A law firm which offers more

Call us: 0113 246 0622

Professional Negligence – A recent case on valuers / surveyors

Comments

The Commercial Litigation Team at Clarion Solicitors in Leeds specialises in professional negligence cases, be they claims against solicitors, accountants, valuers, architects, IFAs etc. 

Put in the simplest terms, professional negligence is generally made out by showing that a professional service provider has breached duties by exercising inadequate skill and care and so falls below the standard reasonably to be expected of a professional working in that particular area. 

A string of caselaw has however distinguished "valuers" as a profession, applying a different test for establishing negligence.  The recent High Court case of K/S Lincoln and others v Richard Ellis CB Hotels Limited (No 2) [2010] confirms and usefully restates the applicable principles, highlighting that the focus must be on the resulting valuation figure rather than on the methodology used by the valuer to arrive at that figure.

In K/S Lincoln Justice Coulson differentiated valuers on the basis that "all that is likely to matter will be the final figure [the valuer] puts on the asset being valued" - in contrast to other professions, the process used by a valuer to arrive at the end result is of little importance should a satisfactory figure be produced. 

The question is, what constitutes a "satisfactory figure"?  Various cases have answered this question by providing for a "margin of error".  If a valuation is within this margin, negligence will be avoided, if outside of this margin the usual test of skill and care will then be applied as described above.  Although the margins will vary on a case by case basis, Justice Coulson set out that in general the following brackets will apply:

1. For a standard residential property - variance in value of plus or minus 5% is acceptable;

2. For a valuation of a one-off property - plus or minus 10%;

3. If there are exceptional features of the property in question, the margin of error could be plus or minus 15% or even higher in an appropriate case. 

In K/S Lincoln it was held that the margin should be plus or minus 10% or perhaps even higher.  Despite an acceptance by the Court that in a number of ways the valuer had failed to exercise the expected level of care and skill, the valuation given was within these brackets and therefore a finding of professional negligence was avoided. 

If you would like to discuss any issues raised in this article then please contact Simon Young, Partner and head of our Commercial Litigation department on 0113 222 3206 or at simon.young@clarionsolicitors.com

Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.