would have commanded significantly more than £70,000.
2. The defendant had failed to use proper care or skill in making its valuation. It had formed the erroneous conclusion that the land could not be used for house building, and therefore failed to investigate, or to properly consider, the planning situation. Had the proper care and skill been used the defendant would have concluded that the land had significant potential for housing development.
3. Although the plaintiff’s brother’s agent might not have been prepared to agree that the land had development potential, the defendant would have then been obliged to inform the plaintiff of the potential and of the existence of a special interest purchaser and seek the plaintiff’s instructions. The plaintiff would have been determined to have obtained his share, it was probable that the land would have been sold for the joint benefit of the plaintiff and his brother and would have realised a price of not less than £750,000. Therefore the plaintiff was entitled to damages equivalent to his half-share of £750,000, less the conveyancing and legal fees which he would have incurred.
Daniel Worsley (instructed by Birkett Long) appeared for the plaintiff; Oliver Ticciati (instructed by Berrymans) appeared for the defendant.
