Expert advice upheld in rent ruling

The failure of a negligence claim against an independent surveyor has cheered the property world, writes Roger Pearson.

A recent High Court decision by Deputy Judge Michael Harvey QC has brought sighs of relief from certain sectors of the property world.

His decision in the case of Currys Group plc v Martin is one which appears to have dammed a potential flood of litigation against independent valuation experts.

The judge dismissed a claim by high street electrical equipment giant Currys that an independent expert, appointed by the Royal Institute of Chartered Surveyors (RICS) in 1993 to decide the rental valuation of a retail property at Shrewsbury in Shropshire, had been negligent.

The negligence allegation was against John Martin, senior partner with Knight Frank, whose appointment for the purposes of valuation was demanded by the terms of the lease.

Because of its complexity, the case, in which Currys claimed to have been left £800,000 out of pocket, took five years to come to trial.

And even before any litigation had taken place Martin himself had called in lawyers because of worries over interpretation of the terms of the lease agreement.

However, at the end of the day Deputy Judge Harvey held that Martin's hands had been tied in fixing an annual rent of £107,000, which Currys claimed was too high, under the terms of the lease.

Titmuss Sainer Dechert, which acted for Currys, claims that the judge's decision to clear Martin – coupled with previous decisions in which other RICS-appointed independent experts have also been cleared of negligence – renders the remedy of negligence "illusory" in such disputes.

However, Steve Cantle, chairman of Kennedys which acted for Martin, does not agree.

He stresses that while the remedy of negligence is available against those acting in the same capacity as Martin, it will only succeed in cases where it can be shown that the independent expert has gone outside the scope of his remit.

Experts acting in this capacity are, he stresses, in a different position to valuation experts called in by those purchasing property or considering loans for the purchase of property.

These are often sued over their valuations with varying degrees of success.

Cantle says: "There have always been a considerable number of negligence actions against valuers as such.

"But these cases against independent RICS experts appointed to decide rent disputes between landlords and their tenants are in a different category.

"The parties have already agreed under the terms of the lease, and therefore by contract, that in default of agreement they will refer the question of final determination to an independent expert appointed by the RICS.

"The parties are, in effect, saying in advance that is how we will determine the rent.

"The way that the cases have always gone so far is that negligence is only arguable if the independent expert then acts in breach of the contract he has with each of the parties.

"It has always been made quite clear that it is not sufficient to bring another expert along to say he would have set a different rent.

"You have got to prove that the expert went outside the scope of his remit and that he was negligent.

"Had the decision in this case gone the other way, it could have exposed independent experts to a far greater threat of litigation.

"The courts ought to be slow to interfere in situations where the parties have expressly agreed in contract as to how they will have the rent determined.

"If the parties to leases want to have their rent determined other than by relying on someone nominated by the RICS they should not go down that route in the first place.

"Had the decision in this case gone the other way and opened this so-called floodgate, it could have made a mockery of any agreements to appoint independent experts in the first place."