Auctioneer .. going … going
In the Belfast High Court case of AURORA LEASING LIMITED V COLLIERS INTERNATIONAL BELFAST LIMITED before Mr Justice Weatherhup (Judgment issued 5th August 2013) the Plaintiff company claimed compensation for loss and damage alleged to have been sustained by reason of the professional negligence of the defendant Colliers International Belfast Limited as surveyors and valuers who completed a valuation of property for the purposes of a loan proposed to be made by the plaintiff to a borrower company with personal guarantees provided by Paul and Mary Campbell.
The Facts
Auctioneer`s Hammer
The defendant Colliers was instructed by the Campbells to provide a valuation in respect of their property and, acting on foot of the valuation, the Plaintiff advanced a considerable loan to the borrower company. The plaintiff claimed the defendant was negligent in conducting the valuations of the property, which was worth less than the valuations. The borrower company defaulted on the payments and judgment was obtained against the Campbells who had since been declared bankrupt and the company had been placed in compulsory liquidation. The plaintiff claimed from the defendant the amount due on foot of the loan to the company together with interest due on the loan as well as wasted costs of pursuing the borrower company and the Campbells.
Court`s Decision
Law Courts, Belfast
It was determined that the valuations were a significant overvaluation such as to amount to a breach of the defendant’s duty to exercise reasonable care, competence and skill. However, as the plaintiff did not take all measures that a reasonably prudent lender should have taken it was found that the plaintiff bank was guilty of contributory negligence to the extent of 20%. The Court awarded judgment for the plaintiff for the amount of the advance of £901,000 from which should be deducted all payments made by the company.
Conclusion
There can often be huge pressure on Auctioneers to provide a very favourable valuation on a property to enable clients secure borrowings on that property. Many valuations of Auctioneers, after the crash of the Celtic Tiger (which affected Northern Ireland also!) were called into question in circumstances where, at the time of the loan, the Auctioneer might never have anticipated that the Borrower would ever default on the loan. With the experience which has been gained by all professionals from the economic collapse in Ireland one would believe that Auctioneers will be very hesitant in the future to deliver over-generous valuations.