Background
The claimants (institutional investors and pension trustees) extended credit to a borrower secured on a commercial property, subject to a facility agreement containing a loan-to-value (LTV) ratio covenant of 75%. On 31 January 2018, the defendant valuation firm provided a valuation of £23.75 million. Disclosure in December 2025 revealed that the firm’s valuer, Mr Paul Geoffrey Hale, had initially prepared a draft valuation of £22.41 million on 21 January 2018—a figure that would have breached the LTV covenant at 79.2%. Following a telephone conversation between Mr Hale and the borrower’s agent on 30 January 2018, Mr Hale issued a revised valuation the next day at £23.75 million, bringing the LTV to 74.74% and thereby complying with the covenant.
The claimants alleged that this overvaluation was negligent, as a competent valuation would have revealed the covenant breach, triggering immediate remediation steps that would have mitigated subsequent losses when the property was sold at significantly lower value. The claimants applied to re-amend their pleading to add allegations that the valuer was influenced by the borrower’s agent in revising the valuation upward, and to introduce further particulars of breach based on the sequence of events and documents disclosed during litigation.
The Court’s Holding
Judge Halpern allowed the majority of the proposed amendments. The court held that it was properly arguable on the disclosed evidence that the claimants could infer a causal link between the conversation with the borrower’s agent and the subsequent revision of the valuation. Applying the test for permitting amendments—real prospect of success, lateness, and balance of prejudice—the judge found that it would be more unjust to prevent the claimants from advancing their revised case than to allow it, notwithstanding the lateness of the application.
The court permitted amendments pleading that: (1) the decrease in yield from 8.48% to 8% lacked reasonable justification (paragraph 34.10A); (2) the valuer failed to obtain approval from the defendant’s risk management team for the final valuation (paragraph 34.10B); and (3) the valuer unreasonably permitted the borrower’s agent to influence the valuation figure (paragraph 34.10D). The court allowed the factual narrative (paragraphs 21B–21J) supporting these allegations, subject to clarification that the inference of influence was predicated on the conversation preceding the valuation change.
However, the judge rejected certain amendments as duplicative or unclear. Paragraph 34.10C was struck as merely duplicating paragraph 34.10A while introducing ambiguity about whether an unplanned effect negated breach of duty. Paragraph 21A, citing an internal email in which the valuer described the property as “utterly awful,” was rejected as inadmissible without connection to breach or causation. The defendant was permitted to serve a supplementary witness statement from Mr Hale addressing the newly pleaded influence allegation, and trial was not delayed.
Key Takeaways
- A court may permit late amendments to pleadings where the real prospect of success exists and allowing amendments causes less injustice than refusing them, even if the application is substantially delayed.
- On evidence of a conversation between a valuer and a borrower immediately preceding an unexplained upward revision of value, courts may infer a causal connection without requiring the claimant to provide particulars of a conversation within the defendant’s exclusive knowledge.
- A valuer owes a duty not to permit the borrower to influence valuations; failing to seek approval from the lender’s risk management team for a revised valuation may constitute separate negligence even in a single overvaluation claim.
- Pleadings must relate alleged conduct to breach and causation; unexplained or conclusory allegations are struck despite factual support elsewhere in the claim.
Why It Matters
This decision clarifies the scope of a valuer’s duty of care when advising lenders, particularly the duty to resist borrower influence and to document or seek approval for material revisions to valuations. The judgment permits discovery and trial of whether a temporal connection between borrower communication and upward valuation revision suffices to establish negligence, without requiring the claimant to reconstruct the substance of a conversation to which it was not party. This has significant implications for professional negligence claims against valuers, as it permits inference of causation from circumstantial evidence when documentary records are incomplete.
The decision also reinforces that late amendments will be permitted where they do not prejudice trial dates and introduce genuinely new particulars of an existing claim, reflecting the modern civil procedure emphasis on deciding cases on their merits rather than pleading technicalities. For valuers and lenders alike, the case underscores the importance of contemporaneous documentation of valuation decisions, particularly when figures change materially, and the need for internal approvals to be evidenced in writing and preserved.