Case Update – Liability in Valuer Negligence Claims

The recent case of Rowland Philip Bratt v Nigel Lawson Jones [2024] EWHC 631 (Ch) has provided further guidance as to how the courts should approach the question of liability in valuer negligence cases.

Case Summary

Very briefly, Mr Bratt claimed that Mr Jones had negligently undervalued a large residential development site, resulting in Mr Bratt receiving substantially less profit under an option agreement and was entitled to damages accordingly.

Mr Jones had provided a valuation of £4.075m. Mr Bratt’s position was that the correct value of the site was c.£7.8m with a 10% margin of error either way and that the focus of the court’s enquiry should be on the end result rather than how the valuer got to the result. In other words, that to prove negligence, Mr Bratt only had to satisfy the court that Mr Jones’s valuation was outside an acceptable bracket either side of the “correct” valuation of the site as at the valuation date.

Jones’ position was that a competent valuation was c.£4.5m with a 15% margin of error either way and that the starting point to any consideration as to whether he acted negligently is the Bolam principle (Bolam -v- Friern Hospital Management Committee [1957] 1 WLR 582), i.e. that it is not enough to show that another expert would have given a different answer. Rather, the key issue is how the valuer got to the result and whether the valuer has acted in accordance with practices which are regarded as acceptable by a respectable body of opinion in his profession and, if they did, whether the methodology was applied in a reasonably competent way. If so, the valuer would not be negligent, regardless of the end result.

Relevant Principles

Having considered the relevant authorities, the judge identified (at para.162) two relevant principles to be applied in negligence claims against valuers:-

1. To establish negligence against any professional, it is a fundamental requirement that they be found to have acted otherwise than in accordance with practices which are regarded as acceptable by a respectable body of opinion in the profession (the Bolam principle); and
2. That it is, in any event, a precondition of liability that the valuer’s valuation should fall outside the ‘margin of error’ range permitted to a non-negligent valuer in respect of that particular type or kind of valuation (having regard to the guidelines set out in K/S Lincoln: 5% for standard residential properties, 10% for unusual or one-off properties, and 15% for more complex or exceptional properties).

Relevant Approach

1. The court must form its own view, based on the evidence before it, and its own evaluation, of the correct value as at the valuation date applying professional practice standards which applied at that date.
2. The court must then consider what the appropriate margin of error applicable to the valuation judgment should be, in order to determine the bracket within which a non-negligent valuation would have fallen. This will depend upon the facts of a particular case and have regard to the K/S Lincoln guidance.
3. If the valuation is within the relevant margin of error as determined by the court, then it is within the bracket of potential non-negligent valuations and negligence would not have been established.
4. If the valuation falls outside of the margin of error as determined by the court, then the valuer’s competence and the care used in his or her valuation is called into question and the court will go on to consider the Bolam principle and examine the question of whether the valuer has acted in accordance with practices which are regarded as acceptable by a respectable body of opinion in his profession.

In this case, the court determined that the appropriate margin of error was 15% and that, as Mr Jones’s valuation fell within just within the margin (at 14.15%), it was not considered to be negligent and Mr Bratt had failed to establish liability.

For further information please contact: Kenny Friday

Please note that this information is provided for general knowledge only and specific advice should be sought for individual cases.