Valuation liability – what if you get the right answer, using the wrong approach?

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Explore:  UK Valuation

There has been a long debate as to whether the proper approach to determining liability in ‘negligent valuation’ cases is to focus on whether the valuer was negligent in (a) the way in which they went about their task (that is, the methodology), or (b) the consequential valuation (that is, the result). In the judgment of Webb Resolutions Limited v E.Surv Limited [2012] EWHC 3653 (TCC), the High Court of England and Wales was called upon to consider this issue. 

In the end, the Court considered that, as a matter of law, the right approach was to focus on the consequential valuation (that is, the result). As the Court asked, albeit rhetorically, ‘[h]ow relevant is it that the valuer made a number of errors in going about his valuation if, in the final analysis (and perhaps more through luck than judgment), his valuation was reasonable?’ However, to the extent that there are any allegations of contributory negligence (or perhaps proportionate liability) that fall for consideration, questions as to the valuer’s methodology and any culpability therein would still be relevant.

It will be interesting to see whether the same approach is ultimately adopted in Australia. Indeed, a similar issue was previously considered in Adwell Holdings Pty Ltd v Smith [2003] NSWCA 103, where the New South Wales Court of Appeal cast some doubt on this proposition when commenting that a valuation which fell within an acceptable range of values might still be negligent.