Following a landmark ruling by the Court of Appeal, lenders may be able to recover significantly increased damages when claiming loss due to negligent property valuations.

The decision is likely to have significant implications for professional advisers.

The decision in Tiuta International Ltd (in liquidation) v De Villiers Chartered Surveyors Ltd [2016] EWCA Civ 661 (1 July 2016) has helped clarify the “but for” test in situations where a lender provides security on the strength of a negligent valuation and then later provides further finance on a subsequent negligent valuation.

The Court of Appeal allowed the appeal by bridging loan specialist Tuita International against the dismissal of their claim for Summary Judgment. Tuita alleged that De Villiers surveyors’ two valuations had substantially overvalued a complex which they were financing, where Tuita lent in reliance on those valuations.


A key to recovering compensation is to prove the surveyor’s negligence caused the claimant to suffer loss. “Causation” must be shown, i.e. “but for” the defendant’s lack of care, the claimant would not have suffered any loss

Calculating the loss involves comparing:

-what the claimant’s position would have been “but for” the defendant’s negligence

-the claimant’s actual position.

High Court

Originally, applying the “but for” test, the High Court dismissed Tuita’s application for summary judgment, deciding that the lender could only recover the amount involved in the second round of lending. Under that common approach defendants in negligence cases can divide up elements of a deal and limit their liability. The judge decided that any loss attributable to the first loan was not caused by any negligence in the second valuation

The Court of Appeal

The Court of Appeal took a different view in applying the “but for” test and allowed the appeal. The Appeal judges held that the test should be applied in the context of the second loan being entirely independent from the first loan. They concluded that, assuming De Villiers’ second valuation was negligent, it would be liable for any losses arising from the whole of the two-stage loan agreement, based on that valuation.


  • This case involves complex issues, and the Court of Appeal suggested that the point could have been dealt with at trial as a “preliminary issue”, rather than on a summary judgment application. The costs of that application and subsequent appeal may ultimately prove to have been wasted.
  • The dispute may now progress to trial where if the second valuation is not found to be negligent, the defendant could avoid liability.
  • Based on this decision, professional indemnity insurers are likely to raise policy premiums for surveyors. Other professionals such as solicitors, accountants and estate agents could also expect higher negligence insurance premiums.
  • As a protective measure, valuers should aim to limit their liability. A limitation clause should be included in valuers’ standard terms and conditions, limiting liability where the valuation may be relied upon to discharge a prior finance and provide new funding.

Paul Sykes is a Director in our Disputes Management department. For further information regarding professional negligence and business disputes contact

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