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Mortgages.

The editor of this section of the site is Nigel Clayton of Kings Chambers, Leeds and Manchester. Nigel also maintains the specialist website dealing with mortgages at www.legalmortgage.co.uk

There are two cases this month:
  • A mortgage valuer was liable for damages in deceit where he had no honest belief in his valuations.
  • The court granted judgment in default on part of the Land Registrar’s claim to recover an indemnity after having paid out compensation following a mortgage fraud.

Mortgage valuations

Deceit

Mortgage Express v Countrywide Surveyors Limited
[2016] EWHC 224 (Ch)

Summary

A mortgage valuer was liable in deceit in respect of three out of four categories of claim, where he had no honest belief in his valuations, and where subsequent communications did not have the effect of correcting his valuations.

Facts

ME sued its panel valuers CWS for damages for deceit (fraudulent misrepresentation) as a result of incurring losses of over £3.3M on lending on the security of a number of over-valued new-build flats in a marina development. The flats had been given rental valuations of between £1,300-£1,540 pcm when in fact they were only worth £600-£750 pcm. Following an internal review of the valuations, CWS was subsequently able to alert ME to the possibility of overvaluations, giving rise to issues of causation. Sample claims in four categories were listed for trial.

Decision

It was an essential element of a claim in deceit that the defendant had acted fraudulently, that is that he made a false statement knowingly, without belief in its truth, or recklessly, careless whether it be true of false (Derry v Peek (1889) 14 App Cas 337). The burden of proof was on ME. The standard of proof was balance of probabilities.

The court did not find the particular valuer to be an honest witness, and on a balance of probabilities found that he had no honest belief in his valuation. It was the figure required by the brokers and that was the reason for the valuation. He was at the very least reckless in the sense that he did ... THIS IS AN EXTRACT OF THE FULL TEXT. TO GET THE FULL TEXT, SEE BELOW

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