Regent Leisuretime Ltd v Natwest Finance Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Jonathan Parker,Lord Justice Keene,Lord Justice Schiemann |
| Judgment Date | 26 March 2003 |
| Neutral Citation | [2003] EWCA Civ 391 |
| Docket Number | Case No: A2 2002 1593 |
| Court | Court of Appeal (Civil Division) |
| Date | 26 March 2003 |
[2003] EWCA Civ 391
Lord Justice Schiemann
Lord Justice Jonathan Parker and
Lord Justice Keene
Case No: A2 2002 1593
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM PLYMOUTH COUNTY
COURT (HHJ Overend)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Mr Stephen W. Amos (Director of Regent Leisuretime Ltd) for the Appellant
Mr Andrew Sutcliffe QC and Mr Andrew McGee (instructed by Messrs DLA) for the Respondent
INTRODUCTION
This is an appeal by Regent Leisuretime Ltd ("the Company") against orders made by HHJ Overend on 7 May 2002 and 12 July 2002 respectively. Permission to appeal was granted by Aldous LJ at an oral hearing on 24 October 2002.
The Company appears on this appeal by Mr Stephen Amos, a director, pursuant to a direction given by Peter Gibson LJ on 13 January 2003.
On 17 November 1998 the registrar of companies struck the Company off the register of companies pursuant to section 652 of the Companies Act 1985 ("the 1985 Act"). The Company was dissolved shortly thereafter. On 30 March 2001 Mr Amos and another former director of the Company, Mr Peter Barton, applied on behalf of the Company, without notice, to restore the Company to the register pursuant to section 653 of the 1985 Act. I shall refer to these proceedings as "the restoration proceedings". By an order made in the restoration proceedings on 19 April 2001 District Judge Walker restored the Company to the register, and directed that in the case of any claim of the Company which was not statute-barred on the date of dissolution no period of limitation should run between that date and the date of the order (19 April 2001). I shall refer hereafter to that period as "the period of dissolution".
On the following day (20 April 2001) the Company commenced an action against NatWest Finance Ltd (formerly County NatWest Ltd) ("the Bank") claiming damages for negligence and/or fraudulent misrepresentations. I shall refer to this action as "the Company action". The Bank is the respondent to this appeal.
On 13 July 2001 the Bank applied to be joined as respondent in the restoration proceedings, and on 17 October 2001 District Judge Tromans made an order to that effect. On 7 May 2002 a further hearing of the restoration proceedings took place, this time before HHJ Overend, at which the Bank was represented by Mr Andrew Sutcliffe QC (who also appears for the Bank on this appeal). At that hearing, the Bank applied to vary the order made by District Judge Walker by the deletion of the direction as to limitation ("the limitation direction"). Mr Amos (appearing then, as now, for the Company) resisted that application. In the result, by his order dated 7 May 2002 (the first of the two orders against which the Company now appeals) the judge acceded to the Bank's application.
In the meantime, on 14 September 2001 the Bank served a Defence and Counterclaim in the Company action. By its Defence, the Bank contended that the Company's claim was statute-barred, and on 21 January 2002 it applied for summary judgment on that basis.
The Bank's application for summary judgment came before HHJ Overend on 12 July 2002, and by his order of that date (the second of the two orders against which the Company now appeals) the judge granted that application, concluding that the Company's claim was statute-barred.
THE FACTUAL BACKGROUND
In 1991 the Company bought a property known as Carvynick Golf and Country Club, with the aid of a loan of £400,000 from the Bank. The loan was for a term of one year. In January 1992 the Company was looking to purchase two additional properties, The Blue Lagoon and The Tall Trees Night Club and to refinance the one-year loan on Carvynick Golf Club. (I shall refer hereafter to the three properties together as "the Properties".) For these purposes, the Company required a loan of £2.025M.
The Bank was willing to make such a loan, but it required (a) that a report and valuation be obtained from independent valuers showing a minimum forced sale value of the Properties of not less than £3.5M, and (b) that the security for the loan should include personal guarantees of all the Company's liabilities to the Bank, both present and future, by Mr and Mrs Amos jointly and severally (limited to £500,000) and by Mr Barton (limited to £250,000).
In early March 1992 (and in any event prior to 16 March) Mr Timothy Murphy, an employee of the Bank working in its Acquisition Finance Department in Leeds, telephoned Mr Douglas McLaughlin, a partner in Messrs. Tretheweys, Chartered Valuation Surveyors, and instructed him to value the Properties for the purposes of the proposed facility to be granted by the Bank. On 16 and 17 March 1992 Mr McLaughlin inspected the Properties and arrived at his valuations. In accordance with his firm's normal practice (and not having at that stage received any instructions from the Bank to the contrary) he did so on an open market value basis, as opposed to a forced sale value basis.
By letter dated 17 March 1992 a Mr Hargreaves, a local director of the Bank, wrote to Mr McLaughlan formally instructing him to carry out the valuation of the Properties (together with some other properties). The letter included the following:
"Your report should cover the following areas: -
Your opinion of: —
1. a current market value of the Properties assuming a willing buyer and a willing seller within a reasonable time period.
2. a current market value assuming a willing buyer and willing seller assuming a sale within 6 months as may be considered acceptable for security purposes. A "forced sale mortgage valuation".
Following receipt of that letter, Mr McLaughlin had a number of telephone conversations with Mr Murphy. In one of those conversations reference was made to the letter, and to the instruction contained in it to value the Properties on a forced sale value basis. In an affidavit sworn in an action subsequently brought by the Bank on the guarantees ("the Guarantee action", to which further reference is made below), Mr McLaughlin stated that after consulting with his partners he told Mr Murphy that the open market value of the Properties would need to be reduced by between 30 and 50 per cent in order to reflect their forced sale value. According to Mr McLaughlin's affidavit, Mr Murphy's response was that such a reduction would be detrimental to the transaction proceeding, and it was accordingly agreed that Mr McLaughlin's report would be prepared on an open market value basis.
The written report is dated 26 March 1992. A note in the introductory part of the report states as follows:
"This report is prepared in accordance with previously agreed Conditions of Engagement which are recited in Appendix 1 to this document."
Paragraph 4.1 of Appendix 1 to the valuation is in the following terms:
"Unless otherwise instructed, the value given is the "Open Market Value" defined as the best price at which the Property …. might reasonably be expected to be sold by private treaty at the date of the Tretheweys valuation assuming:
4.1.1. a willing seller;
4.1.2. a reasonable period in which to negotiate the sale taking into account the nature of the Property …. and the state of the market;
4.1.3. that values remain static during that period;
4.1.4. that the Property …. is freely exposed to the open market; and
4.1.5. that no account is taken of any additional bid by a purchaser with a special interest."
The report was received by the Bank on 26 March 1992 (although Mr Amos and Mr Barton did not see it until some time later). On that day, Mr Amos and Mr Barton attended at office of their solicitor, Mr Hills, to prepare for completion of the loan documentation the following day. In the course of that meeting, they made a conference call to Mr Murphy in which he was asked about the valuation. Mr Murphy responded to the effect that he had received the report and that it was "just enough". The court has held that this amounted to a representation that the Properties had been valued at not less than £3.5M on a forced sale value basis.
On the following day, 27 March 1992, the loan documentation was completed, and the Bank issued a formal facility letter. Paragraphs 8.9 and 8.10 of the facility letter contain the Bank's requirement for guarantees from Mr and Mrs Amos and from Mr Barton. Paragraph 9.3.1 (under the heading 'Conditions precedent') contains the requirement for an independent valuation. It provides that the Bank's obligation to make the facility available is subject to the Bank and its advisers being satisfied with:
"…. a report and valuation by independent valuers showing a minimum forced sale valuation of [the Properties] of £3,500,000 …."
The transaction was duly completed (and first tranche of the loan drawn down) on 1 April 1992.
Subsequently the Company defaulted on the loan, and on 31 August 1993 the Bank appointed administrative receivers and managers over the Company's assets and business.
On 6 September 1993 Mr Amos, who had not as yet seen Mr McLaughlin's report and who was by this stage concerned about his prospective liability as guarantor, telephoned Messrs Tretheweys to inquire whether what he believed to be the forced sale value of the Properties of not less than £3.5M was still more or less correct. He spoke to a Mr Bower, who informed him that the Properties had been valued not on a forced sale value basis but on an open market value basis. This unwelcome news was confirmed in a letter dated that day (6 September...
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