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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Nationwide Building Society v Dunlop Haywards (DHL) Ltd (t/a Dunlop Heywood Lorenz) & Anor [2009] EWHC 254 (Comm) (18 February 2009) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2009/254.html Cite as: [2009] 2 All ER (Comm) 715, [2010] 1 WLR 258, [2010] WLR 258, [2009] PNLR 20, [2009] EWHC 254 (Comm), [2009] 1 Lloyd's Rep 447 |
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QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
NATIONWIDE BUILDING SOCIETY |
Claimant |
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- and - |
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(1) DUNLOP HAYWARDS (DHL) LIMITED (t/a Dunlop Heywood Lorenz) (2) COBBETTS (A FIRM) |
Defendant |
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Mr William Flenley (instructed by Barlow Lyde & Gilbert LLP) for the Second Defendant
Hearing dates: 2nd February 2009
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Crown Copyright ©
MR JUSTICE CHRISTOPHER CLARKE:
The history of the proceedings.
CBS' claimed loss
a) The net amount of its advance to Goldgrade, plus lost interest on alternative advances, plus the cost of managerial and staff time, plus consequential losses; less:
b) The current value of the Property.
a) Losses:
i) The net amount advanced to Goldgrade £ 11,413,750
ii) Lost interest on alternative advances £ 2,411,429
iii) Cost of managerial and staff time £ 50,701
iv) Consequential losses, namely:
(1) Additional funding costs (loss of retail deposits)
£ 86,355
(2) Additional funding costs (wholesale funding)
£ 12,864
(3) Loss of opportunity to make more mortgage loans
£ 7,557,600
(4) Loss of opportunity to reduce back stop facilities
£ 74,455
(5) Loss on a 12 month retail bond
£ 119,366
b) Less:
i) Current Value of the Property
£ 625,000
c) TOTAL LOSS: £ 21,101,520
d) Less
ii) Recovery from Cobbetts £ 5,585,001
TOTAL CLAIM £ 15,516,519
The measure of CBS' loss in respect of its claim against DHL
a) CBS is entitled to recover its losses directly flowing from CBS' reliance on DHL's fraudulent statement as to the value of the property, including consequential losses and loss of profits. CBS is entitled to recover damages to put it in the position it would have been in had the statement not been made.
b) CBS' losses must have been caused by the fraudulent statement but there is no requirement that the losses be foreseeable.
c) The defence of contributory negligence is not available to DHL.
The net amount advanced to Goldgrade
Lost interest on alternative advances
Cost of managerial and staff time
Additional funding costs (loss of retail deposits)
Additional funding costs (wholesale funding)
Loss of opportunity to make more mortgage loans
Loss of opportunity to reduce back stop facilities
Loss on a 12 month retail bond
1. Net amount advanced to Goldgrade | £ 11,413,750 |
2. Lost interest on alternate advances | £ 2,411,429 |
3. Cost of managerial and staff time | £ 50,701 |
4. Loss of retail deposits | £ 34,542 |
5. Additional wholesale funding costs | £ 12,864 |
6 .Loss of opportunity to make mortgage loans | £ 7,557,000 |
7. Loss of opportunity to reduce backstops | £ 74,455 |
8. Loss on 12 month retail bond | £ 119,366 |
Sub- total | £ 21,674,107 |
Less: Value of property | (£ 625,000)[1] |
TOTAL for which DHL is liable | £ 21,049,107 |
Less: Recovery from Cobbetts | (£ 5,585,001) |
TOTAL | £ 15,464,106 |
1. Net amount advanced to Goldgrade | £11,413,750 |
2. Lost interest on alternate advances | £ 2,411,429 |
Sub- total | £ 13,825,179 |
Less: Value of property | (£ 625,000)[2] |
TOTAL | £ 13,200,179 |
Contribution
The Civil Liability (Contribution) Act 1978
" 1. Entitlement to contribution.
(1) Subject to the following provisions of this section, any person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with him or otherwise).
………
(4) A person who has made or agreed to make any payment in bona fide settlement or compromise of any claim made against him in respect of any damage (including a payment into court which has been accepted) shall be entitled to recover contribution in accordance with this section without regard to whether or not he himself is or ever was liable in respect of the damage, provided, however, that he would have been liable assuming that the factual basis of the claim against him could be established.
2. Assessment of contribution.—
(1) Subject to subsection (3) below, in any proceedings for contribution under section 1 above the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person' s responsibility for the damage in question."
Discussion
(a) D1 and D2 are not liable for the same damage because they are responsible for different things;
(b) D1 and D2 are both liable for the same damage and in the same amount;
(c) D1 and D2 are liable for the same damage but D2 is liable for less than D1 e.g. because he has available to him defences which reduce what would otherwise be his liability for the damage in question e.g. contributory negligence and contractual or statutory limitation.
"… B's right to contribution by C depends on the damage, loss or harm for which B is liable to A corresponding (even if in part only) with the damage, loss or harm for which C is liable to A. This seems to me to accord with the underlying equity of the situation: it is obviously fair that C contributes to B a fair share of what both B and C owe in law to A, but obviously unfair that C should contribute to B any share of what B may owe in law to A but C does not."
Cobbetts submits that, in the present case, on the assumption that the settlement of £ 5.585 million reflects their liability to CBS, the "damage, loss or harm for which C (Cobbetts) is liable to A (CBS)" and that which "both B and C owe in law to A" is £ 5.585 million.
"An accountant had negligently valued the shares at £7.5m. The vendor warranted that the shares were worth the price of £10m. In truth the shares were worth only £5m. The vendor was liable for damages in the sum of £5m. Counsel for the contractor said that the accountant could only be liable to the extent of the common liability i.e. £2.5m. Counsel for the architect accepted this analysis as correct. Again, the architect is in difficulties because the example demonstrates the unavailability of a right of contribution to the extent that there is no common liability."
The reference to the accountant only being "liable to the extent of the common liability" must have been a reference to liability in contribution proceedings brought by the vendor.
The Law Commission
Section 2 (3)
"(3) Where the amount of the damages which have or might have been awarded in respect of the damage in question in any action brought in England and Wales by or on behalf of the person who suffered it against the person from whom the contribution is sought was or would have been subject to —
(a) any limit imposed by or under any enactment or by any agreement made before the damage occurred;
(b) any reduction by virtue of section 1 of the Law Reform (Contributory Negligence) Act 1945 or section 5 of the Fatal Accidents Act 1976; or
(c) any corresponding limit or reduction under the law of a country outside England and Wales;
the person from whom the contribution is sought shall not by virtue of any contribution awarded under section 1 above be required to pay in respect of the damage a greater amount than the amount of those damages as so limited or reduced."
Ball v Banner
Platform Home Loans v Oyston Shipways
"1. Apportionment of liability in case of contributory negligence.
— (1) Where any person suffers damage as the result partly of his own fault and partly of the fault of any other person or persons, a claim in respect of that damage shall not be defeated by reason of the fault of the person suffering the damage, but the damages recoverable in respect thereof shall be reduced to such extent as the court thinks just and equitable having regard to the claimant's share in the responsibility for the damage."
Policy
"unduly favourable to D1 as he has caused £ 1,000 worth of damage for which he was ready to assume liability up to £ 400 but at the end of the day his liability is further reduced to £ 200".
Conclusion
Costs
Cobbetts' costs
CBS' costs
I am asked to assess those costs summarily, in order to avoid the additional costs of a detailed assessment, which are unlikely in practice to be recovered. I propose to do so, on the basis that I shall err on the side of caution so as to adopt a figure which I can, with some confidence, regard as no more than CBS would recover on a detailed assessment. I propose to assess the costs at £ 700,000.
Contribution from DHL in respect of costs paid by Cobbetts to CBS.
Note 1 The mid-point of Mr Peter Clarke’s valuations as at the date of trial [Back] Note 2 I do not propose to adopt the suggestion made on behalf of Cobbetts that, as between them and DHL, I should adopt the higher value of the property at the time (October 2008) when Cobbetts settled with CBS. To take the valuation at the date of trial properly reflects CBS’ loss to which DHL and Cobbetts are to contribute. I am not persuaded that the fact that Cobbetts’ settlement assumed a higher value of the property ought to mean that the contribution percentages should be applied to a figure which assumes a value for the property higher than the value which is to be taken in the assessment of CBS’ loss. [Back] Note 3 The matter is made even clearer by reference to the Law Commission’s draft Bill in which section 3 (1) is in the form of section 1 (1) of the Act and section 3 (4) is in the same form as section 2 (1) save that it refers to “that person’s responsibility for the damage” without the words “in question”. These were, presumably, added to section 2 (1) of the Act because that subsection was no longer part of the section containing the words in section 1(1) of the Act/section 3(1) of the Bill. [Back] Note 4 Law Com.No.79, 1977, paras 68-79. [Back] Note 6 Under the law as it was then thought to be and which the Law Commission later recommended should be changed. [Back] Note 7 South Australia Asset Management Corp v York Montague Ltd [1997] AC 191. [Back] Note 8 “A person is liable in respect of any damage for the purposes of this Act if the person who suffered it…is entitled to recover compensation from him in respect of that damage (whatever the legal basis of his liability, whether tort, breach of contract, breach of trust or otherwise)”. [Back]