24/07/2021
Case summary:
KCB Bank Limited Vs Sendagire Joseph & Another Civil Suit No.640 of 2013
High Court (Commercial Division) ruled that a land valuer/surveyor will be required to jointly pay back a loan that a bank disburses to a borrower on the basis of their misleading, false and inaccurate valuation report.
In this particular case a borrower applied for a loan of 300,000,000/- and on the basis of a valuation report valuing the pledged property (security) at 650,000,000/- the bank disbursed the said loan to the borrower.
The borrower defaulted on the loan payment and as the law requires a revaluation of the property was done for purposes of foreclosure, the property was valued at only 24m by a different valuer/surveyor.
It’s at this point that the Bank realized that the initial valuer/Surveyor valued a different property as opposed to the one he was instructed to. The Bank sued the borrower and the Valuer for breach of contract, recovery of the loan, damages and interest arising out of the valuers professional negligence.
Court ordered the valuer and the borrower to jointly pay back the loan on grounds that the actions of the Valuer were not mere permissible errors but rather gross professional negligence.
