Cases - Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd
Record details
- Name
- Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd
- Date
- [1994]; [1995]; [1997]
- Citation
- 2 EGLR 108; 1 EGLR 129; AC 191. CA
- Legislation
- Keywords
- Negligence in valuations and surveys
- Summary
-
A property company, which wished to borrow money on the security of recently acquired commercial properties, instructed a firm of valuers to value those properties. It was held that the valuers owed a duty of care to both the lender and the insurance company that issued mortgage indemnity guarantee policies, since the valuers knew that both these parties would rely on their valuations.
The valuers admitted negligence, but other aspects of the case were the subject of an appeal. In dealing with the case, the Court of Appeal emphasised that it is not part of a valuer's duty to advise the client on future movements in property prices, whether nationally or locally. To the extent that a belief among buyers and sellers as to what will happen in the future affects current prices, this should be taken into account in the valuation. However, the valuer's concern is with current value only; he or she is not asked to predict what will happen in future.
The purpose of a valuation is not to protect the client against a future decline in the property market. The essential question is the scope of the duty to the client taken on by the valuer. Ordinarily, this will simply be to provide a valuation rather than to advise on the whole transaction. Hence the valuer’s liability will normally be limited to the consequences of the valuation itself being wrong, rather than all the consequences, however foreseeable, of having entered into the transaction relying upon the valuation.