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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Lombard North Central Plc v Automobile World (UK) Ltd  EWCA Civ 20 (26 January 2010)
Cite as:  EWCA Civ 20
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ON APPEAL FROM THE HIGH COURT OF JUSTICE CHANCERY DIVISION
HIS HONOUR JUDGE LANGAN QC
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE RIMER
LORD JUSTICE PATTEN
| LOMBARD NORTH CENTRAL PLC
||Respondent / Claimant
|- and -
|AUTOMOBILE WORLD (UK) LTD
||Appellant / Defendant
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7404 1424
Official Shorthand Writers to the Court)
Mr Nick De Marco (instructed by Messrs Addleshaw Goddard Llp) for the Respondent
Hearing dates : Wednesday 16th December 2009
Crown Copyright ©
Lord Justice Rix :
The making of the contract
"I am asked to give an opinion as to the Residual Values for the Mercedes…
The car was built by Mercedes, is not a 'Third Party' stretched version of an S600L saloon and, as an original factory built Pullman Limousine, will have a worldwide appeal, especially in the Far East.
I am told that the car is expected to have an annual mileage of 15,000, that a full Manufacture's Service History will be maintained and that the car will be kept in excellent condition.
On the above basis, and assuming no accident or other 'event' detrimental to the value to the vehicle, it is my opinion that the car would have the following residual values:
After 3 years £140,000…
After 5 years £110,000…
This opinion is based on the market appertaining at the date hereof…"
The proceedings: how the misdescription point emerged
"27. Mr Mark Treadwell who dealt with the sale of the vehicle following repossession has confirmed the following facts:…
(h) The car sat on the forecourt of William Loughrans for some time and it was offered to them but they showed no interest. When asked if they felt the vehicle was worth £110,000, they made it clear that it was not now and possibly never was given that it was a 2001 model."
"Notwithstanding any other issue within our Defence, Witness Statement or Skeleton Argument, you now state in these proceedings that the vehicle subject to the above agreement between your client and ourselves was never worth even £110,000 yet your contract with us was at some £194,000.
In the circumstances we hereby formally rescind and terminate the agreement with your client and in doing so we avoid the contract.
We also call upon your client for the return of all the monies paid immediately and shall be seeking damages."
"On the basis of what the Claimant now states and relies upon, the Defendant rescinds the contract with the Claimant on the basis amongst others of clear misrepresentation as to the value of the goods which according to the Claimant's own admission now were never worth even £110,000."
The proceedings before Judge Behrens
"12. I should equally mention that other points were taken on the question of liability, for example representations about the value of the car. I express no view about that but I do note the point which is taken by Lombard which is that any representation was not made by their agent, and it may be that is an unanswerable point. But for the reasons that I have given, it seems to me there is a triable issue as to whether there were any arrears when they purported to terminate, and in those circumstances it was not appropriate to give summary judgment."
"Mr Wilson [the solicitor appearing for Lombard]: Your Honour, I am conscious that – I obviously accept that you want to go to trial on liability, but I am conscious that there are umpteen points that have been brought by Mr Mulhall. Are we saying that they all go to trial? Because District Judge Caswell dealt with each one separately, rather than…
Judge: If you want me to…
W: Your current Judgment allows…
J: Yes, everything…
W: …everything, basically
W: …I am just conscious that it may sort of confuse and complicate the issue if there are parts of the defence that are pursued that frankly have no merit or real prospect of success…
Mr Mulhall: I would ask that we be allowed to extend the defence as to the points that we have raised, because I do think that some of them may perhaps impact on others in some way.
J: I mean, I have not given a ruling, or – but you say there was a misrepresentation about value. I did not quite follow that…I do not suppose that Lombard said anything about that.
M: Well, no, but they did also say that it was a May 2004, whereas now they are saying that it was not worth what it –
J: Lombard did not say it was a May 2004, did they?
M: Well, it is on the document as a May 2004. They contend that that is the registration date, but it does not clearly say that it is the registration date. And my view would be that they have adopted the statements, and from what…
J: Mr Wilson, I am going to [inaudible, but sc allow] these points. They are not going to take long to sort out. They are not going to add significantly…But I am not going to stop – the pleadings are complete, are they?
W: Yes, there is Particulars of Claim, Defence and Reply.
J: Good…[The discussion then moves on to other aspects of an order for directions.]…
W: I do not know if Mr Mulhall wants permission to amend his defence. It is not something he has addressed the court on, but if he wishes to pursue particularly his points on misrepresentation, they are not actually pleaded. I only raise the point out of fairness to Mr Mulhall.
J: That is very kind of you.
M: Thank you.
J: Are you planning to go to a lawyer.
M: Yes, I think I probably will.
J: I do not want to encourage this misrepresentation. I do not think it has got much chance of success. I am not going to give unlimited permission to amend. If your lawyer wants – there is plenty of time between now and next March for the lawyer to raise the points, and if he says he wants permission to amend, well, Mr Wilson will have to think about that. And if he consents it will go through, if he does not consent, there will be an application."
"14…A case summary (which should not exceed 500 words) outlining the matters still in issue and referring where appropriate to the relevant documents shall be included in the bundle for the assistance of the Judge in reading the papers before the trial."
Thus Mr Mulhall must have known that the case summary would be an important if not definitive document.
"9. Permission is granted to the parties to obtain expert evidence regarding valuation of the asset…at the point of sale by the Claimant following repossession.
10. If so advised, the Defendant may obtain expert evidence and the report of any expert instructed must be filed and served by 4pm on 7 January 2008."
The period of preparations for trial
"1. Disputed terms of the Agreement…
2. Non-registration of the goods…
3. Failure to obtain insurance cover…
4. VAT tax point invoice…
5. Sale at an undervalue…
6. Amount of arrears…
7. Failure to provide a statement…
8. Loss caused by Lombard's reckless actions…
10. Late payment fee…
11. Set offs."
"These are the issue[s] to be addressed by the court at trial and it is to be noted that the main argument of substance at the hearing regarding the appeal against summary judgment before His Honour Behrens was whether or not the Defendant was in arrears at the date of termination…"
"This case summary is agreed with the Defendant on the basis it does not prejudice any further argument he may seek to raise although in that regard the Claimant similarly reserves its right to argue against any unpleaded grounds for defending the claim being raised at this late stage."
"A point raised by the Defendant as part of the appeal of the summary judgment decision in this matter is that the Claimant now believes that the vehicle that was the subject of the finance agreement was never in fact worth the amount originally paid for it (by the Claimant) under the original finance agreement. That is a correct statement of the Claimant's view but the Defendant then seeks to allege that this means that the Claimant is somehow liable for this overvaluation. That of course cannot be correct as the Claimant cannot and did not make any representation as to value and would have entirely relied upon the information supplied to it by the Defendant and the selling agent. The supplier does not act as the Claimant's agent in such circumstances. Therefore, this point raised by the Defendant has no merit and cannot succeed."
Otherwise Lombard's evidence made no reference to unpleaded issues.
"169. Consequently there is nothing in the pleadings about this, but it is addressed in the witness statements and the Court have a copy of AWL's termination notice. Lombard represent the vehicle as a 2004 on the agreement, if it is worth any less because it was a 2001 then AWL look upon it that Lombard have misrepresented the vehicle and this should have been discovered upon inspection by Lombard, if it is the case that there is merit in Lombard's assertions."
Misrepresentation – wrong description/original price too much
171. If there has been a misrepresentation by Lombard, then AWL are entitled to rescind…
172. We have submitted regarding the wrong description 2004/2001 and AWL relied upon Lombard's expertise in valuing the vehicle and inspecting the same…
174. AWL say that there [is] liability on Lombard's part if it is proved that the vehicle was never worth the original purchase price. Lombard are not able to rely upon exclusion clauses, if it is unreasonable to do so and AWL rely upon the Unfair Contract Terms Act 1977 and the Supply of Goods (Implied Terms) Act 1973 in this regard as to price."
"7. It is the defendant's position that if what the Claimants state is correct or to be believed, that the defendant believe that misrepresentation has taken place and that the defendant is entitled to rescind and terminate the agreement and have agreement set aside by the Court. This was not included in the original defence because there had been no disclosure of this and the statement has only come about from the Claimants shortly before the Summary Judgment hearing.
8. Regardless of any additional defence of misrepresentation that the defendant would rely upon, the defendant in its defence would also rely upon the Supply of Goods (Implied Terms) Act 1973 together with the Unfair Contract Terms (1977) Act if necessary in relation to exclusion clauses which the Claimant seek to rely upon.
9. The Claimants' agreement clearly states and not least implies that the vehicle is a 2004 they now say that it is a 2001 and this is why the sale price achieved was far less…
13. What I can say, however, is this. All Mercedes-Benz S600L Pullman Limousines of the W220 series, that's the model of this, were built between 2000 and 2003."
"25…At all times the Defendant relied on the Claimant in assessing the value of the vehicles [sic] prior to purchase."
The trial before Judge Langan
"They are not points that have not been before the Court, see Summary Judgment and Appeal, all these points were before Judge Behrens…Lombard cannot claim that they are unaware of such."
The misdescription point
The mitigation point
"In my judgment, Mr Treadwell, who was an impressive witness, was careful to obtain the best price obtainable for the vehicle in circumstances in which Lombard was attempting to recoup its losses by what was in effect a forced sale. I do not accept that Mr Treadwell's conduct can be the subject of any valid criticism."
"I am not satisfied that such offers ever reached Lombard, nor, in view of the financial situation of AWL and in the light of the price which Lombard could obtain for the vehicle elsewhere, am I satisfied that any offer of £150,000 would have been a genuine one."
Lord Justice Rimer :
Lord Justice Patten :