United Bank of Kuwait Plc v Prudential Property Services

JurisdictionEngland & Wales
JudgeLORD JUSTICE EVANS,LORD JUSTICE PETER GIBSON,LORD JUSTICE HENRY
Judgment Date27 November 1995
Judgment citation (vLex)[1995] EWCA Civ J1127-1
CourtCourt of Appeal (Civil Division)
Docket NumberQBENF 94/0146/C
Date27 November 1995

[1995] EWCA Civ J1127-1

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

(Mr. Justice Gage)

Before: Lord Justice Evans Lord Justice Peter Gibson Lord Justice Henry

QBENF 94/0146/C

United Bank of Kuwait Plc
Plaintiff/Respondent
and
Prudential Property Services
Defendants/Appellants

VINCENT MORAN (Instructed by Cameron Markby Hewitt, London, EC3N 4BB) appeared on behalf of the Appellants.

CLARE BROWN (Instructed by Clifford Chance, London, EC1A 4JJ) appeared on behalf of the Respondent.

LORD JUSTICE EVANS
1

This is an appeal from a judgment given by Mr. Justice Gage at Sheffield on 10 December 1993 following a ten-day hearing in London. The defendants, who are the appellants, are or were in practice as commercial property consultants, surveyors and valuers in Ipswich. In September and October 1990 they valued a commercial property known as Coachmans Court, Dogs Head Street, in Ipswich, for the Commercial Banking Division of the plaintiffs, the United Bank of Kuwait. The valuation was required for the purposes of a loan which the plaintiffs were proposing to make to the developers of the property, Sallows Developments Ltd., whom I will refer to as SDL. SDL was the parent company of what was called the Sallow Group, 99% of the shares in which were owned by Mr. Ray Sallow personally. The other company in the group, a subsidiary of SDL, to which notice should be given, was Sallows Homes Ltd. who, as the name implies, were concerned with residential rather than commercial development.

2

The valuation which the defendants gave was £2.5 million and on the strength of that valuation the plaintiffs advanced 70% of that figure, in other words £1,750,000 for the term of 25 years at an interest rate which was 2% above the current lending rate of 15%.

3

After the trial Mr. Justice Gage held that the defendants had been negligent in relation to that valuation. What he called a correct valuation was, as he said, a figure of £1. 8 or 1.85 million. The relevant passage of his judgment, at page 19B, read as follows:

"In my judgment the correct valuation for Coachmans Court in September 1990 was £1.8 to £1.85 million. I cannot be more precise than that. I am fortified in this view by Mr. Jones' valuation of £1.9 million in June 1990 at a time when the market was perceived to be marginally stronger."

4

For convenience it may be noted that 70% of that figure, £1.85 million, is £1.295 million. There is no appeal against that finding of negligence by the learned judge. He also found that the plaintiffs would not have made the loan if it had not been for the defendants' overvaluation of the property. Therefore, as a matter of law, damages were assessed on what is called the

5

"non-transaction basis" meaning that the recovery was of the order of £1.3 million. The property was sold later, for less than £1 million, after the market had fallen.

6

There has already been an appeal to the Court of Appeal on the question of law of whether it was right to take account of the market loss element in those damages. This appeal formed one part of the appeals now reported at [1995] 2 WLR, 607, under the heading Banque Bruxelles Lambert S. A. v Eagle Star Insurance Co. Ltd. In that appeal Mr. Justice Gage's judgment in this case was upheld and we are told that there is a pending appeal to the House of Lords.

7

The present appeal is concerned, first, with the question whether the learned judge was right to regard this as a non-transaction case, as he found that it was. The second issue is whether the learned judge was wrong to reject the defence of contributory negligence which the defendants had raised. This has been the main issue in the present appeal and a considerable amount of evidence was directed to it.

8

The allegation is in the terms of paragraph 6A(b) of the Amended Defence:

"Failing to carry out any or any sufficient enquiries, investigations or analysis of the ability of Sallows Developments Ltd. to service and/or to repay the debt."

9

Expert evidence was directed to this issue. For the plaintiffs a Mr. Rex; for the defendants a Mr. Clark, whose reports were exchanged a month or so before the hearing in October 1993. In the course of the trial the plaintiffs' witnesses were cross-examined by Mr. Walker Q.C., for the defendants. It became apparent that he was making a number of specific criticisms which had not been identified earlier either in the pleadings or in Mr. Clark, the defendant's expert witness's, report. So it followed that in the course of the trial certain voluntary Further and Better Particulars were provided in which the case was summarised. Details will be given later. It does mean, however, that one oddity of these proceedings is that these specific criticisms were never made the subject of a supplementary report by Mr. Clark nor were they even specifically adopted by him. In general terms, however, he did adopt them when he gave his evidence and the learned judge said this:

"Although in evidence Mr. Clark supported these criticisms none of them appear in his report."

10

This absence of, or deficiencies in, the expert evidence called by the defendants has given rise to a subsidiary issue on this appeal. Mr. Walker submits that the court can and should make a finding of negligence or, strictly, of contributory negligence even if the allegations have no support or only limited support from the expert evidence assuming, that is, that the Court considers it right to do so on the whole of the factual evidence. Mr. Walker went further and submitted that the opinions of experts on the question whether the plaintiffs were negligent or not are strictly inadmissible. The most the experts can do, he submits, is to inform the Court of current practice in the relevant area of expertise. In support of this submission he cited the judgment of Lawton LJ in Boyce v Rendells [1983] 2 EGLR 146, at page 149F, where Lawton LJ cited the earlier judgment of Oliver J., as he then was, in Midland Bank Trust Company Ltd. v Hett, Stubbs & Kent [1979] Ch. 384, 402.

11

I would accept Mr. Walker's submission to this extent. The nature and permissible scope of expert evidence varies widely. In all cases it is admissible to inform the court of relevant practices in an area where the conduct on the particular occasion is said to have been negligent. In other words, such as no reasonably competent practitioner would undertake. Sometimes, however, it may be unnecessary so to inform the court. An obvious example is in the case of a motor accident where private cars and pedestrians are involved. It might be otherwise, however, if a specialist vehicle was involved in the particular case. Another example might be the straightforward need to translate a document from a foreign language. Evidence might be unnecessary in the case of elementary French, whereas it would almost certainly be necessary in the case of even elementary Mandarin Chinese. The object throughout and always is that the Court should reach a fully informed decision and by way of comparison one might refer to the kind of expert evidence in a personal injury road accident case which, for example, might explain what can be deduced from certain tyre marks or other real evidence after the road accident.

12

The decision whether or not there was negligence is always one for the Court. So the question raised by Mr. Walker's submission is this: can there never be cases where the expert can say what he would have done or not done or would have expected to have been done if he had been placed in the relevant situation? Clearly there are cases where such evidence is admitted. One might say that it happens every day, especially in medical cases where, for example, an allegation of negligence is made against a surgeon. It may be that in practice this kind of evidence would be indistinguishable, although not always necessarily so, from the expert witnesses' evidence of what current good practice required.

13

Section 3 of the Civil Evidence Act 1972 establishes that opinion evidence of this kind is properly admissible. That was held by this Court in the recent case of Glaverbel SA v The British Coal Corporation and Anr., judgment of Staughton LJ on 9 November 1994, reference CHPCF 93/0213/B. Conversely, in another recent judgment, Stuart-Smith LJ has emphasised that expert evidence is unnecessary and should be discouraged in what one might call the ordinary case of a claim for personal injuries arising out of a road accident. That was Peter Liddell v Malcolm Middleton, 7 July 1995, reference OBENF 95/0350/C. Generally reference may be made to chapter 12 of the latest edition of what is now known as Cross and Tapper on Evidence.

14

I would hold that it is a mistake to attempt to include all experts in one category. They range from, for example, the translator of foreign languages to a person who can explain advanced scientific concepts and from describing practices in highly technical areas, including surgery, to those in other areas where the Court has sufficient personal experience of its own.

15

The interpretation of accounts, perhaps, comes midway in this scale. The Courts, meaning individual judges, may have some understanding of them but they cannot be confident. Therefore expert evidence is potentially admissible under both heads, that is to say as to practice and of opinion because it is helpful in assisting the Court to reach a fully informed decision which, in my judgment, is the overriding principle. But equally and conversely, depending on the nature of the issues in the particular case, it...

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