GA Property Services faces a £1m claim for damages in an overvaluation case in which, unusually, there has been no default by mortgage borrowers and the property securing the loan has never been sold.
The claim centres on Chatmohr House, which stands in around 87 acres at Romsey, Hampshire. The Victorian-built country house was valued by GA Property in 1991 at £1.65m for the purpose of a £1m remortgage. On the basis of that, and a later revaluation of £1.395m, Europe Mortgage Co (EMC) eventually advanced a total of £1.02m.
EMC later sold their mortgage book, which included the property, to LBS Mortgages. The sale was subject to a discount to reflect LBSs view of the value of the assets they were purchasing. The discount for Chatmohr House was negotiated at £530,000.
Despite the property never having been sold, EMC claims that the true 1991 value was £650,000 and that the discount that was negotiated in the sale of the mortgage book reflected GA Properties’ negligent valuation. EMC seeks to recover a shortfall of £450,000 plus interest.
The defendant argues that EMC’s losses arose from the mortgage book sale, whereas the valuation related to a loan secured on a single property, a wholly unconnected and very different type of commercial transaction.
The hearing continues.
Europe Mortgage Co Ltd v GA Property Services Ltd, Queens Bench Division (Moore-Bick J) 15 March 1999.
Nicholas Stewart QC and Neil Mendoza (instructed by Llewelyn Zietman)appeared for the plaintiffs; Christopher Moger QC and Paul Rees (instructed by Berrymans Lace Mawer) appeared for the defendants.
PLS News 16/3/99
