The Court of Appeal has clarified the test for professional negligence in cases involving a property valuation exercise in Bratt v Jones. This firm represented Mr Bratt in this case, who sought to challenge Mr Jones' expert valuation of his development site in Oxfordshire which was sold to a developer pursuant to an option agreement.

In this article, we provide clarity on the legal threshold for property valuers to be found negligent, drawing a clearer understanding of how courts assess professional standards for valuers and where the legal line is drawn.

What constitutes professional negligence for valuers?

Whilst it has long been accepted that in such claims, a Claimant must prove, using expert evidence, that the valuation in question was outside of a reasonable margin of error (the "permitted bracket"), what was less settled in previous case law was the extent to which the Claimant needed to establish the methodological error that led to the incorrect valuation result.

The Court of Appeal has held that a Claimant needs to prove both that the valuation was outside of the permitted bracket, and that the valuer breached their "Bolam duty" to use reasonable care and skill in carrying out the valuation.

It does not automatically follow that an incorrect valuation means that insufficient care and skill was applied, and a valuer can escape a finding of negligence, regardless of if the result was incorrect, if they nonetheless used reasonable care and skill.

For example, if the valuer justifiably relied upon externally provided information which turned out to be incorrect, they would not necessarily then be liable for the incorrect resulting figure.

In this case Mr Jones had admitted that a double counting error had been made, which resulted in his valuation using the residual approach being some £1 million lower than it would have been had that error not been made.

The High Court however had already dismissed this as proof that the necessary care and skill had not been applied on the basis that the final valuation ultimately relied on the comparable valuation and not the incorrect residual valuation.

The Court of Appeal also considered what might happen in another scenario, where a valuer is proven to have failed to exercise reasonable care and skill, but nonetheless avoids negligence on the basis that the resulting valuation fell within the permitted margin. This can leave claimants with no means of redress and the judgment gives a clear signpost to future claimants who may find themselves in this situation to take this question to the Supreme Court.

Does the burden of proof shift to the valuer if the valuation is outside of the range?

The Court clarified that the burden of proof does not reverse once it is found that the valuation fell outside of the permitted bracket. It remains with the claimant to prove that the valuer breached their Bolam duty and does not require the valuer to prove that reasonable care and skill was used.

How is the permitted bracket determined in valuation claims?

Mr Bratt and Mr Jones also disagreed as to the correct approach to assessing the permitted bracket itself, Mr Bratt arguing it was a question of law for the court decide, having not adduced any expert evidence on the point.

The Court found in favour of Mr Jones on this question too – the judge is tasked with determining whether it is a more exceptional case requiring a higher bracket of 15% or above, or a more ordinary case demanding a bracket of (usually) 10%, on the basis of the evidence put forwards by experts.

In this case, the High Court judge felt that the correct bracket was somewhere between 10% and 15%. On the basis that the valuation was established to have been 14% away from the correct valuation, it was not therefore outside of the determined bracket.

What does Bratt v Jones mean for valuers and landowners?

Expert valuers (and their insurers) can be assured going forwards that the risk of a claim in negligence is low, unless something has clearly gone wrong not only in the resulting valuation, but also the process to get there.

Given the wide ranging approaches to market valuation exercises permitted under RICS guidance (valuation is typically considered more an "art than a science"), finding a fault in the methodology will likely be challenging for future claimants.

For landowners entering into option agreements in which the price is to be determined by an expert if not agreed, they will want to bear in mind the difficulty in challenging any result and ensure that the minimum price figure truly is one they would be content with.

To discuss this ruling and how it could impact you further, please contact Charlotte Weeks or Rob Bridgman.

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