Developers borrowed money to fund a development, the project over-ran and according to a valuation report would have required more money to complete than the undrawn loan moneys. The bank called in the loan and sold the property at a loss. The developers who gave personal guarantees went bankrupt.
The developers sued the valuer for negligence alleging the valuers:
a) provided incorrect information which resulted in the builder being overpaid; and
b) concealed the mistake in their report to the bank to make it look like there were insufficient funds to complete the development.
The court held that the whole cause of action vested in the trustee upon the developer becoming bankrupt and did not re-vest upon their discharge from bankruptcy. The court noted that the developer’s personal claim for distress and injury arose as an aspect of their claim for damages and was not a separate claim for a personal injury or wrong that remained vested with the bankrupt developer. The court held that the proceedings were not competent and dismissed them.
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