Platform Funding Ltd v Anderson & Associates Ltd

A mortgage valuer must adopt a holistic, evidence-based approach to market value. This includes considering incentives, relevant new-build and second-hand comparables, the market and other available information, while exercising professional judgment as to the weight of each item. A valuation may be carried out without reasonable skill and care, yet the lender’s claim still fails if the negligent valuation did not cause the loss claimed. Loss caused overwhelmingly by dishonest marketing, sham conveyancing and misleading transaction information falls outside the effective scope of the valuer’s responsibility.

Platform Funding Ltd advanced approximately £250,000 on the security of a newly built flat after receiving a valuation of £275,000 from Anderson & Associates Ltd. The borrower defaulted, the flat was repossessed and sold at a substantial loss.

The lender alleged that the defendant’s valuation was negligent and advanced a no-transaction claim. The defendant also brought contribution proceedings against the solicitors involved in the conveyancing. The principal issues were whether the valuation was performed with reasonable skill and care, whether any breach caused the lender’s loss, and whether the loss fell within the scope of the valuer’s duty.

1. Valuation methodology. A mortgage valuation under the Red Book required identification of market value through a holistic assessment of all reasonably available evidence. Sale prices carried greater weight than asking prices, but the valuer also had to consider incentives, comparable new-build sales, the second-hand market and relevant market conditions. The selection and weighting of comparables were matters of professional judgment.
2. Incentives and bulk transactions. The revised Red Book provisions required consideration of incentives and the nature of transactions on the development. A valuer was not required to discover information that was concealed and could not reasonably be obtained. The evidence did not establish that a reasonable valuer could have discovered the concealed sub-sale, its price or the dishonest recycling of funds.
3. Breach. The defendant’s valuer failed to consider some matters that should have been considered, including whether second-hand comparables should be used. The court nevertheless found that, on the balance of probabilities, the valuation would have been the same had reasonable skill and care been exercised.
4. Causation and scope of duty. The lender’s loss was caused by the dishonest marketing scheme, the collusive and sham conveyancing, and the misleading presentation of the transaction. The valuer was retained to provide a mortgage valuation, not to assume responsibility for loss caused by dishonest conduct that distorted the apparent sale price and comparables. Applying the principles associated with a no-transaction claim in South Australia Asset Management Corp v York Montague Ltd, the alleged negligence did not cause the recoverable loss.
5. Disposition. The lender’s claim was dismissed. The allegations of contributory negligence therefore required no further determination. Anderson & Associates Ltd obtained judgment against Bluestone in the contribution proceedings for its unrecovered costs.