Platform Funding Ltd v Bank of Scotland Plc (formerly Halifax Plc)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Moore-Bick,Lord Justice Rix,Sir Anthony Clarke MR |
| Judgment Date | 31 July 2008 |
| Neutral Citation | [2008] EWCA Civ 930 |
| Docket Number | Case No: B2/2007/2609 |
| Court | Court of Appeal (Civil Division) |
| Date | 31 July 2008 |
[2008] EWCA Civ 930
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
HIS HONOUR JUDGE COLLINS CBE
TCC07016
Royal Courts of Justice
Strand, London, WC2A 2LL
Sir Anthony Clarke Mr
Lord Justice Rix and
Lord Justice Moore-Bick
Case No: B2/2007/2609
Mr. Thomas Grant and Mr. Alex Winter (instructed by Walker Morris) for the appellant
Mr. Clifford Payton and Mr. Ben Hubble (instructed by Glenisters) for the respondent
Hearing dates : 30 th June 2008
This is an appeal against an order of His Honour Judge Collins CBE made on 2 nd November 2007 in the Central London County Court giving judgment for the claimant, Platform Funding Ltd (“Platform Funding”) against the defendant, Bank of Scotland Plc, for damages to be assessed. The defendant was formerly known as Halifax Plc, but in relation to the matters with which this appeal is concerned it traded under the name of Colleys and it is therefore convenient to refer to it in this judgment by that name.
The appeal concerns the nature of the obligations undertaken by a surveyor who is instructed by a mortgage lender to value the property offered by the borrower as security for a loan. The lender in this case was Platform Funding which was approached by a borrower, Mr. David Hewes, for a loan to be secured by a mortgage on a property known as 1 Bakers Yard, Belchmire Lane, Gosberton, Lincolnshire. Colleys carried on business as surveyors and valuers and in circumstances to which it will be necessary to refer in greater detail in due course provided Platform Funding with a valuation of a property identified in its report as 1 Bakers Yard, Belchmire Lane, Gosberton. The valuer's report contained the following certificate:
“Declaration
This valuation is for the benefit of Platform Funding Limited, its successors, assignees and transferees. . . . . .
I certify that the property offered as security has been inspected by me and that the above valuation is a fair indication of the current open market valuation for mortgage purposes. . . . . . . ”
Unfortunately, however, the valuer had not inspected 1 Bakers Yard, which was a plot of land on which stood a house still in the course of construction. He had been misled by Mr. Hewes into inspecting 5 Bakers Yard, a plot close by on which stood a house that had almost been completed.
In January 2003 Platform Funding advanced Mr. Hewes £154,495 on the security of a mortgage on 1 Bakers Yard. However, Mr. Hewes failed to maintain the payments due under the loan agreement and in November 2004 Platform Funding repossessed the property in order to realise its security. At that point the mistake came to light. By that time the amount outstanding on the loan account was £184,951.68. The property was sold for £154,506.99 after deduction of the costs of sale, leaving a shortfall of £30,444.69. Platform Funding sought to recover its loss from Colleys.
At this point it is necessary to describe in greater detail how this state of affairs came about. In September 2002 Mr. Hewes approached a mortgage broker called The Mortgage Helpdesk for assistance in arranging a loan. On 12 th September an application for a loan was filled out by a representative of The Mortgage Helpdesk, Mr. Allan Davis, on the basis of instructions received from Mr. Hewes. It was directed to Victory Home Loans (“Victory”), a trading name of GMAC-RFC Ltd, and sought a loan of £120,000 to be repaid over 25 years. The borrower's present address was stated as 1 Bakers Yard and he was said to have lived there for one year and two months. Those statements were false (though there is no reason to think that Mr. Davis was aware of the fact) because at that time the house at 1 Bakers yard was little more than a shell, having no roof or windows. In the box for details of the arrangements for a valuer to gain access to the property there were entered the words “Via Mr. Hewes” and a mobile telephone number was provided.
The details of the circumstances under which Colleys were instructed to inspect and value 1 Bakers Yard are somewhat obscure, but their essentials are reasonably clear. The Mortgage Helpdesk, probably acting through another intermediary, Solent Mortgage Services (“Solent”), instructed Colleys by telephone on 4 th November 2002 on behalf of Victory to carry out what is known as a 'Schedule 1' inspection of the property and provide a valuation. A Schedule 1 inspection is a relatively superficial inspection sufficient to enable the surveyor to provide a general description of the nature and condition of the property in question. It is the type of inspection normally required by mortgage lenders, whose concern is to ensure that the property provides adequate security for the contemplated loan. The nature of the inspection is reflected in the fee paid to the surveyor—£250.
There is no written record of the telephone conversation between Solent and Colleys, but the terms of the instructions are reflected in a printed sheet entitled 'Instructions to Valuer' produced by Colleys later the same day. In it Mr. Hewes is named as the applicant and the address of the property to be valued is stated as 1 Bakers Yard. The purchase price is stated to be £300,000. The instructions indicated that access to the property could be obtained by contacting Mr. Hewes and a telephone number was provided. All that information must have been provided over the telephone. Although the printed sheet makes provision for the insertion of some detailed information about the property (type, number of bedrooms, number of garages, tenure etc.), none was inserted, other than the purchase price. I think it is clear, therefore, that at the time Colleys were instructed they were given no information about the property other than its address and purchase price.
Later the same day an employee of Colleys, Jane Yarham, telephoned Mr. Hewes to make an appointment for the surveyor to attend. Mr. Hewes asked for his visit to be deferred to enable him to complete some work on the windows. Miss Yarham made a handwritten note on the instruction form reflecting that part of her conversation with Mr. Hewes. She also made a handwritten note that the property was a detached house with four bedrooms and two garages. She can only have obtained that information from Mr. Hewes. Having spoken to the surveyor who was to carry out the inspection, Mr. Faux, an appointment was made for him to attend on 18 th November.
Bakers Yard is a short road running off Belchmire Lane. The land on the right hand side as one enters the road was once in single ownership, but by the time of Mr. Faux's inspection it had been divided into five plots. The plots were numbered from 1 to 5, number 1 being nearest Belchmire Lane, but none of them displayed a house number. Mr. Hewes had almost completed building a detached house on plot number 5 which he said he hoped to occupy within a matter of weeks. On plot number 1 there was a substantial detached house still in the course of construction. That was 1 Bakers Yard.
Before he went to inspect 1 Bakers Yard Mr. Faux telephoned Mr. Hewes to make arrangements to gain access to the property. In the course of their conversation Mr. Hewes told him that the property to be valued could be identified by a feature post box on the front wall which others in the road did not have. On entering Bakers Yard he disregarded plot number 1, which did not correspond with the description he had been given by Mr. Hewes, and drove to the far end where he saw the house with a feature post box and found Mr. Hewes. Mr. Hewes showed Mr. Faux round the house and generally led him to understand that he had come to the right place. Mr. Faux carried out an inspection and on 19 th November he produced a report valuing the property at £230,000 in its current condition.
In the event, for reasons which are unexplained, Victory did not make an advance to Mr. Hewes and as a result Mr. Davis of The Mortgage Helpdesk set about helping him find another lender. On or about 5 th December 2002 Mr. Davis spoke to Colleys asking that the report produced by Mr. Faux for Victory be 're-typed' for Flagship Homeloans (“Flagship”), which was a trading name used by Platform Funding. Having received their agreement, he wrote confirming his instructions and enclosing a cheque for the additional fee. In return Colleys drew up an inspection report and valuation in the standard form required by Flagship. Shortly thereafter, probably on 18 th December, Platform Funding was approached for the first time by Solent acting on behalf of The Mortgage Helpdesk with an application by Mr. Hewes for a loan secured by a mortgage on 1 Bakers Yard. The application was supported by the necessary documentation, including the valuation of 1 Bakers Yard provided by Colleys. That was the first Platform Funding had heard of Mr. Hewes or 1 Bakers Yard. Apart from being addressed to Flagship, the report contained the same information as had been provided to Victory. It also contained the declaration mentioned earlier.
The case put forward on behalf of Platform Funding at trial was very simple: Colleys had accepted instructions to value 1 Bakers Yard; they had produced a report addressed to Platform Funding certifying that they had inspected the property; Platform Funding had made an advance on the strength of that report and was therefore entitled to rely on the certificate as having contractual effect; having failed to inspect the...
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