Valuation negligence test clarified by Court of Appeal

In May, the Court of Appeal handed down its decision in Bratt v Jones [2025] EWCA Civ 562, clarifying the test for liability in a case of alleged valuer negligence, as well as outlining some thoughts in passing about how the test might be addressed by the Supreme Court in future. 

Although the law had seemed fairly settled, the claimant contended that there was more to be read in the precedents than had previously been detected, and that no specific findings as to what a valuer had done wrong – beyond reaching a valuation figure that fell outside of a reasonable margin of error – was necessary to establish liability. 

Neither the trial judge nor the Court of Appeal had any doubt that this was wrong. The parties had, rightly, proceeded on the basis that the valuation had to fall outside a reasonable bracket if there were to be any liability, but the courts made it clear that in addition to this, the claimant has to demonstrate that the valuer failed to reach the standards of a reasonably competent valuer in their approach or methodology in order for a finding of negligence to be made.

The Court of Appeal also took the opportunity to set out some thoughts as to whether this was an approach that would withstand scrutiny from the Supreme Court.

The parties could not agree a price, however, and the defendant, Mr Jones, was instructed to value the site in an independent expert determination. He carried out a valuation and assessed the market value of the site at £4,075,000. The resulting purchase price was £3,529,500, which reflected 90% of the market value less various deductibles.

The defendant's assessment included residual and comparable valuations. In undertaking the latter, he identified a site that he considered so similar that he placed exclusive reliance on it as the basis of his comparable valuation, resulting in a market value of £4,075,000.

Mr Jones's residual calculation produced a market value of £3,634,000, which he considered supported his comparable valuation. However, while unbeknown to Mr Jones at that time, the residual valuation contained a mathematical error, without which the residual valuation would have returned a market value of around £4.6m. Mr Jones, however, maintained that he would have still concluded that the residual valuation supported his comparable valuation as it was within the same tone. 

The claimant commenced a claim on the basis that the defendant had negligently undervalued the site, alleging that it was worth around £8m. This claim was supported by expert evidence although, unusually, that evidence did not itself include an opinion as to the reasonable range of opinions that could have existed.

The defendant also relied on expert evidence, which concluded that Mr Jones had been reasonably competent in undertaking the valuation – noting that not every error is a breach of duty – and that his valuation fell within a reasonable margin of error, which was +/-15% of £4.2m.

Moreover, it was contended on behalf of the claimant that, at this stage, the evidential burden in fact switches to the defendant valuer who must then demonstrate why they are not negligent.

The claimant relied in particular on the cases of Merivale Moore v Strutt & Parker [2000] PNLR 498 and Legal & General Mortgage Services Ltd v HPC Professional Services Ltd [1997] PNLR 567 as authorities that the focus of the enquiry should be exclusively on the end result, rather than the process the valuer followed. 

While the claimant accepted that there may be cases where the valuer escapes a finding of negligence even where their valuation falls outside a reasonable margin – namely, he said, if a defendant can satisfy its evidential burden to demonstrate that it had not acted negligently in the circumstances of the case – he argued that this would be rare, and that the onus was on the defendant to show that it fell in this exceptional category.

Mr Jones, however, submitted that, while these cases showed that a precondition to liability was that the valuation fell outside a reasonable margin, the underlying requirement for a finding of liability must always be by reference to the Bolam principle: namely, a finding that the defendant acted in a manner that no reasonably competent valuer could have done.

In this way, Mr Jones submitted, valuers' cases are no different from any other professional negligence case, namely a claimant must always plead and prove that the defendant has failed to act in accordance with the practices of a reasonably competent group of peers.

At trial, Mr Jones was at pains to emphasise that, in anything other than the most straightforward cases, the court will – in order to arrive at its own 'true' valuation of the property – need to carry out a detailed consideration of the approach and actions taken by the valuer in any event. This will by necessity include an assessment of whether the approach and/or steps taken at each of the stages were reasonably competent. 

The assessment of what is considered to be reasonably competent, furthermore, will often reflect a range of approaches, on the basis that valuation is an art not a science. It is generally accepted that not every competent valuer will undertake the same steps or indeed adopt the same approach.

Further, and as mentioned above, not every error will amount to a breach of duty. As such, a non-negligent range will encompass every result that could be arrived at by a reasonably competent valuer.

The judge found that the court's task was to form its own view as to the most likely correct value and then identify an appropriate margin of error. Should the original valuation fall within the margin, there would be no negligence. Should it fall outside, then the court must examine whether the valuer had failed the Bolam test.

The judge made it clear that, ultimately, the question of negligence could not be decided solely by whether the valuation fell outside the margin but by reference to whether the valuer acted 'in accordance with practices [that] are regarded as acceptable by a respectable body of opinion in his profession'.

The court agreed with the defendant that, in complex valuations, an assessment of the 'true' value will often require considering what a reasonably competent approach would be to each part of the calculation. If the court finds that the actions the valuer took would be considered acceptable by their professional peers, negligence cannot be established.

There will often be some differences between the way different valuers approach a valuation, and there can often be more than one single accepted practice in respect of the issues that arise. Where there are a range of approaches that the profession would generally accept as being reasonably competent, this should be reflected in the court's assessment of the reasonably competent range.

In the present case, the judge found Mr Jones to have acted competently in his reliance on one comparable site – supported by a residual cross-check – and in assessing the comparable evidence by reference to the way a hypothetical purchaser would have approached its valuation of the land, market value being a question of what the market would pay for it. 

The judge found that the defendant's approach was therefore likely to lead to an accurate assessment of the site's true market value 'or thereabouts'.

The judge considered each stage of the valuation process and concluded that the site's most likely market value was £4,746,860. This placed the defendant's valuation within a margin of up to 15%, which the judge agreed was an appropriate margin of error for the site. As such, there was no need for the judge to compare Mr Jones's practices to a respectable body of his peers any further, and the claim was dismissed.

However, the claimant appealed on the basis of four grounds, including two relating to the judge's approach in law.

The Court of Appeal rejected both of these arguments, making it clear that 'whilst a valuation outside the acceptable bracket is an indication that something may have gone wrong, a claim in negligence or breach of contract against a valuer cannot succeed unless the court is satisfied that the valuer has failed to exercise due and proper professional skill, care and diligence in undertaking the valuation'.

The court did not disagree with or disapprove of the trial judge's approach in any respect. It confirmed that the first question, in accordance with Merivale Moore, is whether the valuation falls outside a reasonable margin of error and if so, the second question is that of the valuer's competence, that is, the Bolam test. 

In respect of the latter, the court made it clear that the legal burden of proving negligence was not, as the claimant had argued, reversed – it being unhelpful to refer to an 'evidential' burden in circumstances where it is merely the case that the claimant must plead and demonstrate all aspects of its claim, in other words that the burden of proving negligence rests at all times on a claimant.

On this basis, in circumstances where the defendant's valuation was found to have fallen within an appropriate margin of error, the trial judge was correct in finding that there was no requirement to consider the Bolam test. 

But if the valuation had been found to be outside a reasonable margin of error, there would have had to have been a clear finding as to what the valuer had done that constituted negligence.

The court did not disagree with the trial judge's finding that only pleaded allegations of breach of duty could be considered in this respect and this ultimately had not been done by the claimant.

The good news for valuers and their insurers is that Bratt emphasises the need for a claimant both to plead and to prove the specific respects in which it is alleged that a valuer has conducted a valuation in a manner no reasonably competent peer could have done. 

It also reaffirms that a claimant's evidence must address the reasonable margin for error in respect of the particular valuation, as this margin is a question of fact in each case.

Bratt has therefore affirmed the primacy of the Bolam principle, so defendant valuers can rest easy in the knowledge that they will only be found to have acted negligently where the court has found something specific they did in their approach to the valuation in question was outside the bounds of reasonable professional competence. 

There will be no finding that a valuer was negligent simply because a judge comes to a different view about the 'true' overall valuation figure. Furthermore, for now at least, additional protection remains for valuers that, even if a methodological mistake has been made that has distorted the overall valuation, they will not be found liable for damages unless that valuation falls outside a reasonably competent range.

This point was not, however, fully argued; but should it ever find its way to the Supreme Court it is possible that its determination will depend on that court's view about the scope of the valuer's duty, and whether said duty was to provide a reasonably competent overall valuation or to exercise reasonable care and skill to avoid error in the valuation report.

There are potentially strong arguments both ways on that – and that question might be viewed as one that depends on the facts of the individual valuation; valuers may well have an eye on this when setting out the scope of their duty in retainer letters in future. 

For now, however, the Court of Appeal has reaffirmed and clarified the orthodox position in respect of the law of valuer's negligence.