Causation in valuers’ negligence cases: Reliance on earlier valuations

The Supreme Court has held that where a lender advanced money on the basis of an initial valuation, then refinanced the facility (effectively repaying and replacing the original loan) on the basis of a second negligent valuation, the liability of the negligent valuer was limited to the ‘top up’ element of any additional lending: Tiuta International Ltd (in liquidation) v De Villiers Surveyors Ltd [2017] UKSC 77.

The Supreme Court unanimously overturned the decision of the Court of Appeal, which had held that the valuer was liable for the whole loss attributable to the entire amount of the second loan. In assessing the loss caused by the valuer’s negligence, the relevant comparison was between what the lender’s position would have been if the defendant had fulfilled his duty of care and the lender’s actual position.

Applying that comparison, the Supreme Court held that even if the second valuation had not been negligent and the second loan had not been advanced, the lender would in any event have been exposed to a loss of £2.5million in respect of the sums advanced under the first loan. The lender did not intend to advance the second facility in addition to the original loan.

For more information on the decision, see this post on our Insurance Notes blog.

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