Charles B Lawrence & Associates v Intercommercial Bank Limited (Trinidad and Tobago)

The scope of a professional valuer’s duty is determined objectively by the purpose for which the valuation was commissioned and the risk it was intended to address. A valuer engaged to value land for lending security is liable for loss caused by negligent overvaluation within that purpose, but not for loss caused by defective title where title was assumed and title investigation was outside the retainer. The SAAMCO counterfactual is a flexible cross-check, not a substitute for purpose-based analysis, and may be unhelpful on particular facts. A settlement for loss outside the valuer’s duty does not require deduction for double recovery.

Intercommercial Bank lent $3m to Singapore Automotive Trading Ltd, with Rafferty Development Ltd as guarantor and a mortgage over land as security. Charles B Lawrence & Associates valued the land at $15m, assuming good title and commercial development. The borrowers defaulted, and the Bank discovered that Rafferty had no title to the land. The Bank settled its negligence claim against its conveyancing attorneys for $2.4m.

The High Court of Trinidad and Tobago awarded damages against the valuer. The Court of Appeal upheld liability but altered the interest calculation and imposed a 20% reduction for contributory negligence. The central issue before the Board was whether loss attributable to defective title fell within the valuer’s scope of duty and whether the settlement had to be deducted.

1. Disposition. Lord Burrows and Lady Rose delivered the joint judgment, with which Lord Briggs, Lady Arden and Lord Kitchin agreed. The appeal was allowed. Damages were to be assessed using the formulation and figures advanced by the appellant.

2. Scope of duty. The court determines the scope of a professional adviser’s duty by identifying objectively the purpose for which the advice or information was given, the risk the duty was intended to guard against, and whether the loss represented the fruition of that risk. The Board applied the explanations in Manchester Building Society v Grant Thornton UK LLP [2021] UKSC 20; [2021] 3 WLR 81 and Meadows v Khan [2021] UKSC 21; [2021] 3 WLR 147.

3. The valuation report was prepared on the assumption that the guarantor had good legal title. Its purpose was to value the land, not to investigate or advise on title. Loss attributable to the commercial rather than residential overvaluation was therefore within the valuer’s duty. Loss attributable to the defective title was outside that duty and irrecoverable from the valuer. The appropriate starting point was the $3m loan less the residential value of the land, assuming good title, of $2,375,000.

4. The counterfactual associated with South Australia Asset Management Corpn v York Montague Ltd [1997] AC 191, namely whether the same loss would have occurred if the information had been correct, is a flexible and useful cross-check. It is of secondary importance and may be unhelpful where it conflicts with the purpose-based analysis. Applied here, it would have produced the wrong result.

5. The $2.4m settlement with the conveyancing attorneys was irrelevant. The title-related loss had already been excluded as outside the valuer’s duty, so deducting the settlement was unnecessary to prevent double recovery, subject to there being no excess over the title-related loss.

6. The additional negligence concerning occupiers did not alter the result. It was another breach of the valuation duty, and the evidence did not establish that the occupiers reduced the land’s value below $2,375,000 or increased the recoverable loss. The 20% contributory-negligence reduction and statutory interest under section 25 of the Supreme Court of Judicature Act (Trinidad and Tobago) were applied as set out in the appellant’s calculation.

1. Privy Council — The appeal was allowed and damages were ordered to be assessed on the basis that the title-related loss was outside the valuer’s scope of duty.
2. Court of Appeal of the Republic of Trinidad and Tobago — The appeal was dismissed. The court substituted statutory interest at 12% and imposed a 20% reduction for contributory negligence, assessing damages at $2,070,379.
3. High Court of Trinidad and Tobago — Judgment was given for the Bank in negligence. Damages were assessed at $2,361,636.70 plus contractual interest, after deducting the $2.4m settlement.