Wasps Football Club, Trustees of v Lambert Smith Hampton Group Ltd.

A negligent valuer is liable only for loss falling within the scope of the duty undertaken. That scope is determined by construing the engagement as a whole in its commercial setting, including the purpose of the valuation and the parties’ reasonable expectations. Where a valuation is required for capital gains tax purposes, it must be an open market valuation and must address material development prospects. A valuation which materially understates an asset’s value may justify damages measured by the difference between the value reported and the proper value, where that reflects the claimant’s actual loss. A loss-of-chance claim requires a real or substantial chance, rather than a speculative possibility, of the benefit being obtained.

The trustees of Wasps Football Club claimed damages from Lambert Smith Hampton Group Ltd for negligent valuation and related representations concerning the Club’s Sudbury ground. The March 1996 valuation stated a value of £832,500 and was used in the Club’s fundraising and disposal arrangements. LSH admitted that the valuation should have been on an open market basis and that proper planning enquiries had not been made.

The central issues were the scope of LSH’s duty, the proper value of the ground, causation and loss, contributory negligence, mitigation, and LSH’s contribution claim against Nicholson Graham & Jones.

1. LSH owed a duty extending beyond the narrow calculation of capital gains tax. The valuation was required in the commercial context of a possible transfer of the ground to raise funds for professional rugby. LSH knew, or should have known, that Wasps would rely on it in deciding whether and at what value to dispose of the ground.

2. A valuation for capital gains tax purposes was required to be an open market valuation. A reasonably competent valuer should have made proper planning enquiries. The change in Brent’s planning designation and the applicable policies showed materially better prospects of residential development than the valuation reported.

3. The proper March 1996 valuation was approximately £3.25 million. This comprised £2.7 million for the development site, £88,000 for the leasehold land and £500,000 for the clubhouse. The restrictive covenant did not justify a discount. Had it been thought material, it should have been expressly identified.

4. Applying the principles in SAAMCO, Platform Home Loans Ltd v Oyston Shipways Ltd and Aneco Reinsurance v Johnson & Higgins, the loss fell within the scope of LSH’s duty. The appropriate measure was the difference between the valuation received and the proper valuation, namely £2,417,500.

5. The Court considered the loss-of-chance principles in Allied Maples Group v Simmons & Simmons, but held that the claim did not need to be assessed on that basis. Wasps had established that it would probably have realised the proper value of the ground, although not that it would have pursued the same development course as Loftus Road.

6. Wasps were not contributorily negligent and had not failed to mitigate. The Part 20 claim against NGJ failed because NGJ had not been retained to advise on valuation or commercial matters, and the Golden Share created only a qualified veto over disposal of the ground.

Wasps were entitled to damages of £2,417,500, subject to further submissions on interest and any tax issue. The Part 20 claim was dismissed.