Summary

Although there was a presumption that the value of a 90-day sale by mortgagees in possession would normally be lower than the open market value, the true answer always depended on the actual market conditions which prevailed at the time of valuation.

Facts

UCB Corporate Services' ('UCB') appeal from the order of HH Judge Green QC made on 15 July 1998 entering judgment in favour of the defendant surveyors on a claim for damages brought by UCB against the surveyors for alleged negligent valuation of property for mortgage purposes. UCB granted loans on commercial properties and, for mortgage purposes, the defendant surveyors had provided UCB with a valuation of units on a small industrial estate in Kingston-upon-Thames, Surrey. The valuation of the units was used by UCB for the purpose of loaning monies to a company who wished to purchase the units in June 1990. The terms of the surveyors' retainer was to provide an opinion of the open market value of the unencumbered freehold interest in the units with the benefit of vacant possession, the valuation to be on a 90-day sale basis with UCB as mortgagees in possession. The second defendant, as employee of the first defendant, carried out a full survey of the units and area and concluded that the open market value of the units was #644,000, and that there should be no discount made for a 90-day mortgagee sale. UCB proceeded on the basis of the surveyors' valuation and loaned the company #532,000 for the purchase of the units. The company went into liquidation and UCB claimed possession of the units. The units were eventually sold at #325,000. UCB commenced proceedings against the surveyors claiming damages for negligent valuation. The judge, after considering all the evidence of the expert witnesses called for both parties, and all other evidence, concluded that the surveyors had not been negligent in setting the discounted value as the same as that of the open market value. UCB appealed contending that the judge should have found that the 90-day mortgagee sale value was less than the open market value, and should have adopted a margin of 10 per cent as contended by UCB's expert.

Held

Although there was a presumption that the value of a 90-day sale by mortgagees in possession would normally be lower than the open market value, the true answer always depended on the actual market conditions which prevailed at the time of valuation. In the instant case, the judge heard the evidence of the expert witnesses called by the parties and where the evidence conflicted, the judge preferred the evidence of the defendant surveyors' witness. The judge was entitled to prefer the defendants' expert evidence and there was no basis on which the court could interfere with his exercise of discretion. Accordingly, the judge was right to hold that the defendant surveyors had acted reasonably in concluding that no discount should be made for a valuation on a 90-day mortgagee sale basis.

Appeal dismissed.