Two well-known firms have clashed in the High Court about who was responsible for the over-valuation of a property for which the owner was seeking – and was given – a mortgage.

Conveyancer Goldsmith Williams and e.surv – part of LSL, the parent company of Your Move and Reeds Rains – were found to be equally liable.

On behalf of the lender, e.surv had valued the property, near Buxton in the Peak District, at £725,000.

Goldsmith Williams failed to disclose that within the mortgage industry’s six-month rule period, the property had been sold to the applicant – and for £390,000.

The property had been on the market from May 2005 with an asking price of £399,950 and was bought for £390,000 in September 2005 with a bridging loan.

The valuation, for the purposes of the loan, was undertaken in November 2005. In late December, the property owner applied for a loan of £580,000, based on the £725,000 valuation.

The mortgage was approved in January 2006, successfully going through the underwriting process, the applicant making it clear on the form that he had owned the house for only a short time.

E.surv had settled with the lender for £200,000, and took Goldsmith Williams to court, arguing that it would have realised its mistaken valuation if Goldsmith Williams had disclosed the property’s recent history, and that the conveyancer should share at least some of the costs.

E.surv said that had the price paid for the property been disclosed, it would either have amended its valuation, and/or notified the lender about the misinformation, giving it the opportunity to turn down the loan.

Goldsmith Williams admitted breaching the express obligation to inform the lender that the property had been bought less than six months earlier. However, it argued it was not obliged to inform the lender of the purchase price that had been paid.

Judge Stephen Davis said that the surveyor was initially misled by the borrower and had been “careless rather than reckless” in the valuation.

Due to “a desire to please or pressure of time or both”, the over-generous valuation had been produced.

The judge noted: “… It is clear that the borrower needed a high valuation to get the loan which he needed to clear the bridging loan.”

The judge did not find any evidence of dishonesty on the part of the mortgage applicant, surveyors or any of the parties.

However, he concluded: “There is no basis in my judgement for regarding the solicitors’ blameworthiness as significantly less than the surveyors’.

“Although the original fault was that of the surveyors, since as I have found it was the solicitors’ role to bring the disparity to the lender’s attention, and had they done so the valuation would have been corrected, it does not seem to me that there is any material difference in that regard.

“In short, there is no reason in my judgement to allocate responsibility anything other than equally.”

The court ordered Goldsmith Williams to pay £100,000 plus interest to e.surv.

It is understood that Goldsmith Williams will seek to appeal against the judgement.