Bank loses ‘unrealistic’ negligence claim against surveyors
Published: 8 August 2017
A bank was being unrealistic when it brought a professional negligence claim for £750,000 against a firm of quantity surveyors.
That was the decision of the High Court in a case involving
the Bank of Ireland and the Watts Group plc.
The bank agreed to lend £1.4m to a company to develop a city
centre property into apartments. It engaged Watts to provide an appraisal of
the borrower's building costs estimates.
The borrower later entered creditors' voluntary liquidation
and building work ceased.
The unfinished property was sold, but the bank suffered a
loss of approximately £750,000. The bank sought damages from Watts, claiming
that the appraisal was negligent, and that if it had been properly prepared,
the money would not have been loaned.
The Court rejected the claim. It held that the surveyor had
not fallen below the standard to be expected of a “reasonable monitoring
surveyor,” and he could not be expected to carry out the entire calculation
himself when his role was to simply assess the reasonableness of the figures
provided by the borrower.
The bank’s expert was not a properly independent witness.
The bank was his principal client and had provided most of his work for the last
The expert had adopted an unrealistic approach to the
allegations. Watts were paid £1,500 for producing the report. The size of the
fee was good evidence of the limited nature of the service they were expected
It reflected the fact that they were not expected to do
their own detailed calculations of cost, time or cash-flow, but instead had to
check the borrower's calculations. In contrast, the expert's report and the
associated work cost more than 30 times that amount.
That was a clear indication that the criticisms were based
on an entirely unrealistic expectation of what Watts were required to do.
Please contact Matthew Sigsworth in our Dispute Resolution
Team if you would like more information about the issues raised in this article
or any aspect of professional negligence claims.