22nd Nov 2021


Robert Strang (Instructed by BDB Pitmans LLP (London)) for the Appellant.

1. introduction

This is a case about the loss recoverable by a lender consequent on a valuer’s negligent valuation. The valuation was of land that the borrower’s guarantor was providing as security, by means of a mortgage over the land, for the loan. The famous case of South Australia Asset Management Corpn v York Montague Ltd (“SAAMCO”) [1997] AC 191 laid down that a valuer is not liable in the tort of negligence (or in contract) for loss caused by the valuer’s negligence that falls outside the scope of the valuer’s duty of care. This is the “scope of duty principle” (or “SAAMCO principle”) which has recently been explored and explained by the Supreme Court of the United Kingdom in Manchester Building Society v Grant Thornton UK LLP [2021] UKSC 20; [2021] 3 WLR 81 and Meadows v Khan [2021] UKSC 21; [2021] 3 WLR 147 in the context of negligent advice or information given by an auditor and a doctor respectively. In this case, there is an interesting twist on the usual facts of a negligent valuation case because, as it transpired, the guarantor had no legal title to the land that was being mortgaged so that the land was of no value to the lender. That is, the security was worthless. The lender has recovered a substantial sum of damages by way of settlement of its claim against its attorneys for negligence in relation to the guarantor’s defective title to the land. In assessing the damages for the negligent valuation, the central question we are asked to decide is how precisely the scope of duty principle applies on these unusual facts.

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