Cases - Alliance & Leicester Building Society v Edgestop
Record details
- Name
- Alliance & Leicester Building Society v Edgestop
- Date
- [1994]
- Citation
- 2 A11 ER 38
- Legislation
- Keywords
- Negligence in valuations and surveys - Estate agency
- Summary
-
One of the defendants, a reputable firm of surveyors, employed a certain land buyer for residential development. The land buyer was not professionally qualified. He had no actual authority to make valuations of land and buildings for a lender for mortgage purposes. He produced written valuations of hotels on the firm's headed paper. They were signed by him and appeared to be signed by a qualified valuer, but the land buyer had forged the valuer's signature. They were dishonest valuations which were part of a large conspiracy to perpetrate mortgage fraud. The plaintiff building society sued the defendants for damages for deceit in excess of £23m. The firm admitted that the valuations were fraudulent, but denied liability on the ground that the fraud committed by the land buyer was without the firm's authority and outside the course of his employment.
It was held that, although the firm was unaware that the land buyer had produced fraudulent valuations, it had held out to the plaintiffs that he had authority to value hotels by allowing him to gain and occupy a position in the firm in which, in his dealing with third parties, he was able to extend without restriction his activities as a land buyer and provide valuations for lending institutions. The firm permitted the land buyer to gain and occupy that position in consequence of its failure to monitor or curb his activities or to require him to report on his activities on a regular basis or to place more clearly defined express limits on his activities and authority.