First National Commercial Bank Plc v Humberts
| Jurisdiction | England & Wales |
| Judgment Date | 13 January 1995 |
| Date | 13 January 1995 |
| Court | Court of Appeal (Civil Division) |
Before Lord Justice Neill, Lord Justice Waite and Lord Justice Saville
Court of Appeal
Negligence - valuation of property - cause of action accrues when loss crystallises
Where as a result of a negligent valuation the plaintiff lender suffered loss on an advance made to a borrower, the cause of action in tort against the valuer accrued on the earliest occasion when the plaintiff's loss crystallised, namely the date of sale of the security, and not the date when the advance was made.
The Court of Appeal so stated allowing an appeal by the plaintiff lender, the First National Commercial Bank plc, from the decision of Judge David Smith, QC, sitting as a High Court judge on July 30, 1993 whereby he ruled on the trial of a preliminary issue that the plaintiffs' action in tort was statute barred.
In July 1983 the plaintiffs advanced money on a property in reliance on a valuation provided by Humberts, the defendant valuers, in May 1983 in the sum of £4.4 million. The borrowers were now insolvent and the security taken for the advance proved insufficient to recoup the amounts owed. The plaintiffs alleged that the valuation was made negligently and that if a proper valuation of £2.7 million had been made they would not have entered into the loan agreement or made any of the advances.
The plaintiffs issued a writ against the valuers on March 20, 1990. The plaintiff's case before the judge was that their action was not statute barred because their cause of action accrued after March 20, 1984.
Mr James Townend, QC and Mr Clive Newton for the plaintiffs; Mr Michael Lewer QC and Mr David Tucker for the defendants.
LORD JUSTICE SAVILLE said that for the purposes of the preliminary issue, it was to be assumed that the defendants owed a duty of care to the plaintiffs and were in May 1983 in breach of that duty. It was the law that a cause of action for the tort of negligence only arose when there had been a breach of duty resulting in actual loss or damage recognised by the law.
The main submission of the defendants, which was accepted by the trial judge, was that, on the evidence, the financing deal that the plaintiffs had made in 1983 was of substantially less value in money terms as an investment than it would have been had the valuation of £4.4 million been accurate, so that by reason of the negligence the plaintiffs sustained an actual loss in 1983 of that...
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