Valuation – Limitation – Standstill agreement – Appellant bringing claims for negligence and deceit by respondent in valuations of properties carried out for mortgage purposes – Parties entering into standstill agreement suspending time for purposes of limitation defence – Preamble to agreement referring to earlier letter of claim setting out claims for breach of contract and negligence – Interpretation of standstill agreement — Whether applying to claims in deceit as well as negligence – Appeal allowed
In 2013, the appellant mortgage lender brought proceedings against the respondent firm alleging negligence, fraudulent misrepresentation and deceit by two surveyors employed by the respondent in relation to a number of property valuations carried out for the appellant in connection with mortgage applications. The parties had previously entered into a written “standstill agreement” in November 2010, under which time was to be suspended “For all purposes of any defence or argument based on limitation… in connection with the Dispute”.
The “Dispute” was defined in the standstill agreement as “any claim or claims directly or indirectly arising out of or in any way connected with” the matters referred to in the preamble to the agreement. The preamble referred to the allegation made by the appellant in an earlier letter of claim that the valuations fell “outside the parameters of what would be regarded as reasonable”, in that “each valuation was negligent and beyond the level of skill, care and diligence expected of a reasonably competent surveyor”. The terms of the letter of claim also reserved the right “to amend and/or raise any additional allegations and/or particulars on receipt of any further relevant information”.
The respondent contended that the appellant’s claim in deceit was time-barred in relation to many of the valuations since the standstill agreement applied only to claims in negligence. On a trial of a preliminary issue, the judge held, in favour of the respondent, that a claim in deceit could not arise either directly or indirectly from the matters set out in the preamble to the standstill agreement. He accordingly held that the agreement did not have the effect of suspending time in relation to the appellant’s claims in deceit. The appellant appealed.
Held: The appeal was allowed.
The standstill agreement fell to be construed against the background which would reasonably have been available to the parties. That background included knowledge that a claim based on fraud and dishonesty was of a different character to a claim based on negligence and breach of contract: Paragon Finance plc v DB Thakerar & Co (a firm) [1999] 1 All ER 400; [1998] PLSCS 227 applied. It also included the fact that no specific claim had been intimated prior to the standstill agreement other than a claim for breach of contract and negligence. However, the letter of claim had specifically reserved the right to amend and/or raise additional allegations. The words used in the standstill agreement were wide, so far as they suspended time for all purposes of any defence or argument based on limitation in connection with the dispute. The definition of “Dispute” was similarly wide.
Although the preamble to the standstill agreement referred to the allegations of breach of contract and negligence, the wide definition of “Dispute”, as including claims “in any way connected with” the matters referred to in the preamble, plainly extended beyond what had been alleged by the appellant at that stage. The proper construction of the standstill agreement was that claims that arose “indirectly” from the matters referred to in the preamble, or were in some way connected to those matters, fell within the suspension provisions. The claims based on dishonesty fell within that very broad category of claims since they were, at least in some way, connected with the factual matters set out in in the preamble and with the specific allegations there described.
Paul Lowenstein QC and William Edwards (instructed by Walker Morris & Co) appeared for the appellant; Patrick Lawrence QC (instructed by Clyde & Co LLP) appeared for the respondent.
Sally Dobson, barrister
Click here to read transcript: Mortgage Express v Countrywide
