Dale House Developments LTD against Brian C Ronnie and Ryden LLP (Court of Session) [2024] CSOH 99 (06 November 2024)

Dale House Developments LTD against Brian C Ronnie and Ryden LLP (Court of Session) [2024] CSOH 99 (06 November 2024)

The first defender failed to exercise the reasonable skill and care required of an independent valuer in the circumstances. He did not properly cross-check his residual valuation of the hotel scheme with available market comparables, failed to question the assumptions underlying the Meininger scheme, and did not consider the value of the ground floor retail/leisure element as a sense-check. These omissions constituted a departure from normal and usual practice as set out in the RICS Red Book and VIP 12. As a result, the valuation was flawed and the pursuer suffered loss by being deprived of a profit share to which it would otherwise have been entitled.

Citation
[2024] CSOH 99
Parties
Pursuer: Dale House Developments Limited; First Defender: Brian C Ronnie; Second Defender: Ryden LLP
Jurisdiction
Scotland
Judgment Date
06 November 2024
Procedural Posture
Commercial Action (breach of Contract, Professional Negligence) / Opinion Following Proof Before Answer
Outcome
For the pursuer. The first defender and second defender are found liable for breach of contract and professional negligence.
Legal Topics
Expert Determination, Valuation of Development Land, Duties of Independent Valuer, RICS Red Book Standards, Residual Valuation Method, Cross Checking With Market Comparables
Contract Law Professional Negligence Property Law Expert Determination Valuation of Development Land Duties of Independent Valuer RICS Red Book Standards Residual Valuation Method +1 more

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Parties

Dale House Developments Limited

Pursuer

Brian C Ronnie

First Defender

Ryden LLP

Second Defender

Procedural Posture

Commercial Action (breach of Contract, Professional Negligence) / Opinion Following Proof Before Answer

Legal Issues

  1. 1 Did the first defender (independent valuer) fail to exercise reasonable skill and care in valuing the property?
  2. 2 Did the first defender fail to comply with the requirements of the RICS Red Book and VIP 12 in conducting the valuation?
  3. 3 Was the pursuer entitled to a profit share under the missives if the valuation had been properly conducted?

Ratio Decidendi

The first defender failed to exercise the reasonable skill and care required of an independent valuer in the circumstances. He did not properly cross-check his residual valuation of the hotel scheme with available market comparables, failed to question the assumptions underlying the Meininger scheme, and did not consider the value of the ground floor retail/leisure element as a sense-check. These omissions constituted a departure from normal and usual practice as set out in the RICS Red Book and VIP 12. As a result, the valuation was flawed and the pursuer suffered loss by being deprived of a profit share to which it would otherwise have been entitled.

Court Disposition

For the pursuer. The first defender and second defender are found liable for breach of contract and professional negligence.

Orders

  • The defenders are ordained to pay damages to the pursuer, quantum to be determined at a further hearing if not agreed.
  • The defenders are found jointly and severally liable for the pursuer's expenses.