Cases - Preferred Mortgages Ltd v Countrywide Surveyors Ltd

Record details

Name

Preferred Mortgages Ltd v Countrywide Surveyors Ltd

Date

[2005]

Citation

EWHC 2820 (Ch)

Legislation

Supreme Court Act 1981

Keywords

Negligence in valuations and surveys

Summary

In November 1998, the claimant lenders instructed the defendants to carry out a mortgage valuation of a residential property consisting of a converted 100-year old Methodist chapel in a Norfolk village. The property looked attractive, but it was subsequently found to have no mains electricity, water supply or proper foul drainage. When the purchaser (who was almost certainly a party to mortgage fraud) defaulted and disappeared, the claimants brought an action against the defendants, alleging that their valuation was negligent.

In attempting to substantiate this allegation by reference to the 'margin of error' principle, the claimants' expert witness took the price at which the repossessed property had been resold in May 2002 and then 'de-valued' this by working backwards, using the Nationwide Index of House Prices for East Anglia, arriving at a value of £30,000 as at the date of the defendants' valuation. This methodology was roundly condemned by the judge, who ruled that, if such an approach could ever be justified, it would require clear and cogent evidence of how the market had moved in the immediate vicinity.