Plaintiffs wishing to sell home and purchase new property to develop – Solicitors offering to lend conveyancing deposit pending completion – Plaintiffs entering contract to buy before finance to purchase raised – Plaintiffs charging investment properties to raise bridging loan – Plaintiffs unable to sell home or service repayments – Whether plaintiffs adequately advised – Judge finding solicitor and mortgage broker not failing in duty to properly advise – Appeal dismissed
The plaintiffs owned Catchfrench Manor, Saltash, Cornwall, which was mortgaged to Lloyd’s Bank for over £200,000. They ran a bed and breakfast business in part of the house and the remainder had been divided into flats that were let out. They also owned three cottages in Plymouth. In July 1984 they contracted to buy Caradoc Court, Ross-on-Wye, Herefordshire, a Grade II listed manor house with 52 acres, which they intended to develop and use as a leisure centre, for which they needed to borrow a 5% deposit. They put Catchfrench Manor on the market and contacted the first defendant, a mortgage broker, who referred them to the second defendant, Harvey & Sproull, a firm of solicitors with a facility for lending conveyancing deposits to clients pending completion. The plaintiffs did not have the money at the date of contract to finance the purchase and a number of meetings took place between the parties. Subsequently, the plaintiffs received an offer of a loan of £384,500 from BMT and the vendor agreed to leave £135,000 outstanding until May 1985. The bridging loan was secured on the three properties owned by the plaintiffs in Plymouth. In December 1984 the contract to purchase Caradoc Court was completed. However, the plaintiffs were unable to sell Catchfrench Manor. Their borrowings exceeded £700,000 and they could not service the interest payments. Caradoc Court was sold in 1986 for £216,000, the Plymouth properties were sold by BMT and Catchfrench Manor was sold by Lloyd’s Bank.
The plaintiffs issued proceedings against the defendants claiming that they had not been adequately advised about the risks of exchanging contracts without finance being in place, and about the consequences of their default as purchasers, which had resulted in their exposure to a damages claim as well as the forfeiture of the deposit. The question of the liability of the defendants was heard as a preliminary issue. The judge in dismissing the plaintiff’s claim held that the plaintiffs were experienced in dealing in properties and had known the full extent of the risks they were running by exchanging contracts without having the finance in place, and that they had ignored the adequate advice that had been given to them. The plaintiffs’ appealed.
Held The appeal was dismissed.
1. The appeal could only succeed if there was no evidence to support the judge’s conclusion or if his conclusion was against the evidence as a whole. A lot of what the plaintiffs had submitted showed that they had not fully appreciated the basic rules by which the court was bound.
2. The judge had correctly directed himself that the events had taken place a number of years previously and that it was accordingly appropriate to consider the evidence against the documents that had been made contemporaneously. He had seen and heard the witnesses and he had been entitled to conclude that he had preferred the evidence of the defendants to that of the plaintiffs as to what had taken place between the parties at the crucial meetings. He had made clear his finding on the basis of the evidence and it could certainly not be concluded that they were against the evidence as a whole. Therefore the appeal was incapable of succeeding.
The plaintiffs appeared in person; John Macdonald QC and NicholasTerras (instructed by Curtis, of Plymouth) appeared for the first defendant; Alastair Norris (instructed by Bond Pearce, of Exeter) appeared for the second defendant.
Thomas Elliott, barrister
