Casebook Revisited

Casebook Revisited

Valuation Nighmare Part II

MIKE TRUMAN explains what happened next after Taxation revealed strange goings-on in a south coast valuation case.

Nine months ago, we published the story of a valuation saga that had been going on for 13 years (Taxation, 4 March 2004, page 529). Written by the accountants who dealt with the case, Cartwright & Co, the story started simply enough.

Two adjacent properties that had been converted into flats and bedsits were sold in January 1989 for £480,000. The properties had been owned since the 1960s, and so a valuation as at 31 March 1982 was needed. Taking the average of two independent valuations, the accountants submitted a figure of £370,000. They thought that there might be a counter-offer from the district valuer, but were not expecting one as low as £200,000, which was the district valuer's opening gambit.

The district valuer refused initially to give comparables and evidence to support the valuation. It took seven years to obtain them, by which time the district valuer had increased the valuation offered to £275,000. However, in the accountants' view, the valuation was not supported by the comparables, and the revised valuation was not accepted. The case appeared destined for the Lands Tribunal.

Ordnance Survey

A crucial part of the case made by the district valuer was that in March 1982 there had been a builders' yard adjacent to the properties, which would have significantly reduced their value. The area had been redeveloped since 1982, so the yard was no longer there. The valuer produced an Ordnance Survey plan purporting to show the yard and the entrance to it, but the client (having owned the properties for so long) said that there had never been a builders' yard next to them.

Our article continued as follows:

The RICS

Following the publication of the article, it was suggested to us that the Royal Institution of Chartered Surveyors (RICS) should be contacted. Like all chartered institutes, the RICS has a disciplinary system to maintain professional standards. It was therefore suggested that a complaint should be made about alleged unprofessional conduct. The accountants duly forwarded the information they had to the RICS and waited for a reply.

There was no doubt that the dossier was examined carefully. However, no answer was given to the allegation that the district valuer had doctored the Ordnance Survey map. Instead, two months later, the reply came that no action could be taken because the case was 'out of time'.

Human rights

At this point Cartwright & Co asked if Taxation would step in and help again. We asked the press office for an explanation and prepared to do battle. But when the explanation came, it revealed a genuine difficulty. The alleged misconduct had taken place in 1997, when the comparables and accompanying statement had been sent to Cartwright & Co. It had been discovered a few months later when the client had stumbled across the original map in the library. However, that was now some seven years ago.

The RICS, again in common with most chartered institutes, has a range of sanctions that it can apply against members. These run from reprimands up through fines to exclusion from the institute.

As several tax cases have shown, the power to impose financial penalties, even in what is otherwise a civil matter, can bring into play the provisions relating to criminal trials in the European Convention on Human Rights, as imported into UK legislation by the Human Rights Act. Similarly, the advice received by the RICS was that the penalties available to the RICS meant that they had to abide by the provisions of Article 6(1) of the Convention, which says inter alia that: 'In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time'.

Whether this is a bar to taking action is debatable; there is a comment in the case of Dyer v Watson [2002] 3 WLR 1488 by Lord Millett that 'the right is to trial without undue delay, it is not a right not to be tried after undue delay'. However, one can understand why the RICS would not want to be a test case on the application of that principle to professional bodies, hence their conclusion that at this late stage there was nothing they could do.

The message would therefore seem to be that if tax advisers have complaints about district valuers that they think should be investigated by the RICS, they should bring them to their attention as soon as possible.

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