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Bank of Ireland (UK) Plc v Watts Group Plc [2017] EWHC 1667 (TCC)

Mr Justice Coulson was asked to considered the duty of care of a quantity surveyor providing a report to a bank as part of its lending decision.

A developer had borrowed money from the bank, before going into liquidation. The bank argued that the QS firm’s Initial Appraisal Report was negligent and that, if it had been properly prepared, it would not have permitted drawdown of the loan. The firm denied negligence and argued that it was the bank’s negligent decision to lend that caused the loss. Ultimately, the bank’s claim failed.

The development was in Clifford Street in York. The bank decided to lend more than its own lending guidelines allowed for. Part of the condition of lending was that a bank-appointed quantity surveyor would overview detailed costings for the proposed development. Watts was instructed to prepare an Initial Appraisal Report.

It was accepted that Watts owed a duty, either by way of an implied term of their appointment or at common law, to take reasonable care in undertaking their obligations, to the degree of skill and care to be expected of an ordinary monitoring surveyor of reasonable competence and experience. In any case, a valuer is not liable for losses which would have been suffered by a lender in any event, even if the valuation had been correct: Bank of Ireland v Faithful and Gould Ltd [2014] EWHC 2217.

Coulson J attacked the bank’s expert witness at [60-1], holding that he was not properly independent or reliable. On the facts, the bank failed to show that Watts had been provided with planning drawings or establish that it was negligent in its analysis of cash flow or construction costs. The Judge also found that the Bank would have loaned the money anyway notwithstanding any comments made in the report. The claim also failed as a matter of causation. Finally, the true cause of the loss was not the report but the decision to lend, applying BPE Solicitors v Hughes-Holland [2017] UKSC 21.

David Sawtell / 27th Jul 2017


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