Negligent valuations and lenders losses (Barclays Bank v Christie Owen & Davies)

Negligent valuations and lenders losses (Barclays Bank v Christie Owen & Davies)

The liability of a property valuer for a lender’s losses resulting from a negligent valuation is examined by barrister Nicola Rushton, of Hailsham Chambers, inthe light of Barclays Bank v Christie Owen & Davies.

Original news

Barclays Bank plc v Christie Owen & Davies Ltd (trading as Christie & Co) [2016] EWHC 2351 (Ch), [2016] All ER (D) 06 (Oct)

The Chancery Division ordered the defendant property valuer to pay damages to the claimant lender, a bank which had sustained losses after it made a loan to a borrower inreliance on the defendant’s valuation of three properties. The court found that the defendant had been negligent inadopting the wrong basis for valuing the properties and thereby over-valuing them, which had caused the claimant’s losses when the borrower was placed inadministration and the properties were sold at a price substantially lower than the defendant’s valuation. However, the court held that the bank had been contributorily negligent, so that it would only be entitled to 60% of the sum that it sought.

What was the background to the case?

The claimant alleged that the defendant had over-valued three amusement arcades inGreat Yarmouth. The borrower already owned two of them and applied for an equity release loan to buy the third. The defendant was instructed to value all three, on a trading valuation basis. It valued the three arcades at £4.2m intotal.

What issues were before the court?

The eight principal issues were whether:

  • the defendant had adopted the correct basis for the trading valuation
  • the arcades were negligently over-valued and how the court should reach that decision
  • the sale price paid by the borrower was relevant as evidence of value
  • the claimant would have made any loan on an accurate valuation
  • the claimant needed to give credit for parts of the

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About the author:

Meet Suzanna:

1. Banking and finance lawyer with experience in real estate finance, trade finance and aviation finance

2. Likes skiing, comedy shows and listening to live music

3. Thinks the law is not for the fainthearted

Suzanna has wide-ranging experience in banking and finance transactions with particular emphasis on advising lenders in the context of real estate finance and trade finance, and advising on ECA supported aviation finance transactions. Suzanna qualified as a solicitor in 2001 with Theodore Goddard (now Addleshaw Goddard LLP) and has since gained experience with Barclays Bank PLC, ECGD and Crédit Agricole CIB before joining LexisNexis.