Kenneth Taylor v Legal and General Partnership Services Ltd
| Jurisdiction | England & Wales |
| Judge | Cawson |
| Judgment Date | 07 October 2022 |
| Neutral Citation | [2022] EWHC 2475 (Ch) |
| Docket Number | Case No: BL-2021-MAN-000103 |
| Court | Chancery Division |
[2022] EWHC 2475 (Ch)
HHJ Cawson KC
SITTING AS A JUDGE OF THE HIGH COURT
Case No: BL-2021-MAN-000103
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN MANCHESTER
BUSINESS LIST (ChD)
Manchester Civil Justice Centre
1 Bridge Street West,
Manchester M60 9DJ
Chris Hegarty (instructed by High Street Solicitors) for the Claimants
Tom Asquith (instructed by Clyde & Co. LLP.) for the Defendant
Hearing dates: 5–7 September 2022
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
HHJ Cawson KC:
| Introduction | 1 |
| Witnesses | 9 |
| My assessment of the witnesses, and the correct approach to the evidence | 12 |
| Witnesses of fact | 12 |
| Expert witnesses | 17 |
| Background | 19 |
| The essence of Mr and Mrs Taylor's case | 59 |
| Duty | 59 |
| Breach | 66 |
| Causation | 67 |
| Damage | 69 |
| Further considerations regarding breach | 71 |
| Limitation | 74 |
| Determination of the present claim | 84 |
| Duty | 84 |
| Breach | 95 |
| Causation | 96 |
| Damage | 98 |
| Limitation | 100 |
| Overall conclusion | 114 |
Introduction
This is a sad and unfortunate claim brought by a husband and a wife, the victims of an investment fraud, who seek by the present proceedings to hold a mortgage advisor responsible for losses suffered in consequence of the failure of their investment where the mortgage advisor had recommended an interest only mortgage that they granted as security for a loan made to fund the investment that failed.
In March 2007, the Claimants, Kenneth Taylor (“ Mr Taylor”) and Tracey Taylor (“ Mrs Taylor”), granted a mortgage (“ the Mortgage”) over their home as security for an advance made to them by Platform Home Loans Limited (“ Platform”) for the purposes of discharging an earlier mortgage and providing further funds to pay a deposit for an “off plan” purchase of a property on a development in St. Vincent in the West Indies.
The development was never completed in consequence of, amongst other things, the fraudulent misapplication of monies paid by way of deposit by investors such as Mr and Mrs Taylor, resulting in the total loss of the investment acquired using the monies advanced by Platform and paid by Mr and Mrs Taylor by way of deposit, as well investments made by Mr and Mrs Taylor the previous year using monies received from an inheritance that had been used to pay deposits for the purchase of other properties on the same development.
In the present proceedings Mr and Mrs Taylor seek to recover the losses they claim to have suffered in consequence of having entered into the Mortgage by way of a claim in negligence against the Defendant, Legal and General Partnership Services Limited (“ Legal and General”), a mortgage broker, whose appointed representative, Kinleigh Financial Services Limited (“ KFS”), arranged the Mortgage on its behalf.
Mr and Mrs Taylor's principal contention is that the Mortgage should not have been recommended to them before KFS had ensured that they had obtained independent advice in respect of the proposed investment for which the deposit was provided, and that had KFS done that which it ought to have done, the relevant transaction would not have gone ahead.
Legal and General disputes liability. Whilst recognising that it is responsible for the actions of KFS as its appointed representative, it denies that it (or KFS) owed any relevant duty of care to Mr and Mrs Taylor, denies that there was any breach of any relevant duty of care, and denies that any breach was causative of any loss or damage. It further denies that any loss or damage suffered by Mr and Mrs Taylor fell within the scope of any relevant duty of care, and contends that the claim is, in any event, statute barred.
Mr Chris Hegarty of Counsel appeared on behalf of Mr and Mrs Taylor. Mr Tom Asquith of Counsel appeared on behalf of Legal and General. I am grateful to them both for their written and oral submissions.
I have been assisted in the preparation of this judgment by a note of the evidence and submissions prepared by the Solicitors instructed by Legal and General, which such note has been agreed by those representing Mr and Mrs Taylor. I have, of course, ensured that this note accords with my own note of the evidence, which it does.
Witnesses
So far as evidence of fact is concerned, I heard evidence from Mr Taylor and, very briefly, from Mrs Taylor.
Legal and General did not call as a witness the employee/agent of KFS who dealt with Mr and Mrs Taylor, Ray Margetson (“ Mr Margetson”). No point was taken by Mr Hegarty that any adverse inferences ought to be drawn from Legal and General not calling Mr Margetson. However, I, myself, raised the point with Mr Asquith in closing. Mr Asquith, in my judgment quite correctly, responded that it would be inappropriate for me to draw any significant adverse inferences if not raised and developed in argument on behalf of Mr and Mrs Taylor by reference to the particular inferences that it might be said ought to be drawn from the failure to call Mr Margetson. Mr Asquith also took the point that an employee/agent such as Mr Margetson, who would no doubt have been dealing with many mortgage applications at the time, could not, some 15 years after the event, reasonably be expected to have any significant or reliable recall of this particular transaction. In these circumstances, I do not consider it appropriate to draw any adverse inferences from the fact that Mr Margetson was not called to give evidence, and I do not do so.
I had the benefit of expert evidence as to mortgage broking practice, hearing from David Griffiths (“ Mr Griffiths”), called by Mr and Mrs Taylor, and from Nicholas Baxter (“ Mr Baxter”), called by Legal and General.
My assessment of the witnesses, and the correct approach to the evidence
Witnesses of fact
The evidence in the present case centres upon events dating back to 2007. In the circumstances, it is necessary for me to bear firmly in mind the much repeated observations of Leggatt J (as he then was) in Gestmin SGPS S.A. v Credit Suisse Limited [2013] EWHC 3560 (Comm) at [15]–[22] with regard to the unreliability of memory, and his caution to place limited weight on witnesses' recollections of what was said in the course of historic meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or provable facts.
A particular danger identified by Leggatt J resulting from the passage of time is that of a witness honestly, but falsely, recalling matters in their own mind, and doing so in a self-serving way as the events of the case are reconstructed in their mind during the course of the litigation process.
I must therefore have regard to these considerations when assessing the oral evidence of Mr and Mrs Taylor, recognising that I should make any necessary findings of fact by reference to all the evidence, placing such weight as is appropriate, and as the circumstances require, upon the documentary and witness evidence respectively.
Mrs Taylor's witness statement largely repeats matters referred to by Mr Taylor in his witness statement. It is evident from their evidence that Mr Taylor was primarily concerned with any communications and discussions with Mr Margetson, and that Mrs Taylor was essentially prepared to leave matters to Mr Taylor, and to go along with decisions taken by him. Consequently, the cross examination of Mrs Taylor was extremely short, and she essentially confirmed that there was nothing of substance that Mr Taylor had said that she disagreed with.
I found Mr Taylor to be a fundamentally honest witness doing his best to assist the Court given the constraints of the passage of time that I have identified. His evidence was impressive because he did not, to my mind, seek to either exaggerate, or play down facts to suit any particular narrative or agenda, and where he was unable to recall events, he frankly said so. Further, he realistically accepted, in a number of instances, when documents, or common-sense propositions were put to him, that he is likely to have acted in the way suggested thereby even if not necessarily helpful to his case. This is all much to his credit.
Expert witnesses
So far as the expert witnesses are concerned, I unhesitatingly found the opinion evidence of Mr Baxter to be more reliable and of more assistance than that of Mr Griffiths.
There are a number of key reasons for this:
i) Firstly, Mr Griffiths' background, is, essentially, a banking background in which he has primarily been concerned with the entry into mortgages from a lender's perspective. On the other hand, Mr Baxter's background includes a wider range of financial services activity, including, specifically, mortgage brokering.
ii) The significance of this difference in background came to the fore in a number of responses to questions posed of Mr Griffiths where he was plainly considering matters, and in particular aspects of due diligence, more from the position of a lender concerned as to the value and enforceability of its security, that of a borrower looking for a mortgage for a specific purpose, and the concern of the borrower to be able to meet his or her obligations thereunder.
iii) Mr Griffiths' initial position in evidence was that the relevant duty of care for mortgage brokers was informed by the Mortgage Conduct of Business rules (“ MCOB”), and specifically by MCOB chapters 4.7 and 11, and that he, when supervising from a...
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