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An accountant
was not held to be negligent for a share valuation, regardless of errors,
where the end result figure was within the permissible margin of error
bracket.
Goldstein
claimed damages against Levy Gee for negligent share valuation. Goldstein
was made redundant from an estate agency which he had helped to set
up and in which he held shares. This triggered a provision in the company's
articles of association and Goldstein was deemed to have given the directors
a transfer notice. The price for the shares fell to be determined by
Levy Gee as valuers. The valuation took into account a portfolio value
determined by a separate firm which included a 10% portfolio discount.
Goldstein was disappointed with the final figure and alleged negligence.
The court
held clearly that in valuation cases many questions were a matter of
judgment, which had to be exercised with reasonable skill and care.
The court's reasoning in Merivale Moore v Strutt & Parker (1999)
had to be followed - it was a necessary precondition of liability that
the figures being considered, fell outside the permissible margin of
error or bracket. It was the decisiveness of the end result that was
important as opposed to the process by which the valuer reached the
end result. The valuer, in seeking a portfolio valuation and in relying
upon it, had committed an error which caused him to fall below the standard
to be expected of a competent auditor undertaking a share valuation.
The relevant figure should have been the full aggregate values of the
properties. However, in this instance the final share valuation was
within the permissable margin of error or bracket and it followed, in
accordance with the law laid down in Merivale Moore, that it was not
negligent.
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