Property Solicitors Lose £100k Claim Over Botched Valuation

Parties to property transactions should take note of a recent case in which a botched surveyor’s valuation managed to land a conveyancing firm in hot water to the tune of £100,000.

The case of E.Surv Limited v Goldsmith Williams Solicitors [2014] emphasises the risks for the professionals involved in conveyancing. It also demonstrates that injured parties have significant scope for recourse when dealing with professionals that fail to live up to expectations.

What Happened in E.Surv Limited v Goldsmith Williams Solicitors?

Surveying firm E.Surv Limited were instructed by lender The Mortgage Business in the valuation of a property known as Quarnford Lodge, Near Buxton around December 2005. The valuation was to be carried out in order that the borrower and property owner, Mr David Gayler, could remortgage the property for a loan of £580,000. The surveyor stated in its valuation that the current market value of the property was £725,000.

In February 2006 Goldsmith Williams Solicitors were instructed by the borrower and the lender to carry out the remortgage transaction. In the course of Goldsmith Williams’ investigations into title, the office copy entries obtained from the Land Registry revealed that Mr Gayler had been the proprietor of the property for less than six months and that the price he had paid for it was £390,000 in September 2005. Goldsmith Williams did not report this to the lender.

The transaction competed in February 2006 but Mr Gayler subsequently defaulted and the lender suffered a loss.

How Did Goldsmith Williams Become Liable for £100,000?

E.Surv settled with the lender in its claim for the over-valuation of the property for £200,000 and it sought a contribution from Goldsmith Williams under the Civil Liability Contribution Act 1978. The basis of the claim relied on the law firm’s failure to inform the lender that Mr Gayler had owned the property for less than six months or about the price that he had paid for the property. E.Surv contended that it would have changed its valuation if it had received this information from the lender.

The law firm was under a contractual obligation to inform the lender that Mr Gayler had been the proprietor for less than six months and admitted this part of the claim. It denied however that it was under an obligation to inform the lender of the price he paid for the property.

Despite this Judge Stephen Davies concluded that, “There is no basis in my judgement for regarding the solicitors’ blameworthiness as significantly less than the surveyors,” and Goldsmith Williams were ordered to pay E.Surv £100,000.

Comment

Professionals owe significant contractual duties and duties of care to their clients when carrying out transactional work. If you have been let down by a professional or feel that you have experienced professional negligence, please contact Peter Gourri today by email PGourri@rollingsons.co.uk or telephone 0207 611 4848.