Preferred Mortgages Ltd v Bradford & Bingley Estate Agencies Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BUXTON,Lord Justice Latham,LORD JUSTICE LATHAM,SIR MARTIN NOURSE |
| Judgment Date | 08 March 2002 |
| Neutral Citation | [2002] EWCA Civ 336 |
| Court | Court of Appeal (Civil Division) |
| Date | 08 March 2002 |
| Docket Number | B2/01/1693 |
[2002] EWCA Civ 336
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE SHEFFIELD COUNTY COURT
(HIS HONOUR JUDGE MOORE)
Royal Courts of Justice
Strand
London WC2
Lord Justice Buxton
Lord Justice Latham
Sir Martin Nourse
B2/01/1693
MR TAGER QC and MR HUGH JACKSON (Instructed by Messrs Sprecher Grier Halberstam, London, WC1V 7JH) appeared on behalf of the Appellants.
MR ROGER STEWART QC and MR ANDREW NICHOL (Instructed by Messrs Harrison Drury & Co, Preston PR1 2UT) appeared on behalf of the Respondents.
Lord Justice Latham will give the first judgment.
This is an appeal from His Honour Judge Moore, sitting at the Sheffield County Court on 13 July 2001, when he dismissed the appellant's claim for damages for £24,000, allegedly the result of a negligent valuation of a residential property. The judge's decision was at the conclusion of the hearing of a preliminary issue which had been ordered by a district judge in terms which were somewhat uncomfortable in the sense that, unlike many preliminary issues, the preliminary issue itself did not set out a self-contained statement of assumed facts. The preliminary issue was defined in the following terms:
"Upon the following facts being admitted for the purposes only of the preliminary issue:
The claimant advanced the sum of £49,500 to the borrower on or about 5 March 1997 such advance being secured by first legal charge and being made in reliance on the defendant's negligence (sic) over valuation dated 8 January 1997, it being assured (sic) that the true value of the property as at 8 January 1997 was £45,000.
On 19 November 1997 the claimant made a further advance to the borrower in the sum of £7,955.67 such advance being secured by way of a charge on the property dated 19 November 1997.
Prior to the making of the November 1997 advance the claimant commissioned and received a valuation from Country Wide which was dated 20 October 1997 and which valued the property at £70,000.
In these circumstances the question is:
Is the defendant responsible for the loss sustained by the claimant in reliance of the defendant's valuation report as alleged in the particulars of claim, the claimant having made the further advance to the borrower and the borrower having granted the charge dated 19 November 1997 whereas the defendant not so liable as pleaded in para 16 d of the defence."
In addition to the facts which were asserted, or said to be assumed, in the preliminary issue, the district judge ordered that a bundle of documents should be prepared, and that skeleton arguments and evidence should be provided.
Before His Honour Judge Moore the parties had prepared a bundle of documents, running to some 375 pages. There was a witness statement of Philip Edwards Hopes, the Chief Financial Officer in the employment of the appellants.
The judge dealt with the matter on a consideration of both the documents and the evidence of Mr Hopes, as well as the matters set out in the preliminary issue. He concluded that the appellant's claim should be dismissed.
The judge came to the conclusion that, in his judgment, the events in November 1997 had resulted in an effective re-mortgage of the property by way of a redemption of the existing mortgage and a grant of a fresh mortgage, and accordingly, it was the only transaction for which the respondent could be said to have had any duty of care either in contract or in tort. That transaction had resulted in no loss to the appellant. There was, therefore, no basis for the claim for damages which could properly be sustained. The judge ordered that the appellant's claim be dismissed at the conclusion of the preliminary issue.
Mr Tager, on behalf of the appellants, submits that the judge was wrong in his conclusion in two respects. First, he submits that the judge's analysis of the facts was wrong; that, in truth, there was no effective re-mortgage which could be said to have affected the respondents' liability to the appellants by reason of the events in November 1997. In his submission, what happened in November 1997 was simply that the appellants provided a further advance to the borrower in circumstances which in no way affected the underlying effect of the valuation which had been the basis of the original loan. The consequence was simply that the respondents' liability in respect of that loan continued. It may well have been that there was a further negligent over valuation by the valuers, who provided the report in November 1997 for the purposes of the further advance, butg they were only responsible for the loss to the appellants resulting from the making that further advance.
He accepts that, although on the face of it there had been a re-mortgage after apparent redemption, this was simply an internal book-keeping exercise within the appellants, necessitated, according to the evidence of Mr Hopes, by the inability of the appellants' computer system to enable them to provide second mortgages, or otherwise amend existing mortgages. Hence the only way in which a further advance could be made to an existing lender was by way of redemption and re-mortgage.
Mr Tager submits that that had no practical effect on the true nature of the transactions in question. They remained, basically, the original loan secured by mortgage to which was added a further loan which in no way affected the substance of the original transaction or the liabilities of the parties under that original transaction. Accordingly, he submits that we should treat the reality of this as meaning that when, as eventually was the case, the property ultimately was sold for only £24,000, the respondents remained liable for their assumed negligent over valuation of the property.
He submits that, even if he is wrong in that submission, the appellants suffered loss when they entered into the first transaction by receiving less security than they should have had for the purposes of that loan and that that loss was never made good by the events of November 1997. There was no question of any payment being made which discharged the obligation of the borrower, so that the loss which the appellants sustained was extinguished. He submits that, accordingly, the matter, again looked at as a matter of reality, could only achieve that result if there had been the payment of funds from a third party in November to discharge the borrowers' liability under the mortgage. There was not. The only way in which the mortgage could properly be said to have been redeemed was by use of the appellants' own money which did not bring to an end any liability of the respondents arising out of the original transaction. The effective cause of the continued existence of a loan to the extent of the loan originally made by the appellants, was the assumed negligent over valuation by the respondent in March 1997.
Dealing with those two grounds in order, the first requires some, although I hope not too detailed, analysis of the factual history. Mr Tager starts from what I would perceive as...
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