A conveyancing firm has been ordered to pay £100,000 to a surveying company for failing to disclose information on the value of a property.

E-Surv Limited sought a contribution from Liverpool firm Goldsmith Williams after it was forced to pay £200,000 to a lender over a mistaken valuation.

The surveyors’ case is that the law firm failed, in breach of the terms of its contract with the lender, to advise that an applicant for a mortgage against a Peak District property had been registered as a proprietor for less than six months.

He had paid £390,000 for the property - significantly less than the surveyors’ value of £725,000 - and E-Surv argued that it would have realised its mistake if Goldsmith Williams had flagged up the relevant history.

The law firm admitted breaching an express obligation to inform the lender that the borrower had bought the property less than six months before, but denied it was obliged to inform the lender the purchase price paid.

Following a two-day hearing last month, Judge Stephen Davis, sitting in the High Court (Chancery Division), said the case raises the question of whether the Bowerman duty (on a solicitor to report to his lender client matters relevant to the valuation of the property offered as security for a loan) is ousted by the terms of the lenders’ handbook issued by the Council of Mortgage Lenders.

Davis said the surveyor was initially led into error by the borrower and was thereafter ‘careless rather than reckless’ in producing a valuation. 

The judge added that ‘due to a desire to please or pressure of time or both’ the surveyor produced a valuation he suspected was too generous.

As to the solicitors’ blameworthiness, Davis said it was difficult to reach any conclusion why the conveyancer who dealt with the matter did not report the actual purchase details to the lender. ‘There is no basis in my judgment for regarding the solicitors’ blameworthiness as significantly less than the surveyors,’ concluded the judge.

‘Although the original fault was that of the surveyors, since as I have found it was the solicitors’ role to bring the disparity to the lender’s attention, and had they done so the valuation would have been corrected, it does not seem to me that there is any material difference in that regard.

‘In short, there is no reason in my judgment to allocate responsibility anything other than equally.’

As the £200,000 settlement paid by the surveyors was not in question, he therefore directed that E-Surv is entitled to judgment against Goldsmith Williams for £100,000 plus interest.

Eddie Goldsmith, a partner at Goldsmith Williams, told the Gazette he was ‘disappointed’ with the judgment and would be seeking to appeal.