Negligence - contributory negligence

Citation

(1998), "Negligence - contributory negligence", Property Management, Vol. 16 No. 1. https://doi.org/10.1108/pm.1998.11316aab.016

Negligence - contributory negligence

Negligence ­ contributory negligence

The decision of the House of Lords in South Australia Asset Management v. York Montague [1996]3 AllER 3675meant that the negligent valuer is liable to the lender only to the extent of the overvaluation which is not necessarily all of the lender's loss[1]. Thus the lenders claim that only negligence on their part which contributes to the over-valuation can contribute to that loss. In Interallianze Finanz AG v. Independent Insurance Co. Ltd [1997] EGCS 91 the valuer was deemed negligent in failing to make enquiries which would have brought to light a recent sale of the property. This led the valuer to over-value the property resulting in loss to the bank which lent money to enable the purchasing company to refinance its recent purchase. In the ensuing action by the bank against the valuer for negligence it was held, inter alia, that since the bank knew of the prior purchase it should have made enquiries of the purchaser as to the purchase price. This would have enabled the bank to consider any difference between the purchase price and the valuation. This, the court felt, amounted to contributory negligence and thus a 15 per cent deduction would be made from the damages payable by the valuer.

The same line of reasoning was followed in the case of Coventry Building Society v. William Martin & Partners [99] 48 EG 159where the defendant over-valued a Victorian town house in Putney by £75,000, the difference between the £325,000 value given by the defendant and the £250,000 which the court found was the correct figure at the time of the valuation in July 1989.

However, the court went on to find that the lender had been negligent in accepting a non-status loan at the time (1989) since the cushion of 75 per cent loan-to-value ratio was insufficient to justify this. Thus the lender had taken insufficient care to protect its own interests. However, this did not result in a reduction of the damages because the lender's negligence did not cause the damage (i.e. the amount of the over-valuation) which it was entitled to recover.

A different aspect of contributory negligence arose in the case of Theodore Goddard v. Fletcher King Services Ltd [1997]32 EG 90. This case indicates that when valuers work as part of a team of professional advisers then good communication between the various professionals within the team is vitally important if negligence actions are to be avoided.

The facts of the case were fairly straightforward. Apperley Estates Ltd instructed the plaintiff solicitors to draft the leases and instructed the defendant surveyors (Fletcher King Services Ltd) to procure the letting of the commercial premises. The solicitors negligently deleted or failed to include upwards-only rent review provisions in the draft leases. The defendant surveyors failed to notice this when they were sent the draft leases for approval. Apperley Estates suffered losses when the leases came up for review and they sued the solicitors for negligence. The solicitors were the plaintiffs in this action claiming a contribution from the surveyors under s1(1) Civil Liability (Contribution) Act 1978.

The court held that although the surveyor was not under a duty to read the entire contract before exchange, an experienced surveyor should have noticed the absence of the upwards-only rent review provision. The solicitors' duty to check the lease before exchange did not absolve the surveyor from his duty. The defendants were therefore held to be liable for 20 per cent of the damages paid by the solicitors to Apperley Estates Ltd.