Barclays Bank Plc v TBS & V Ltd

A professional valuation is not negligent merely because another competent valuer would have reached a different figure. The court must first determine the correct value at the valuation date and then identify the permissible margin of error, having regard to the property and the circumstances of the valuation. Liability requires the impugned valuation to fall outside that bracket. Only then does the court examine whether the valuer acted in accordance with acceptable professional practice.

For a trade-related property, the valuation should ordinarily assess the maintainable profits of a reasonably efficient operator and apply an appropriate multiplier. The analysis must reflect the property’s actual characteristics, including ancillary accommodation and operational advantages. A valuation within the permissible margin remains non-negligent even if aspects of the methodology or explanation could have been clearer.

Barclays Bank lent money to purchasers acquiring a leasehold care home. Before advancing the loan, it instructed TBS & V Ltd to value the property. TBS valued the leasehold interest at £350,000. The care-home business later failed, the lease was forfeited, and Barclays claimed its lending loss, alleging that the valuation had been negligent.

The principal issues were whether the valuation fell outside the permissible margin of error for a difficult and unusual property, whether the valuation methodology was professionally acceptable, whether the loan offer was conditional upon a satisfactory valuation, and whether a later refinancing affected causation or loss.

1. Claim dismissed. The valuation was not negligent. The court assessed the correct value at £330,000 and held that the defendant’s valuation of £350,000 fell within a 15% permissible margin of error.
2. The applicable approach, derived principally from Merivale Moore PLC v Strutt and Parker [2000] PNLR 498, required the court first to determine the correct value at the valuation date and the appropriate bracket of permissible valuations. The margin depended on the facts. This was a rare leasehold care-home property with limited comparables and substantial ancillary accommodation, but the circumstances did not justify a margin exceeding 15%.
3. The court then considered the professional standard. A valuation outside the bracket would call for examination of whether the valuer had followed practices accepted by a respectable body of professional opinion. The court could also subject professional opinion to logical analysis. However, liability focused on the result rather than simply on the valuation methodology.
4. The proper valuation involved an EBITDA and multiplier approach under the RICS guidance. The reasonably efficient operator was modelled as a two-person owner-occupier. Appropriate wage costs were £115,000, producing EBITDA of £77,500. The ancillary accommodation was relevant because it facilitated operational savings and offered additional income-generating potential. A multiplier of 4.25 was appropriate.
5. The court accepted that the loan offer contained an implied term making the lending conditional upon a valuation satisfying Barclays’ lending criteria, applying the principles in Marks and Spencer PLC v BNP Paribas [2015] UKSC 72. It would also have rejected the argument that the 2008 refinancing extinguished the defendant’s responsibility, distinguishing Preferred Mortgages v Bradford and Bingley PLC [2002] EWCA Civ 336. Those issues were unnecessary to the result. Contributory negligence was likewise left undecided.