Privy Council reduces compensation owed by real estate agent

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Derek Achong

The Privy Council has reduced the compensation owed by a real estate valuation company, to a bank for overvaluing a property that was used as security for a loan, by more than a half.

Delivering a judgment on Monday, five Law Lords ruled that the local Court of Appeal got it wrong when they ordered Charles B Lawrence and Associates to pay Intercommercial Bank Limited a little over $2 million in compensation over the issue.

The board agreed with the valuator’s lawyer Ramesh Lawrence Maharaj that the appropriate compensation in the case was $833,204.

According to the evidence in the case, the bank was approached by Singapore Automotive Trading Limited for a $3 million loan.

Rafferty Development Limited agreed to serve as guarantor for the loan and put forward a parcel of land located along the San Fernando Bypass Road as security.

The valuator valued the property at $15 million with the expressed assumption that there was good marketable title to the land, planning permission for commercial development, and that it was vacant and free of any encumbrances.

The loan was granted but Singapore Automotive and Rafferty defaulted without making a payment. In July 2010, the bank attempted to sell the land through a receiver but the highest bid was $2 million.

The bank sued the valuator after it learned that the land actually had no value as Rafferty did not have good title to it and that there was no commercial planning permission.

The bank also brought litigation against the law firm, which handled the conveyancing for the mortgage, and the case was settled for $2.4 million. (DA)

The case against the valuator was initially upheld by former High Court Judge Judith Jones, who ordered over $2.3 million in compensation.

The valuator was also represented by Robert Strang while Michael Hylton, QC, and Prakash Deonarine represented the bank.