Cases - Swingcastle Ltd v Alastair Gibson

Record details

Name

Swingcastle Ltd v Alastair Gibson

Date

[1991]

Citation

2 AII ER 353

Keywords

Negligence in valuations and surveys

Summary

The claimant finance company, relying on the defendants' negligent overvaluation of a house, lent money to high-risk borrowers at an initial rate of interest of 36%, which, under the terms of the loan, would rise to 45% immediately on any default in repayment. When the borrowers defaulted, the lender repossessed and resold the property and then sued the negligent valuer for its total losses, including interest at the stipulated contractual rate. The House of Lords rejected this part of the lender's claim on the basis that it would effectively put the valuer in the position of a guarantor of the borrowers' repayment obligations. It was held that the lender was entitled instead to damages reflecting the reasonable costs that it had incurred in financing the loan (in effect, interest at a reasonable commercial rate).