Court ruling could cut negligence claims

A ruling in a High Court case between GMAC-RFC and Countrywide Surveyors could result in fewer lenders making claims of negligence against surveyors.

GMAC-RFC started legal proceedings against Countrywide Surveyors in 2008 for allegedly negligently overvaluing a property which it lent on in 2004. The borrower defaulted in 2007 and GMAC-RFC repossessed the property.

But Countrywide, in turn, made allegations of contributory negligence against GMAC-RFC for its lax lending practices.

On December 14, 2011, Judge Keyser ruled that Countrywide had not been negligent but he added that if it had been found liable, the judge would also have found that GMAC-RFC was contributory negligent for not verifying the borrower’s income and other information.

He ruled that GMAC-RFC contributed to its own loss and as a result he would have deducted 60 per cent of any money awarded to it if the court had found Countrywide liable.

Law firm Mills & Reeve consultant Ed Coulson says: “Sixty per cent is a significant reduction and should concentrate the minds of mortgage lenders when they are considering suing their own professional advisers.”

“In this case, the contributory negligence was not as gross as it has been in other cases I have seen with lenders – on that basis, one can expect to see reductions for contributory negligence increase significantly.”