Mortgage Express Ltd v Bowerman & Partners (A Firm)
| Jurisdiction | England & Wales |
| Judgment Date | 11 July 1995 |
| Date | 11 July 1995 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal
Before Sir Thomas Bingham, Master of the Rolls, Lord Justice Millett and Lord Justice Schiemann
Negligence - duty of care - solicitor acting for both borrower and mortgagee
Where a solicitor acting for both borrower and mortgagees in a property purchase discovered on investigating title information which might have caused the mortgagees to question the accuracy of the valuation they had obtained, he should have disclosed that information to them as well as to the borrower.
The Court of Appeal so held, dismissing a cross-appeal by the defendant solicitors, Bowerman & Partners from Mrs Justice Arden (The Times May 19, 1994) who, in an action for negligence brought by the plaintiff mortgagees, Mortgage Express Ltd, had determined the issue of liability in the mortgagees' favour.
The judge had determined the issue as to the measure of damages in the solicitors' favour, but on appeal her decision on that issue was reversed: see Banque Bruxelles Lambert SA v Eagle Star Insurance Co LtdTLRWLR (The Times February 21, 1995; (1995) 2 WLR 607).
Mr Gilroy, a partner in the defendants' firm, acted for the mortgagees and for the purchaser, Mr Ali Hadi, in respect of the purchase of a flat by Mr Hadi for £220,000. The mortgagees proposed to advance a loan of £180,150 to Mr Hadi on the security of the premises on the basis of a valuation of £199,000 which they had obtained from professional valuers.
In the course of investigating title Mr Gilroy discovered that the property was the subject of two recent sales, the most recent, simultaneous with the sale to Mr Hadi, to Mr Arrach, the vendor to Mr Hadi, who paid £150,000 from a Mr Rasool, who had himself purchased the flat for an undisclosed, but probably lesser, sum from a Mr Khedair.
Mr Gilroy communicated that information to Mr Hadi, but in reporting on title to the mortgagees he did not also inform them. The judge found that if they had been informed they would have arranged for a second valuation. The parties agreed that if that had been done the figure would have been sufficiently different to have caused the mortgagees to withdraw their offer to Mr Hadi.
Mr Christopher Gibson, QC and Mr Ben Patten for the solicitors; Mr Nicholas Patten, QC and Mr Timothy Harry for the mortgagees.
THE MASTER OF THE ROLLS first referred to matters which were not in issue and emphasised that no aspersions of any kind had been cast...
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