Negligence
Negligence
Platform Homes v. Oyston Shipways Ltd and others [1998] 13 EG 148 C.A.
This was an appeal brought by Oyston Shipways against a finding of contributory negligence on their part in making a "non-status" loan. The plaintiffs argued that their negligence in making the loan did not contribute to the same loss as that for which the negligent valuers were held liable, and thus the damages awarded against the valuers should not be reduced in accordance with s1 Law Reform (Contributory Negligence) Act 1945. The defendant valuers cross appealed in respect of the measure of interest to be applied.
This case and a number of others arose as a result of the decision of the House of Lords in South Australia Asset Management Corporation v. York Montague Ltd [1997] AC 191. The House of Lords decided that the liability to a lender of a valuer who negligently values the security for a loan is limited to that part of the loss sustained by the lender as falls within the scope of the valuer's duty of care:that is the difference between the amount of the valuation and the true value of the property at the time when the valuation was made. As a result of this decision, in a number of cases lenders contended that on a proper interpretation of the Law Reform (Contributory Negligence) Act 1945, the valuer's liability for damages should not be reduced by the amount of the lender's own contributory negligence because the lender's negligence did not contribute to the same loss as that for which the valuer was liable. The valuers contended that the relevant damage for the purposes of the Act is the overall transaction loss sustained by the lenders, part of which is caused by the lending policy of Platform and part of which is caused by the negligent valuations.
Decisions given in favour of the lender's argument at first instance were: Interallianz Finanz AG v Independent Insurance Co. Ltd. [1997] EGCS 91, Coventry Building Society v.William Martin & Partners [1997] 48 EG 159, [1997] 2 EGLR 146, Britannia Building Society v. Hallas [1997] EGCS 117, Bristol & West Building Society v Fancy & Jackson [1997] 4 AllER 582, Britannia Building Societyv. White & Co. (unreported 13 August 1997). Decision reached in favour of the valuer's submissions were: Platform Home Loans Ltd v.Oyston Shipway Ltd in the High Court, UCB Bank plc v. David J Pinder plc [1997] EGCS 179, Barclays Bank plc v Peter Wardle Associates (unreported 3 December 1997), Alliance & Leicester Building Society v. Wheelers (unreported 23 January 1996).
Their Lordships were unanimous in dismissing the lender's contentions. They held that it was not necessary for the purposes of s1 Law Reform (Contributory Negligence) Act 1945, for all the damage to be partly the fault of the defendant provided that all the damage is the fault, as defined, of either the claimant or the defendant (Froom v.Butcher [1976] QB 286). Damage for the purposes of Section 1 of the Act is the overall loss sustained by a lender, and caused by his fault. The loss for which the valuer is liable is that limited to the consequence of and attributable to the valuation being wrong, but this nevertheless forms part of the total loss in respect of which the lender's claim is made. Thus the court is entitled to apportion the damages in respect of the claim by reference to the lender's share in the responsibility for the whole loss.
The second issue in this case was a cross appeal by the defendant valuers in respect of interest payable on the damages. The decision by Jacobs J was made before, and was thus not in accordance with, the decision of the House of Lords in Nykredit v.Edward Erdman Group Ltd (No.2) [1997] 1 WLR 1627 (discussed in Property Management, Vol. 16 No. 3, p. 131 ) It was agreed by the parties that the interest on the award was payable as laid down by the House of Lords. However,their Lordships also decided that if the quantum of damages changes on appeal and the date from which statutory interest becomes payable also changes, the trial judge must be free to adopt different rates in these different circumstances.
Platform had not wished these figures to change as interest rates had declined between October 1990 and January 1995 by almost two-thirds. Their Lordships displayed a certain irritation at the time and expense of carrying out the computations necessary to determine the interest payable. Morritt LJ stated:
I confess that I am greatly concerned at the time and expense which is likely to be incurred in carrying out these computations. So far as I can see, if the interest representing the cost to Platform of the money lent to Mr.Hussein is the same as the interest awarded under Section 35A Supreme Court Act 1981, then whatever the answers to these complicated inquiries the same figure will be produced. In these circumstances I consider that the party requiring the full calculation to be made should pay for it, unless it can be demonstrated that it made so significant a difference to the result as would justify the costs involved.
The appeal was dismissed.
