Mortgage valuation – Limitation Act 1980 – Whether loss accrued more than six years before writ – Whether period of limitation extended by section 14A of 1980 Act – Whether plaintiff had material that suggested negligent valuation more than three years before writ – Judge finding proceedings not time-barred – Appeal dismissed
On 25 June 1990 the claimant mortgage provider advanced £176,160 to a married couple (the borrowers) secured by a charge on a property in Parkgate, Merseyside. The advance was made in reliance on a valuation of £250,000 obtained from the defendant firm on 30 April 1990. The borrowers fell into arrears from the outset and irregular payments were made against a background of possession proceedings.
In June and November 1992 and June 1993 the claimant obtained, from debt collection agents, valuations of the property of between £150,000 and £180,000. The claimant repossessed the property in March 1996. In April 1996, the claimant’s valuer valued the property, as at April 1990, at £150,000 and it was eventually sold for £100,000. The claimant issued proceedings alleging that the defendant had negligently overvalued the property.
The defendant asserted that the claim was statute barred as the cause of action had accrued, if at all, no later than the date of the advance, ie more than six years before the issue of the writ. The hearing of a preliminary issue was ordered as to whether the defendant’s assertion was correct and, if not, whether the claimant could nevertheless take advantage of the three year extension afforded by section 14A of the Limitation Act 1980 (delayed knowledge of material facts). On the latter issue the claimant contended that the first occasion on which it could reasonably have been expected to consider proceedings against the defendant was the receipt of the retrospective valuation in April 1996.
The judge held that, but for the provisions of section 14A of the Act, the claimant’s claim in tort would have been barred by limitation; however, the effect of section 14A in these circumstances was that the writ had been issued within time (see [1999] 42 EG 138). The defendant appealed.
Held: The appeal was dismissed.
The values attributed by the debt collection agents in their reports of June 1992, November 1992 and June 1993 might well have raised in the mind of the claimant the question of whether the original valuation was excessive, unless the discrepancy could be explained by a fall in the market. Although there was evidence of some fall, there was no evidence of a fall of 30% or more.
The real question was not whether a prudent lender would have been put on enquiry, but whether it would have been reasonable for the claimant to have obtained a retrospective valuation of the property at that stage. On that question it was necessary to bear in mind that, by June 1993, the claimant had obtained a possession order which it was actively seeking to enforce. However, there was no evidence that a prudent lender would have taken the step of obtaining a retrospective valuation at that time, the only purpose of which would be to provide a basis for a claim against the defendant valuers. It was not unreasonable for a lender in those circumstances to wait until it obtained the possession of the property which it was seeking, before instructing valuers. Accordingly the knowledge of over-valuation could not be imputed to the claimant three years before the writ was issued and therefore section 14A of the Act applied and the action was not time-barred.
Michael Driscoll QC and Timothy Harry (instructed by Portner & Jaskel) appeared for the claimant; Andrew Neish (instructed by Park Nelson) appeared for the defendant.
Tom Elliott, barrister
