Cases - Dennard v PricewaterhouseCoopers LLP
Record details
- Name
- Dennard v PricewaterhouseCoopers LLP
- Date
- [2010]
- Citation
- EWHC 812 (Ch)
- Legislation
- Keywords
- Negligence in valuations and surveys - Unfair Contract Terms Act 1977
- Summary
-
The claimant ‘D’ invested in a series of private finance initiatives in the healthcare industry. D engaged ‘PWC’ to value its interest in those initiatives. PWC arrived at the figure of £5.1m and in reliance on that figure D sold its interest to a bank for £5.5m. The bank resold the interest for a much increased sum. D sued PWC alleging that its undervaluation lost D the chance of being able to sell its interest in the initiatives for considerably more than it did.
It was emphasised that in order to establish that a valuation was negligent it was not sufficient to show that the valuer fell below the standard to be expected of such a professional, but also that the valuation arrived at fell outside the range within which a reasonably competent valuer could have valued the asset (that is, the permissible bracket). It was held that a competent valuer would have valued D’s interest at £8.8m. Unlike in the mortgage lender cases, however, D was not automatically entitled to claim the difference between the negligent valuation and the true value (£3.4m), but only the value of the loss of a chance to sell the interest at a higher price than was originally achieved. Depending on the case at hand some claimants may well be able to show that, on balance, they probably would have been able to achieve the full value of the asset and claim that difference accordingly.
On the facts of this case it was held that D, armed with the correct valuation, would still have proceeded with the sale to the same bank. Further, the bank were tough negotiators and D was keen to do a deal, such that there was in fact only a 75% chance that D would have achieved an increased price of £6.5m. D was entitled to damages of 75% of that part of the increase that could be attributed to PWC’s negligence. Finally, although not relevant given the above, it was found that a clause entered into the contract by PWC limiting its liability to £1m was ‘reasonable’ for the purposes of the Unfair Contract Terms Act 1977. Both parties were savvy commercial entities with the benefit of legal advice, giving rise to the presumption that the contract was entered into with full knowledge of the clause and its effect.