Negligence - Case Law Flashcards
South Australia Asset Management Vs York Montague (1996)
Main Point - Negligence. Commercial property in London overvalued by York Montague (valuer), with the property market having also collapsed not long after, compounding losses to the lender.
Case - South Australia Asset Management lent money on the valuation of a commercial property in London during a rising market. The market subsequently collapsed and the property sold well below assessed value.
Held - Negligent Valuation. The property was overvalued as at the valuation date, valuer was only responsible for foreseeable consequences of information being wrong, not for the subsequent unforeseen change in market conditions.
NB - If the lender had been correctly advised then they would only be capable of recovering the difference between what had actually been lost, under that scenario the lender would have lost the case.
United Bank of Kuwait Vs Prudent Property Services (1994)
Main point - Negligence. Excessive overvaluation of a property for security.
Case - Prudent Property Services valued a property for £2.5m pounds. The United Bank of Kuwait relied upon this valuation and subsequently advanced the sum of £1.75m pounds to their client. The client went into receivership and the property then sold at £905k pounds.
Held - The valuer was responsible for the foreseeable consequences of the information being wrong. Therefore to assess the damage it was decided to compare the negligently assessed value to the correct market value as at the date of valuation. The valuer would not be held liable for any loss attributed to a fall in market conditions.
Baxter Vs Gapp & Co (1935)
Main point - Negligence. To not work outside of your field of expertise.
Case - Gapp & Co valued a property outside his usual market and failed to make adequate local inquiries, although he acted in good faith. The valuation was excessive. The valuer failed to exercise a reasonable standard of care expected of a professional.
Gapp & Co - Valued the property for mortgage lending purposes:
- Failed to make adequate local inquiry
- Had not practiced within the locality
- Failed to enquire about the previous transactions of the property in question
- Assessed £1,800 pounds, where the property had been purchased for £800 pounds by the mortgagor and subsequently sold by the mortgagee for £850 pounds.
Held - Negligent valuation. The valuer was liable for all damages. Damages were not limited to the difference between the amount of the valuation and the true value of the property at the date of valuation, but also included other actual losses including the difference between the sum lent and the net proceeds of the sale etc.
NB - the difference between this case & Hedley Bryne is that Hedly Byre extends a valuers liability, whereas Baster Vs Gapp restricts it as long as all care has been taken.
