Bratt v Jones

Professional negligence – Liability – Expert valuer – Claimant seeking damages from defendant valuer for breach of contractual obligations and tortious duties of care – Whether defendant substantially undervaluing property resulting in financial loss for claimant – Whether defendant’s actions falling below requisite standard of skill and care – Claim dismissed The claimant sought damages from the defendant in relation to his valuation, as expert valuer, of freehold development land formerly forming part of Cotefield Farm, Bodicote, Banbury, Oxfordshire. There was an option agreement between the claimant and a company, under which the company was entitled to exercise an option to purchase the site at a price representing 90% of market value, to be determined, if not agreed, by a third-party valuer. The defendant was appointed as such a valuer. The defendant valued the site at £4,075,000. The claimant contended that the true value was between £7,000,000 and £8,600,000, a margin of 10% above and below £7,800,000. As the defendant’s valuation fell short thereof, the claimant argued that he had a good claim against the defendant for breach of contractual obligations and tortious duties of care. The claimant claimed damages representing the difference between 90% of the true value of the site and 90% of £4,075,000, less agreed costs of £138,000. An issue arose whether, in a valuer’s negligence case such as the present, the focus ought to be on the result or conclusion of the impugned valuation, rather than on how the valuation was arrived at; and the extent to which it was necessary to consider whether the valuer’s actions fell below the requisite standard of skill and care, applying the test in Bolam v Friern Hospital Management Committee [1957) 1 WLR 582. Held: The claim was dismissed. (1) For a valuer, like any other professional, to be found liable for professional negligence it was a fundamental “Bolam” requirement that they be found to have acted otherwise than in accordance with practices regarded as acceptable by a respectable body of opinion in the profession, recognising that there was scope for differences of reasonable professional opinion, and that the process of professional valuation was an art as much as a science. It was, in any event, a precondition of liability that the valuation should fall outside the range permitted to a non-negligent valuer in respect of that particular type or kind of valuation. A valuation that fell outside permissible margin of error called into question the valuer’s competence and the care with which he carried out his task. But only if the valuation was outside that permissible margin did that enquiry arise. The fact that reference was made to a “condition”, or “precondition” that the valuation should fall outside the margin demonstrated that the identification of the margin or bracket could not itself be determinative of the bounds of reasonable professional competence, at least unless the process of determining the margin itself involved such an exercise: Merivale Moore v Strutt & Parker [1999] 2 EGLR 171 followed. (2) The court had to form its own view, on the evidence before it and its own evaluation, of the correct value at the valuation date applying professional practice standards which applied at that date. Having done so, the court then had to consider what the appropriate margin of error applicable to the valuation judgment should be to determine the bracket within which a non-negligent valuation would have fallen. That would depend on the facts of the particular case. If the impugned valuation was within the relevant margin of error of the court’s valuation, it was within the bracket of potential non-negligent valuations and thus negligence would not have been established. Liability was to be established by reference to the results of the valuation, not purely and simply by reference to the details of how that result was arrived at. If the valuation was beyond the margin of error in relation to the court’s valuation and therefore outside the bracket, the valuer’s competence and the care used in their valuation was called into question. The court would examine at that stage the question of whether in reaching a valuation outside the bracket the valuer had acted in accordance with practices which were regarded as acceptable by a respectable body of opinion in his profession: K/S Lincoln v CB Richard Ellis [2010] EWHC 1156 (TCC); [2010] PLSCS 156 and Barclays Bank plc v TBS & V Ltd [2016] EWHC 2948 (QB) followed. (3) The general process to be adopted by the court lent itself to two possible approaches: For the court to form its own view, based on the evidence before it and its own evaluation, of the “correct” value as at the valuation date, and to then apply a margin of error or bracket applicable to the type of valuation exercise in question consistent with the margins identified in relation to non-negligent valuations: see K/S Lincoln v CB Richard Ellis. If the valuation fell within the bracket, the claim failed irrespective, but if the valuation fell outside the bracket, the court was required to go on and consider whether the valuer had acted in accordance with acceptable practices. An alternative course would be for the court to carry out the same valuation exercise, but to adopt a more analytical approach to the determination of the margin of error or bracket by reference to various steps in the valuation process adopted by the valuer by reference to the scope of reasonable professional opinion as applied to each of those steps. (4) Here, the best evidence before the court as to the value of the site was the defendant’s own valuation carried out by reference to the comparable on a pounds per plot basis, distinguishing between market housing units and affordable housing units, a valuation essentially supported by the expert evidence. Keeping in mind that the exercise was not about reaching an immaculate or absolute value, but the most likely figure on the evidence before the court, the most likely figure for the “correct” market value of the site was the value determined by the defendant, subject to adjustment, namely £4,746,860. That figure was broadly consistent with the most likely residual valuation (£4.55m). A margin for a non-negligent valuation of anywhere between 10% and 15% was appropriate. (5) The court had considered the alternative approach of taking a more analytical approach to the identification of the appropriate bracket by reference to the various steps taken in the valuation process, applying Bolam principles. However, the present facts did not lend themselves to doing so. Adam Rosenthal KC (instructed by Gowling WLG (UK) LLP) appeared for the claimant; Scott Allen (instructed by DAC Beachcroft LLP) appeared for the defendant. Eileen O’Grady, barrister Click here to read a transcript of Bratt v Jones