Brownrigg v. Leacy related to a claim for damages by the plaintiff, Mr Frank Brownrigg, arising from the alleged negligence of the defendants in respect of valuations they carried out of his lands in 2007. The court held that auctioneers owe a duty of care when preparing valuations on behalf of an individual and that a party who has commissioned a valuation is entitled to rely on it and to assume that it has been prepared correctly and in accordance with accepted standards.
In 2007, the plaintiff farmer obtained valuations of his lands from two separate auctioneers. The first, Aidan Leacy trading as Phoenix Estates valued the land between €10 million and €11 million, while the second, Ben Kavanagh Auctioneers, valued it at €6.9 million. The plaintiff alleged that he and AIB relied on the valuations in agreeing a loan facility of €7.7 million for the purchase of neighbouring lands for €5.9 million. When the only offer of €1 million on his farm was inadequate for him to complete the purchase of the neighbouring land, he was forced to forfeit the €590,000 deposit.
The plaintiff was unable to repay the deposit to AIB and the bank subsequently obtained judgment against him for the deposit plus interest. The plaintiff in turn sued the auctioneers for damages in negligence alleging the valuations given were inaccurate and misleading.
The first named defendant, Mr Leacy, denied that a letter provided to the plaintiff in 2007 comprised a valuation or that the plaintiff was entitled to rely on it. Mr Leacy classified the letter as a “thinking of selling” letter. He claimed that he was never engaged to sell the lands while the plaintiff asserted that he asked Mr Leacy to find a buyer without advertising for which Mr Leacy would receive 1% of the sale price.
Mr Leacy relied on the fact that the word “valuation” was not used in the letter despite the reference to “current market value”, contending that no bank would rely on such a letter not marked as a valuation and in the absence of a map. The plaintiff produced evidence of attending Mr Leacy’s office around this time to collect his letter in advance of the auction and he argued that he attached considerable importance to it and if it was simply a “thinking of buying” letter he would not have gone to this effort to obtain it from Mr Leacy prior to the auction.
Mr Justice Hedigan held that the valuations were negligently prepared and described the higher of the two valuations as “hopelessly incorrect”. He also took cognisance of the fact that the plaintiff was a prudent and experienced farmer, who knew the risks involved in buying before he sold and who had made a commercial decision to do so, and that he was therefore the partial author of his own misfortune. He found the plaintiff to be contributory negligent and ordered the two auctioneers to pay damages of 50% of the €590,000 deposit forfeited plus interest. In his decision, Mr Justice Hedigan set out four factors which were relevant in determining whether the auctioneers were negligent:
- Reliance - Mr Justice Hedigan concluded that the plaintiff’s actions were indicative of reliance on the letter as a valuation
- Valuation - in deciding whether the letter was in fact a valuation the Judge held that it “was clearly intended to express a professional opinion on the value of the subject lands”
- Negligence - in assessing whether the valuation was negligently prepared, it was held that the valuation was not in compliance with internationally accepted standards and the “red book”. He found that the valuation figure fell far outside the permissible margin of error and was prepared negligently
- Contributorily negligence - it was held that the plaintiff was contributorily negligent in that he was aware of the risk in buying before he sold his own land. The judge remarked that the market had turned against the plaintiff, but that this did not absolve him of his part in the outcome. On this basis, the judge found the defendants were only partly responsible for the unfortunate consequences of that decision
This case establishes that there is a duty of care on a valuer who is retained to value a property for a vendor. This duty exists irrespective of whether the vendor has paid for the valuation or subsequently engaged the valuer to sell the property. The standard of care is that of due skill, care and diligence expected from any professional in similar circumstances.
This case would seem to suggest that once reduced to writing, a vendor is entitled to assume that any valuation has been prepared with due care and skill in compliance with generally accepted practices and guidelines adhered to by valuers. Additionally, once reduced to writing, an opinion or letter which places a value on property could be deemed to be a valuation even where the word “valuation” is absent or other provision expected from a valuation such as commission rates, details of marketing or sale etc. It would therefore seem prudent to mark any kind of correspondence “not to be used for the purposes of valuation” so as to avoid liability.