A firm of surveyors must pay £18m in compensation after giving negligent advice to clients involved in a major property deal.
The surveyors were hired by a consortium of developers to assess the commercial prospects of a factory outlet shopping centre. The centre was in a listed building on two floors.
The developers acquired the lease on the centre for £62.85m based on the valuation produced by the surveyors. However, the centre was not a commercial success.
The developers took legal action alleging that the surveyors had been negligent in overstating the commercial rents that could be achieved and failing to prepare an accurate assessment of the centre’s ability to attract consumer spending.
The High Court held that the surveyors owed a duty to the developers to exercise a reasonable standard of care and skill in producing the required assessments and valuations.
They failed to fulfil that duty because they did not have the experience or expertise to provide satisfactory professional advice and should not have taken on the project. The surveyors had failed to carry out proper and due diligence, and had failed to adequately consider the impact of competing centres.
As a result of the inaccurate valuations, the developers had paid £18m more than the centre was worth and so were entitled to reclaim that amount from the surveyors.