Scullion v Bank of Scotland Plc (t/a Colleys)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lloyd,Lord Justice Carnwath,Lord Justice Maurice Kay,Lord Neuberger Mr,Lord Justice Etherton,Lord Justice Gross |
| Judgment Date | 17 June 2011 |
| Neutral Citation | [2011] EWCA Civ 693 |
| Docket Number | Case No: A3/2010/1987,Case No: A3/2011/2584 |
| Court | Court of Appeal (Civil Division) |
| Date | 17 June 2011 |
[2011] EWCA Civ 693
The Master of the Rolls
Lord Justice Etherton
Lord Justice Gross
Case No: A3/2011/2584
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Richard Snowden QC
Case No: HC07C02643
Royal Courts of Justice
Strand, London, WC2A 2LL
Tom Leech QC and Thomas Grant (instructed by Walker Morris) for Bank of Scotland plc
William McCormick QC and Philip Noble (instructed by Miller Rosenfalck) for Mr Scullion
Hearing date: 23 May 2011
Introductory
This is an appeal from an order made by Mr Richard Snowden QC, sitting as a Deputy High Court Judge, by which, following two conspicuously clear and careful judgments, he awarded Mr Emmett Scullion £72,234.54 (plus interest and costs) against the Bank of Scotland plc ("BOS"). Mr Scullion's claim was based on the contention that a valuation, provided for his prospective mortgagee, of a flat which he subsequently purchased, had been negligent. The valuation had been effected by property surveyors trading under the name of Colleys, which, at the time of the valuation had been part of the Halifax plc group, but which was subsequently transferred to BOS. For convenience, I shall refer to the defendant as Colleys.
On this appeal, Colleys raise four points, which were argued in the following order. The first and most significant point, both to the parties and more generally, is whether the Judge was right to conclude that Colleys, whose valuation was carried out for Mr Scullion's prospective mortgagee, owed Mr Scullion a duty of care. The second point is whether, having found that Colleys' negligent capital valuation caused Mr Scullion no damage, the Judge was right to assess damages on the basis that Colleys' rental valuation was also negligent. The third point is whether the Judge was right to conclude that Colleys' valuation actually played any part in Mr Scullion's decision to purchase the flat. The fourth point is whether the Judge was right to assess Mr Scullion's damages as being the difference between the outgoings he incurred, and the income he received, in respect of the period of his ownership of the flat.
The first point is connected to the second, and the second and fourth points are best taken together. Accordingly, because it raises a self-contained and relatively short issue, I propose to take the third point first, then to deal with the first point, and I will finally briefly discuss the second and fourth points together. Before that, however, it is appropriate to summarise the relevant facts, as agreed or found by the Judge.
The relevant facts
Mr Scullion started his working life as a plasterer, and, having become a jobbing builder, he took over a small property management and maintenance company. Having reached the age of 50, he decided to invest some of the money which he had accumulated in his private pension fund, in the residential buy-to-let property market. In February 2002, he attended a seminar on the topic given by a Mr and Mrs Churchill. At the seminar, Mr Scullion met a Ms Lynch who was a mortgage broker, and a Mr Connolly whose business was locating investment properties.
Two months later, the Churchills formed a company called Portfolios of Distinction Ltd ("POD"), whose business was the provision of services in connection with finding investment properties, and which had some sort of connection with Mr Connolly. In May 2002, POD approached a company called Linden Homes South- East Ltd ("Linden Homes"), which had developed a building called Fieldgate Court, in Portsmouth Road, Cobham, Surrey ("the block"), which consisted of 18 flats with underground car parking. These flats had been developed with a view to being sold off on long leases. It appears that Mr Connolly either already knew of the flats, or was told about them by the Churchills. Many of the flats had not yet been sold, and Mr Connolly informed Mr Scullion of the opportunity they represented. Mr Scullion paid him £1,000 as a deposit on (an unspecified) flat.
In May 2002, Ms Lynch instructed Colleys to value ten of the flats, apparently as a result of POD's interest in the block. These instructions were given on behalf of a division of BOS, which specialised, inter alia, in buy-to-let mortgages. On 7 June 2002, Mr Collins of Colleys visited the block for the purpose of valuing the ten flats.
On the same day, Mr Connolly took Mr Scullion to see Mr Churchill, who explained that, in return for a fee of £25,000, POD would, within a year, find him a portfolio of properties worth £1m, which he could acquire for minimal capital outlay. This was on the basis that POD would introduce Mr Scullion to mortgage brokers who would ensure that mortgage finance would be provided for the purchase of properties by reference to appropriate valuations, and that POD would find tenants for those properties and collect the rents, which would be used to finance the interest payments on the mortgages.
Mr Scullion decided to enter into an agreement with POD, which reflected this arrangement, and, to that end, after entering into a preliminary contract with POD, he executed a short (and rather one-sided) contract ("the POD contract") on 15 July 2002. Among other provisions, the POD contract included an obligation on POD to propose properties for Mr Scullion to purchase, and that each such proposal would be accompanied by "a full appraisal sheet showing purchase costs and expected rental returns."
Meanwhile, Mr Scullion had been in touch with Mr Connolly about buying one of the flats, and Mr Scullion was told that he would be able to buy on the basis that part of the purchase price would be deferred for a year. Mr Scullion then completed a mortgage application form (sent to him by Ms Lynch at Mr Connolly's request), and returned it to Ms Lynch together with a cheque which included a sum to pay for a valuation of the relevant flat for the benefit of the proposed mortgagee. Mr Scullion told the Judge that it did not occur to him to obtain his own valuation, because, as the Judge put it, "so far as he was concerned, the purpose of the valuation was to satisfy the mortgage company of the value of the flat and that the rent would be sufficient to meet the payments on the mortgage" – [2010] EWHC 572 (Ch), para 31.
On 20 June 2002, Mr Collins sent his valuation reports on the ten flats which Ms Lynch had asked him to value. The reports were each in the form of a letter addressed to BOS, with a disclaimer of liability to any third party. In relation to the flat which Mr Scullion eventually bought, Flat 17 ("the Flat"), Mr Collins's valuation report ("the initial Report") stated that the capital value was £353,000 and the achievable rental value was £2,000 per month; it contained some details justifying these figures. Mr Scullion did not see the initial Report.
By early July 2002, it appears that the flat Mr Scullion had been interested in buying had ceased to be available, but he was told by Mr Connolly that another, namely the Flat, was available, albeit that it was somewhat more expensive. He was told the Flat would cost about £350,000, that he would have to pay a 5% deposit from his own funds, that POD would negotiate a discount of about 10% (the basis and nature of which was never made clear), and that the balance would be funded by a loan secured by a mortgage.
At the end of August 2002, Mr Scullion was told by POD that there would be a change of mortgage brokers from Ms Lynch to a Mr Garvin, and that the solicitors acting on the purchase of the Flat would be a firm called Kings.
Mr Garvin visited Mr Scullion the next day, and got him to sign an application ("the Application Form") for a so-called "Bond to Let" mortgage on a form designed for buy-to-let purchasers. The Application Form contained a number of provisions in small type which were "only just legible" (according to the Judge – [2010] EWHC 572 (Ch), para 46). They included a provision authorising "the Lender" to obtain a valuation at Mr Scullion's expense, and an acknowledgment by Mr Scullion that neither Mr Garvin nor the Lender were "qualified valuers" or could be liable to him "in respect of the value or state or condition of the property". The Application Form also included a provision that "[t]he inspection of the property will be carried out on behalf of the Lender and will not include a detailed survey", and an acknowledgment that neither the Lender nor the valuer was to be treated as giving any assurance as to the value of the property.
On 29 August, having received the Application Form, Mr Garvin telephoned Mr Collins, and asked him to issue his valuation in the standard form of a company called Mortgages plc ("Mortgages"). Mr Collins complied with this and issued a report ("the Report") on behalf of Colleys, on 3 September. The Report consisted of two pages. The first page has Mortgages' name printed at the top right, is headed "Buy to Let Report and Valuation", identifies Mr Scullion as "Applicant", and contains various details of the Flat, such as its location, number of rooms, and services.
The second page of the Report has four sections. The first is headed "Suitability of Property for Letting Purposes", where Mr Collins recorded his view of the rental value of the Flat as £2,000 per month, and described the suitability of the location for letting within 60 days as "Average". The second section contains Mr Collins's brief description of the Flat. The third section is headed "Valuation", and records Mr Collins's view of the capital value of the Flat and its area, refers to three transactions relied on in support, and identifies the date of his visit as 7 June 2002. The fourth section is a declaration,...
To continue reading
Request your trial
-
The King (on the application of British Gas Trading Ltd) v Secretary of State for Energy Security and Net Zero
...as to what they would have done in a counterfactual scenario where this is relevant to a claim in court proceedings ( Scullion v Bank of Scotland plc (t/a Colleys) [2011] EWCA Civ 693; [2011] 1 WLR 3212 at [29], Lord Neuberger MR). Our Findings on the Facts 21 Bulb was incorporated on 2 A......
-
Mr Atique Rehman v Mrs Tahira Shaikh Jones Lang Lasalle Ltd
...It is their case that the claim should have been struck out in the light of the Court of Appeal decision in Scullion v Bank of Scotland [2011] 1 WLR 3212 ("the Scullion case"). 43 The duty of care issue is addressed by DJ Giles in paragraphs 26 – 41 of his Judgment at B1, Tab 3, pages 37–39......
-
Edward Astle & Others v CBRE Ltd
...was viable. 83 Both Mr McQuater QC for ERIML and Mr Kramer for CBRE referred me to a number of cases ( Scullion v Bank of Scotland Plc [2011] 1 WLR 3212, Bank of Ireland v Faithful & Gould [2014] PNLR 28, Europe Mortgage Co Ltd v GA Property Services Ltd [1999] Lloyds Rep PN 709) in which t......
-
Freemont (Denbigh) Ltd v Knight Frank LLP
...of these requirements are illustrated by Caparo Industries Plc v. Dickman [1990] 2 AC 605 ." 31 Scullion v. Bank of Scotland plc [2011] 1 WLR 3212 was a case where a valuation was carried out for the benefit of an intended lender of a flat which the intending purchaser sought to acquire......
-
'Buying-To-Let'? - Watch What You Rely On
...Scullion v Bank of Scotland (t/a Colleys) [2011] EWCA Civ 693, the English Court of Appeal considered whether a valuer who had prepared a valuation report for a lender owed a duty of care to the purchaser of the property if that purchaser was "buying to Facts and Decision of the High Court ......