Surveyors defeat Victorian asylum over-valuation claim

Surveyors who were accused of negligently over-valuing the site of a crumbling Victorian mental asylum have fought off a multi-million-pound damages claim after the High Court ruled that they were not responsible for any loss the landowner suffered.

The 17-acre site had been bought for £310,000 in 2003 but its value was later hugely enhanced by a grant of outline planning consent. The landowner received offers from developers in excess of £10 million for the site but was required by the local authority to provide a £5 million bond in order to finance works on the listed asylum.

The landowner needed to raise finance for the latter purpose and the surveyors were instructed by a bank to value the site. They reported that it was worth £17 million with outline planning permission and that that figure would rise to £18.7 million on a grant of detailed planning consent.

The landowner argued that it had relied on the surveyors’ report in marketing the site. Full planning permission was never in fact granted and it was submitted that, due to the alleged over-valuation, opportunities to sell the site at a reasonable price were lost. The asylum had continued to decay and the costs of reinstatement meant that the landowner was left with a site which it considered worthless.

Although the surveyors had been commissioned by the bank, the Court accepted that they owed the landowner a duty of care, both contractually and at common law. However, in dismissing the landowner’s claim, it found that that duty extended only to the provision of a report for secured lending purposes.

The Court rejected suggestions that the surveyors knew, or should have known, that the landowner would rely upon their report when marketing the site and were likely to reject offers which did not match their valuation. The surveyors therefore did not owe a duty of care to protect the landowner against the losses it claimed to have suffered.

Contact - Alan Porter