Michael & Ors v Miller & Anor

Factual and Procedural Background

An appeal and cross-appeal arise from an order made by His Honour Judge Weeks QC of the Chancery Division regarding a dispute between the Appellants, who were mortgagors of an agricultural property known as the Estate, and the Respondents, who were mortgagees responsible for selling the Estate. The Appellants claimed that the Respondents breached their duty to take reasonable care to obtain the best price reasonably obtainable when selling the Estate by private treaty, particularly criticizing the treatment of a large quantity of lavender and other herbal plants on the land, which were effectively regarded as valueless in the sale.

The Respondents sold the Estate for £1.625 million, while the Appellants contended the Estate’s value, including the plants, was around £3 million. The trial judge found the market value of the Estate excluding the plants to be £1.75 million and identified a valuation bracket between £1.6 million and £1.9 million. The judge held that the Respondents breached their duty by agreeing to a last-minute £25,000 price reduction without consulting their valuer and by failing to market the lavender plants separately, relying on negligent advice from an expert.

The judge ordered a credit of £25,000 to the mortgage account and an inquiry into further damages relating to the lavender plants. Permission to appeal was granted on issues concerning the valuation bracket and the inquiry, but refused on the finding of no negligence by the valuer in relation to the Estate sale price. The Court of Appeal granted permission to appeal on the valuation and marketing issues, and allowed a cross-appeal on the scope of the inquiry regarding the plants.

Procedurally, the trial lasted ten court days, with extensive expert evidence and witness statements presented by both parties.

Legal Issues Presented

1. Whether the concept of a valuation bracket is appropriate in assessing a mortgagee’s duty to obtain the best price reasonably obtainable and its significance for liability and damages.
2. Whether the Respondents breached their duty as mortgagees by inadequately marketing the Estate, including the adequacy and duration of the marketing campaign and acceptance of offers.
3. Whether the inquiry ordered concerning damages related to the lavender plants should be limited to quantification of loss or extended to include issues of liability, given the pleadings and trial evidence.

Arguments of the Parties

Appellants' Arguments

• The valuation bracket concept applies only to claims of negligent valuation, not to claims against mortgagees for breach of duty in sale; the mortgagee must ensure proper marketing and sufficient market exposure.
• Having found the market value was £1.75 million, the judge should have held the Respondents liable for the shortfall of £125,000 and awarded damages accordingly.
• The marketing campaign was insufficiently extensive and too brief; the Respondents were negligent in accepting offers too early, which discouraged other potential buyers.
• The Respondents failed to properly market the lavender plants separately, which had significant value, and this breach should be recognized despite the absence of an explicit pleaded claim.
• The pleadings sufficiently raised the issue of the plants’ value and the duty to realize them properly; the inquiry should proceed as ordered.

Respondents' Arguments

• The valuation bracket is an evidential tool primarily for professional negligence claims against valuers; the Bolam principle governs whether the mortgagee acted reasonably.
• The mortgagee’s duty is to take reasonable steps, not to achieve the highest possible price; acting on a valuation within an acceptable margin of error discharges that duty.
• The marketing campaign was reasonable given the circumstances, including taking over from a previous agent mid-campaign; the decisions made by the valuer were within the range of competent professional judgment.
• There was no pleaded claim or adequate trial investigation of any duty to sever and sell the lavender plants separately; liability on this issue was not properly before the court.
• Issues of liability regarding the plants should not be remitted to the judge but addressed in a widened inquiry; costs of the inquiry should be costs in the inquiry.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analyzed the mortgagee’s duty to take reasonable care to obtain the best price reasonably obtainable, equating this with obtaining the true market value at the time of sale. It emphasized that the mortgagee’s decisions on mode of sale, advertising, and marketing duration involve informed judgment, with no absolute requirements, and must be assessed broadly.

Applying the Bolam principle, the court held that mortgagees and their agents (valuers) are not negligent if their valuations or marketing decisions fall within a range accepted by a respectable body of professional opinion. The concept of a valuation bracket was affirmed as a useful evidential tool in assessing whether a mortgagee acted reasonably, not as a rule limiting damages.

The court found that the judge’s approach—first determining market value and then assessing negligence for failure to achieve that value—was somewhat artificial in cases where the property was genuinely exposed to the market and multiple offers were received. Instead, the court suggested the more logical approach is to assess the reasonableness of the mortgagee’s steps in marketing and accepting offers.

Regarding the marketing issue, the court accepted the trial judge’s factual findings that the valuer acted reasonably under difficult circumstances, including continuing a prior marketing campaign and conducting a minimal but sufficient advertising effort. The acceptance of offers within the valuation bracket was not negligent, especially given ongoing marketing.

On the inquiry issue, the court noted that there was no pleaded claim or adequate trial investigation regarding the duty to sever and sell the lavender plants separately. Consequently, the judge’s findings on liability concerning the plants were set aside. Instead, the court ordered the scope of the inquiry to be widened to address questions of power, duty, and reasonableness concerning the plants’ separate sale, urging parties to consider mediation to resolve this issue efficiently.

Holding and Implications

The court dismissed the appeal and allowed the cross-appeal.

The effect of the decision is that the mortgagee’s duty to obtain the best price reasonably obtainable includes a margin of reasonable judgment, assessed by reference to a valuation bracket and professional standards. The mortgagee and their agents were not negligent in the marketing and sale process as conducted. However, the court recognized uncertainty and procedural irregularity regarding the separate sale of the lavender plants and accordingly widened the scope of the inquiry to include issues of liability and power in relation to the plants.

No new legal precedent was established beyond clarification of the application of valuation brackets and the mortgagee’s duty. The parties were encouraged to pursue mediation to resolve the outstanding issues efficiently.