Bank Claims Against Valuers For Professional Negligence: A Note On Recent Ugandan Cases

The relationship between a lending bank and its panel valuer lies at the heart of secured lending. When a valuer misleads a bank into lending money against an overvalued or encumbered property or one occupied by squatters, the bank suffers loss that is often total. A growing body of case law has Mounting judgments have sharpened the legal framework governing this relationship: Barclays Bank v CB Richard Ellis (2024); Barclays Bank v CB Richard Ellis (2026); Centenary Bank v Hasifa Namulondo (2026); Ssali v Sanlam (2026) KCB v Sendagire (2021), Kabege v Niko Insurance (2014) and DFCU v Mukiibi Yudaya (2013). Together these decisions address three key questions: when is a valuer liable for negligence, what can a bank recover from a negligent valuer, and does incorporation shield the individual valuer from personal liability?

When is a valuer negligent?

A valuer owes a professional duty of care to the client in this context a bank. This duty arises both from the contract and independently under the law of tort. Because the valuer assumes responsibility for a professional opinion on which the bank will foreseeably rely in making its lending decision, the valuer must act with the skill and diligence of an ordinary competent valuer, exercising the expertise he professes to hold. A valuer is not negligent merely because another valuer might have reached a different figure. What matters is whether the methodology employed falls within what the profession would consider reasonable. Two important qualifications apply.

First, the permissible margin of error between a negligent valuation and the true value is generally 10%, extendable to 15% in exceptional circumstances. A valuation that falls significantly outside that bracket is convincing evidence of negligence or incompetence. In Barclays (2024), the gaps between the defendants' figures and those of independent re-valuers were so far beyond 10% across all ten properties that the breach of duty was beyond dispute.

Second, and critically, overvaluation is not the only form of negligence on which a bank may rely. In Barclays (2026), the breach arose from a fundamental failure of professional process: the valuer did not personally visit the property, did not make local enquiries, did not consider prior valuations of the same land, and represented it as vacant and undeveloped when it had in fact been occupied by squatters, split by a government valley dam, and subdivided into three plots, all of which was publicly documented. The court set out the minimum steps a competent valuer must take to render a professional valuation: examine the title and conduct an up-to-date registry search; physically inspect the land, noting occupants, developments, and signs of adverse use; make local enquiries of the relevant authorities; consider prior valuations reasonably available; and assess value in light of all those matters.

Furthermore, a valuer cannot deflect professional responsibility onto a surveying subcontractor. The valuer who accepts the bank’s instructions remains principally liable for any work he delegates, even where the bank was aware about the delegation. Equally, the argument that the bank's own internal credit team ought to have detected the same physical defects affords no defence: the very reason for engaging a professional valuer is that the bank lacks the technical or physical capacity to carry out that assessment itself. To say otherwise would invert the logic of the retainer.

What can be claimed against the valuer?

The amount a bank can recover from a negligent valuer depends on a framework known as the “SAAMCO” principle, named after the Australian case from which it derives. A valuer engaged to assess proposed security is providing information to assist the bank in deciding whether to lend. The bank’s overall lending decision remains its own responsibility. It follows that the valuer is liable only for the loss caused by that information being wrong, not for every loss the bank suffers on the transaction.

Where the bank would not have lent at all had it received an accurate valuation (a "no-transaction" case), the entire loan falls within the scope of the valuer’s duty and can therefore be claimed against him. The recoverable amount is subject to a cap, namely the difference between the negligent valuation and the true value but where that difference far exceeds the loan, the cap does not bite and the full loan sum is recoverable.

The two Barclays’ decisions illustrate the significance of this framework and expose an important divergence. In Barclays (2024), despite a clear finding of professional negligence, the bank recovered only the cost of re-valuation. The court declined to award the loan sums on the basis that the bank had not pursued its borrowers and had not attempted to sell the mortgaged land. In Barclays (2026), on similar facts, the bank recovered the full loan principal and accrued interest dated back to the date of filing of the suit.

The reasoning in the 2026 decision is more robust. The court held that the bank's claim against the valuer was not a claim on the loan; but a claim for damages caused by professional negligence. That the bank might also pursue the borrower is a separate matter. If the valuer argues that the bank should have tried harder to recover from the borrower first, the burden of proving that falls on the valuer, not the bank. In this case, the bank had pursued the borrower for over a decade without success, and foreclosure was impossible because of the very problems the valuer had failed to disclose. The valuer could not therefore benefit from a situation his own negligence helped to create.

On general damages, both courts confirmed that a bank kept out of its money for an extended period forced to provision against the debt under banking regulations and deprived of the opportunity to redeploy the capital productively is entitled to compensation for that inconvenience. However, in Barclays (2024), the court wrongly discounted the bank's own contribution to its loss. On interest, the court in Barclays (2026) awarded interest on the full claim at 8% per annum from the date of filing, recognising that the time value of money represents a real loss to a financial institution kept out of funds since disbursement. That said, the 8% pales in comparison to the double-digit interest rates that the bank could have earned from lending that money or investing it in government bonds.

The court in Centenary Bank calibrated its interest award to the bank’s prime lending rate, arriving at an award of 20%. That is a fairer proposition for the bank. Similarly, the court in KCB awarded 20% on the basis that the plaintiff was a bank.

There is however, a further nuance the date from which of interest on the damages runs. In Barclays (2026), interest was awarded from the date of filing, as was the case in Centenary Bank. However, in KCB, interest was awarded on the loan amount, from the date on which the bank should have started earning interest.

Deliberate pleading, proof and consideration of the bank’s prayer is well advised. It is of course for the bank to prove its case. The bank must adduce the loan account statements, the original valuation reports, and the independent re-valuation report.

Does incorporation protect the individual valuer?

A valuer who practises through a limited liability company will commonly argue that only the company bears liability, and that the individual professional is protected by the company’s separate legal identity. The decisions under review reject this argument on multiple grounds.

First, on a procedural point, the DFCU ruling confirmed that there is no requirement to obtain a court order before suing a company director personally. The Companies Act expressly permits such suits.

Second, and more fundamentally, Barclays (2026) held that a professional who signs a valuation report in his own name personally assumes responsibility for its accuracy. The corporate structure does not immunise the individual; it operates alongside his personal liability, not in place of it. The signature on the report is not merely a corporate formality. It is a representation to the bank that the individual personally vouches for the content. This probably explains why some well-known audit firms simply write the name of the audit firm in their opinions, without disclosing any individual.

This conclusion is reinforced by Uganda’s regulatory framework. Only a qualified individual not a company can hold a practising certificate under the Surveyors Registration Act. Professional misconduct is attached to the individual, not the firm. It would be inconsistent for the regulatory system to impose personal professional responsibility while the law of tort permitted the individual to shelter behind the corporate form.

The result is that both the firm and the individual valuer are jointly and severally liable. The bank may enforce against either or both, though it cannot recover the same loss twice.

Does the new Valuation Act 2026 change the position?

The valuation profession has finally broken away from the surveyors and obtained its own legislation, hence the Valuation Act 2026. Ugandan valuers had prior to this Act been licensed under the Surveyors Registration Act, which fused the surveying and valuation professions.

Unfortunately, although the issues covered in this article are contemporary, the new Act, is not explicit in addressing them. The Act provides for a value reconciliation committee to adjudicate where valuers advising independently on the same property produce reports with significant differences. Future claims for professional negligence will thus have the assistance of such a committee. This will be supplemented by regulations on valuation standards for secured lending.

The Act does not specifically restrict the legal form in which valuers may practise. Although the Act mentions partnerships, it does not do so is in mandatory terms.

The four-eyes principle may assist banks in enhancing the quality of the reports on which they rely. Now that valuation and surveying are separate roles, a lender conducting due diligence on land will have to engage a surveyor and a valuer separately. The double and independent duty of care may improve results. The practice has been for the bank to contract a valuer who in turn subcontracts a surveyor to conduct the land search and open the boundaries. KCB is a case in point

Can the bank claim directly under the valuer’s professional indemnity insurance?

Can the bank make its claim directly against the valuer’s professional indemnity (PI) insurer, especially if the valuer or its firm is unable to pay? This question is currently making its way to the Court of Appeal following the grant of leave to file a second appeal on a question of great importance, in Sanlam General Insurance v Finance Trust Bank.

In that case, the bank sought to recover directly from the PI insurer of a firm of surveyors whose negligent valuations had caused it significant losses. Rather than suing the surveyors in negligence (as in the Barclays cases), the bank lodged a complaint with the Insurance Regulatory Authority. Both the Authority’s Complaints Bureau and the Insurance Appeals Tribunal found in the bank’s favour.

The High Court reversed those decisions holding that the PI policy was a contract between the insurer and the surveying firm; the bank was not a party to it and had no right to enforce it. The policy did not confer a benefit on the bank, the statutory exceptions under the Contracts Act did not apply, and the right to lodge a complaint with the Insurance Regulatory Authority is distinct from a right to enforce an insurance contract.

The practical lesson is that a bank cannot short-circuit the process by going directly against the valuer’s insurer. It must first establish the valuer’s liability in court, obtain judgment, and then look to the valuer to satisfy that judgment. Only the insured valuer has the right to call upon the PI policy. If the valuer refuses to claim, or the insurer disputes the claim, the bank has no direct route to the insurance proceeds.

An interesting option is for the valuer himself when faced with a suit, to add his insurer as a third-party defendant as was done in Ssali and in KCB. In Kabege v Niko Insurance, the valuer sued her insurer directly following a demand from her client for negligence.

Conclusion

The current state of Ugandan law on bank claims against valuers may be summarised in four propositions. First, a valuer who overvalues property beyond the permissible 10% margin, or who fails to physically inspect and investigate the property and its encumbrances, is professionally negligent. Second, a bank that would not have lent at all but for the negligent valuation is entitled to recover the full loan sum and accrued interest as special damages, subject to the SAAMCO measure, provided it has not unreasonably failed to mitigate and the burden of proving unreasonable failure to mitigate falls on the valuer not the bank. Third, a bank need not exhaust its remedies against the borrower before suing the valuer; the two claims are independent, and the valuer cannot insist that the bank first depletes its recovery from the borrower before looking to the professional whose negligence caused the loss. Fourth, incorporation does not shield the individual registered valuer from personal liability; by signing the report in his personal professional capacity, the valuer assumes personal responsibility for its accuracy, and the Surveyors Registration Act (now to be the Valuation Act in the case of valuers), makes clear that the professional duty is in any event a personal obligation.

Of the decisions surveyed, Barclays (2026) stands out as the leading authority on valuer liability. Its rigorous application of the SAAMCO framework, its principled engagement with the personal liability question, and its correct allocation of the mitigation burden combine to make it the most reliable guide for practitioners advising either lending institutions or valuation professionals in this developing area of commercial law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.