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Developments in Professional Negligence Claims – a landmark win for lenders

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A recent case insured by Temple Legal Protection has led to a landmark decision, particularly as far as lenders and surveyors are concerned.

Siding with lenders in the professional negligence case of Tiuta International Limited (in Liquidation) v De Villiers Surveyors Limited, the court’s decision is set to have extensive ramifications across the whole lending market.

The question the court had to contend with was whether a lender can recover all its loss on a refinance loan from a negligent valuer, or if their recovery would be limited merely to the “top up” advanced after the existing loan was redeemed.

Tiuta sought to recover from De Villiers the loss arising out of the refinance loan (£890,500), claiming that the second valuation report had negligently overvalued the property, causing this loss. De Villiers argued the issue of quantum, claiming it can and should only be responsible for the second valuation report. For if the second report was negligent then they should only be responsible for the “top up” advance of £272,700.

However, the Court of Appeal reversed its earlier decision and granted that De Villiers would in fact be liable for all the loss suffered because of the negligence, as the loss would have been suffered on the first loan in any event.

The result? A landmark win for lenders. This result now certainly clarifies how loss will be calculated going forward when loans are being refinanced. For surveyors however, the risk is that now they could be found negligent for bigger sums than before.


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