Mortgagor in default – Mortgagee claiming damages for negligent valuation against respondent surveyor – Judge finding action statute-barred – Mortgagee appealing – Whether judge misdirected himself in determining when cause of action accrued – Appeal dismissed
The appellant, DNB Mortgages Ltd, sued the respondent, a firm of surveyors, for damages for negligence in overvaluing a house for the purposes of a remortgage in 1990. The mortgagors had first defaulted on their monthly payments in January 1991. The appellant’s writ was issued on 8 May 1996. The respondent pleaded that the action was statute-barred. The issue, therefore, was whether the appellant had suffered actionable loss before 8 May 1990. The judge found, as a matter of fact, that the value of the mortgagors’ covenant could not, on the balance of probabilities, be as much as £10,000. He concluded that, on the evidence, the action was statute-barred as the cause of action had accrued more than six years prior to the issue of the writ.
The appellant appealed, inter alia, on the ground that the judge had misdirected himself as to the test for determining when the appellant’s cause of action accrued. The principal issues were: (i) where the burden of proof lay in respect of establishing when the cause of action arose; and (ii) the value of the mortgagors’ personal covenant.
Held: The appeal was dismissed.
The principle in Cartledge v Jopling [1963] AC 758 applied, namely: “the initial onus is on the plaintiff to prove that his cause of action accrued within the statutory period. When, however, the plaintiff has proved an accrual of damage within the six years, the burden passes to the defendant to show that the apparent accrual of a cause of action is misleading and that in reality it accrued at an earlier date.” It was an undisputed fact that the mortgagors had managed to pay the requisite monthly instalments on the mortgage until January 1991. That was sufficient to indicate an apparent accrual of the appellant’s cause of action within the limitation period. It was then for the respondent to adduce evidence to show that the apparent accrual within the six-year period was misleading. The judge was wrong to treat the burden as being, without qualification, upon the appellant.
However, the judge had concluded that even if he were wrong and the respondent bore the burden, it had discharged that burden and proved loss before 8 May 1980, as, at that date, the value of the mortgage debt was greater than the value of the house taken together with the value of the covenant.
In the present case, the mortgagors’ covenant had to be valued on the objective evidence, available when the case was heard, of the true state of affairs at the valuation date. The judge’s conclusion was justified on the evidence before him: Nykredit Mortgage Bank plc v Edward Erdman Group (No 2) [1998] 1 EGLR 99 considered.
Derek Wood QC and Marc Dight (instructed by Eversheds) appeared for the appellant; Adrian Cooper (instructed by Hartfields) appeared for the respondent.
Sarah Addenbrooke
