Lloyds TSB Bank Plc v Edward Symmons & Partners

In a professional negligence claim against a valuer, the claimant must first show that the valuation fell outside the permissible range of non-negligent valuations for the particular property and market. If that threshold is met, the court then considers whether the valuer failed to exercise the skill and care expected of an ordinarily competent valuer. A careless step which does not produce an erroneous valuation does not establish negligence. The permissible range must be assessed in context, having regard to local demand, the property’s characteristics, available comparables and the assumptions reasonably open to competent valuers.

The claimant bank instructed the defendants, a firm of surveyors and valuers, to value a difficult former factory converted into a business centre. The defendants valued the property at £525,000. The bank alleged that the valuation should have been approximately £1.1 million and claimed the difference as damages after transferring its security to a company associated with the borrower.

The central issues were whether the valuation was negligent, whether the defendants had adopted an impermissible valuation methodology, and whether the bank had proved loss.

1. Claim dismissed. The valuation of £525,000 was within the permissible range of non-negligent valuations for the property in September 1998. The claim therefore failed at the threshold stage.
2. The applicable professional negligence standard was the ordinary skill and care of a reasonably competent valuer, applying the principle in Bolam v Friern Hospital Management Committee [1957] 2 All ER 118. In valuation cases, however, the court must first determine whether the figure falls outside the permissible bracket. The bracket is fact-sensitive and cannot be fixed mechanically by reference to percentages in other cases.
3. The authorities reviewed by Buxton LJ in Merivale Moore Plc v Strutt & Parker [2000] PNLR 498 established that falling outside the bracket is necessary to liability, but does not automatically establish negligence. If the claimant crosses that threshold, the defendant must explain how the valuation could have resulted without a failure to exercise appropriate skill and care.
4. The property was difficult to value. Local demand in Gosport was limited, competing accommodation was available in better-favoured locations, and the property contained more space than the local market was likely to absorb. It was professionally legitimate to exclude space judged incapable of being let. The defendants’ assumptions about rents, service charges, repairs and reletting were within the range reasonably open to competent valuers. Their approach valued the property rather than the borrower’s business.
5. The court also rejected the alleged errors concerning comparable properties, price-per-square-foot checks and advice about a sale to the borrower’s associates. The alternative issue of loss was not necessary to the decision, but the bank had not shown that it would have achieved the alleged market value, or what course it would otherwise have taken.