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England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Blemain Finance Ltd v E.Surv Ltd  EWHC 3654 (TCC) (20 December 2012)
Cite as:  EWHC 3654 (TCC)
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QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Strand, London, WC2A 2LL
B e f o r e :
| Blemain Finance Limited
|- and -
Mr. Luke Wygas (instructed by LSL Legal Services) for the Defendant
Hearing dates: 11, 12 and 13 December 2012
Crown Copyright ©
The Honourable Mr Justice Coulson:
2. THE RELEVANT FACTS
"From our enquiries with local agents it seems that the valuation figures in the report can indeed be supported by local comparables…
The E.Surv valuation report measures the subject property at 5,000 square feet. On the basis that this is correct then the projected market value of £3,000,000 would seem realistic."
The Ord audit is dealt with in greater detail in paragraphs 67 and 70 below.
3. THE LAW RELATING TO NEGLIGENT VALUATIONS
3.1 Duty of Care/Implied Term
"Some caution at least has to be exercised in this respect, because the question must remain, in valuation as in any other professional negligence cases, whether the defendant has fallen foul of the Bolam principle. To find that his valuation fell outside the 'bracket' is, as held by this court in Craneheath Securities Limited v York Montague Limited  1 EGLR 130 and also, I consider, by the House of Lords in Banque Bruxelles Lambert SA v Eagle Star Insurance Co. Limited  AC 191, is a necessary condition of liability, but it cannot in itself be sufficient."
In similar vein, Mr Wygas also relied on a similar passage in the judgment of Hoffmann LJ in Zubaida v Hargreaves  09 EG 320 when he said:
"The issue is not whether the expert's valuation was right, in the sense of being a figure which a judge after hearing the evidence would determine. It is whether he has acted in accordance with practices which are regarded as acceptable by a respectable body of opinion in his profession: see Bolam v Friern Hospital Management Committee  1 WLR 582 at 587."
3.3 Methodology versus Valuation
4. THE VALUATION ISSUES
4.1 The Parties' Competing Cases
4.2 Mr McKeown's Valuation
4.3 Mr McKeown's Comparables
(a) Cedar Park SW19
(b) 38, Roedean Crescent SW15
(c) 1 and 3 Roehampton Gate
4.4 Mr Godwin's Comparables
(a) 1, Bristol Gardens
(b) 5, Bristol Gardens and 1, Heathview
4.5 Mr Adams-Cairns' Indexed Figures
4.6 Other Information
"There are many areas which due to design are open space – mezzanine etc…unusual design which may not suit all tastes.
The subject property is a modern infill development within its square-metre there is a large amount of space used as mezzanine areas and landing/hallways etc. It is also very much a modern design which once specification has dropped can impact on value. It is also situated slightly out of central Putney up Putney Hill."
4.7 The Correct Valuation
4.8 The Appropriate Margin
4.9 Conclusion as to Valuation
5. THE ALLEGATIONS OF CONTRIBUTORY NEGLIGENCE
5.1 The Relevant Law
5.2 The Appropriate Standard
5.3 The General Evidence About Lending
5.4 The Over-Arching Causation Argument
"In order to constitute contributory negligence, the plaintiff's fault must be causative of the damage in respect of which the plaintiff claims. Fault which is not causative of the damage is irrelevant for the purposes of contributory negligence."
In other words if, notwithstanding the criticisms that are made of Blemain's decision to advance the loan of £250,000 to the Shermans, it could not be shown that a reasonable second charge lender would not have made that loan, the necessary ingredient of causation is not made out. Hence it became very important to see whether or not Mr Pitt was saying that no reasonable second charge lender would have made this loan if they operated a proper lending policy.
"In my opinion, a reasonably competent lender may have taken the decision not to lend at all, having taken into account the issues involved in this case."
At paragraph 5.3 he said:
"In addition, on the basis of the information available to the claimant at the time, the claimant ought not to have completed the loan."
And at paragraph 5.4 he said:
"The claimant's risk assessment was unsatisfactory…the claimant should not have taken the decision to lend."
(Emphasis added each time)
"Q: You say in your report that a reasonably competent lender may have taken the decision not to lend?
Q: Has your conclusion changed?
Q: So you don't say that they would have refused to lend. You say that they might have refused to lend?
Q: You don't say that no reasonably competent lender would have refused the loan?
A: I cannot go that far. I would have asked an awful lot more questions.
Q: So you are unable to say that no reasonably competent lender would have made the loan?
A: No. I would not have done it. But without knowing the lending criteria of all second charge lenders, I cannot answer that. I would have to review all of their information.
Q: With that further information, depending on what it said, you would have made the loan?
A: Yes. And the reverse is also true."
5.5 Allegation 1: The LTV
5.6 Allegation 2: The Debt Information
5.7 Allegation 3: Affordability