England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE CHANF 96/0507/B

Royal Courts of Justice

Strand

London WC2

Friday, 24th October 1997

B e f o r e :

LORD JUSTICE EVANS

LORD JUSTICE ALDOUS

and

LORD JUSTICE WALLER

---------------

CAVENDISH FUNDING LIMITED

Plaintiff (Respondent)

-v-

HENRY SPENCER & SONS LIMITED

(Previously trading as COLLEY SAMPSON)

Defendant (Appellant)

---------------

Handed Down Judgment prepared by

Smith Bernal Reporting Limited

180 Fleet Street London EC4A 2HD

Tel: 0171 421 4040 Fax: 0171 831 8838

(Official Shorthand Writers to the Court)

---------------

MR R STEWART (MISS S CARR 24.10.97 only) (instructed by Messrs Fishburn Boxer, London WC2) appeared on behalf of the Appellant Defendant.

MR N PATTEN QC and MR J RAMSDEN (instructed by Messrs Clifford Chance, London EC1) appeared on behalf of the Respondent Plaintiff.

---------------

J U D G M E N T

(As Approved by the Court)

Crown Copyright

Friday, 24th October 1997

LORD JUSTICE ALDOUS :

The Defendants, who at the relevant time traded as Colley Sampson, are a firm of valuers and estate agents. They appeal against the Order of Evans-Lombe J of 2l March l996 which ordered them to pay to the Plaintiffs £1,049,853 by way of damages and interest as compensation for their admitted negligent valuation of a house. They contend that the Judge wrongly held that their valuation caused the loss. Alternatively, the sum awarded was too high because the Judge should have made a substantial deduction because of the Plaintiffs' contributory negligence.

The facts have been fully set out by the Judge. I therefore can limit this part of my judgment to those facts needed to understand the submissions made on the appeal.

The Plaintiffs, now in administrative receivership, were a secondary bank set up by a group of primary banks. Those primary banks had agreed to provide a revolving credit facility of £20m. The idea was that, unless the majority of the primary banks agreed, the Plaintiffs would apply all advances and drawings in financing and refinancing the making of mortgage loans. The loans would be short-term at relatively high rates of interest and losses would be covered by pooled insurance from the Norwich Union. It was part of the agreement for provision of the credit that the Plaintiffs would "ensure that each mortgage loan applies in all material respects with the lending criteria" and "ensure that the terms of the Operations Manual are complied with in all material respects".

The Operations Manual laid down in considerable detail what had to be done including such things as the lending criteria to be adopted and the loan application and provision procedures. Sub-section l.l contained the product outline. It stated that the product was "high equity, non-status, short-term." The loan period would be for a maximum period of six months, but at the discretion of the Plaintiffs could be renewed at the end of the term for a further six months. Loans were to be secured by way of first legal charge upon properties situated in England and Wales. An arrangement fee was to be charged with interest being charged at 4.5% above the Plaintiffs' base rate; six months' interest being added to the loan and deducted from the advance with the balance to be settled on repayment. The borrowers were defined in sub-section 1.4. The maximum acceptable ages of primary borrowers was said to be 54 for males and 49 for females. Sub-section l.5 required disclosure of details of the applicant's income which were to be self-certified by the applicant. Sub-section l.ll laid down that the maximum loan to value ratio was 75%. High value loans had to be referred to the Norwich Union as underwriters. Sub-section 1.11 required all loans to be covered by the insurance and therefore had to be written within the lending criteria in the insurance policy. Any loans written outside those criteria had to have Norwich Union's express consent. Under sub-section 2.3 the applications should be processed by the Bank of Ireland Mortgage Services Ltd (BIMS) on behalf of the Plaintiffs and in accordance with the manual. Control was to be maintained by the Plaintiffs. As stated in sub-section 2.9, applications had to be processed through a number of stages which included obtaining valuations and appointing a solicitor from a panel. In the case of property valuated in excess of £500,000 in London or £350,000 elsewhere, two surveyors were necessary. The purpose of the valuation reports was to establish that the property in question complied with the Plaintiffs' lending criteria and would form good security for the advance requested. The amount to be lent was to be computed as a percentage of the forced sale value as opposed to the open market value of the property. The maximum percentage advance relative to value was set out in Appendix 2 as 65% where the maximum loan amount was £800,000. Loan amounts in excess of £800,000 were subject to referral and individual consideration of percentage advance relative to value.

Pursuant to the agreed arrangements the Plaintiffs held themselves out as being able to provide loans in, for example, five days. As required the Plaintiffs used the services of BIMS. They did what can be termed the "leg work", but the important decisions were the responsibility of the Plaintiffs, in this case

Mr Dexter who was one of their directors. Thus BIMS did the searches, obtained the required valuations and when appropriate instructed a firm of solicitors selected from the panel to carry out the legal formalities.

In May l990 Mr and Mrs Marsden required finance. They approached the Plaintiffs using a firm of mortgage brokers for a bridging loan. Their application was for a loan of £750,000 secured against their house, Hatfield Manor, which is a Grade I listed house of historical importance. Their loan application was passed to BIMS on 30 May l990. As required in the Operations Manual, BIMS instructed two surveyors to advise the Plaintiffs as to the value of the house on the open market and what the property would fetch on a forced sale in four months time. Bernard Thorpe advised that the house had an open market value of £1m and would fetch on a forced sale £750,000. The Defendants concluded that it had an open market value of £1,525,000 and on a forced sale would be worth £1,342,000. Their valuation was consistent with an unsigned valuation of an open market value of £1.5m that had been supplied to only the Yorkshire Building Society. On l June l990 the Plaintiffs offered Mr and Mrs Marsden a gross advance of £846,501 12p which after deduction of interest and the arrangement fee provided a net advance of £750,000. The loan was to be for six months secured by way of a first mortgage on the house. It was accepted and the paperwork was completed. The Marsdens were unable to repay the loan and on 28 January l99l the Plaintiffs' solicitors were instructed to take proceedings to recover the amount due. An Order for possession was obtained on l7 April l99l. On l2 April l99l administrative receivers were appointed over the Plaintiffs. They instructed new solicitors, who obtained a valuation from Messrs Jackson-Stops & Staff that the house was only worth £150,000. That figure took into account the state of repair of the property and the obligation which fell upon the owners to the building being listed as Grade I. Upon receiving that valuation the receivers decided to suspend the warrant of possession, believing, rightly or wrongly, that they could expose themselves to liabilities, which exceeded the value of the house, arising from the obligation to keep the house secure once possession had been obtained and from the obligation imposed by reason of its being listed.

In l994 the Plaintiffs commenced these proceedings alleging damage by reason of the Defendants' negligent valuation. At first the Defendants denied the valuation was negligent, but before trial they accepted that they had been negligent and that at the relevant time an appropriate valuation would have been in the order of about £250,000. Even so, they resisted the Plaintiffs' claim upon the grounds that the valuation did not cause any damage. Alternatively they alleged contributory negligence. Those were the matters which came before the Judge and arose on this appeal.

Causation Mr Stewart who appeared for the Defendants submitted that to succeed the Plaintiffs had to establish both that they had relied upon the Defendants' negligent valuation and that it was a material part of the cause of the damage. He reminded us of a number of cases in which the Courts have held that the Plaintiff had not established reliance. In Berg Sons & Co Ltd v Adams (1992) BCC 66l the Defendants were held not to be liable for the damage that had occurred because the Plaintiffs had not relied upon the certificate of the auditors. The cause of the damage was the reckless conduct of the Plaintiffs. In Banques Bruxelles Lambert SA v Eagle Star Insurance Co Ltd (1995) 2 AER 769 Phillips J held that the lenders had not relied on the valuation in that they had believed that they could go ahead upon their own conclusion as to value. The Court of Appeal in JEB Fasteners Ltd v Marks Bloom & Co (1983) l AER 583 held that, although the Plaintiffs had been aware of and had considered the relevant accounts, they had not to any material degree affected the Plaintiffs' judgment in deciding to take over the company. In those circumstances the Judge was correct to decide that there had been no reliance upon the accounts.

Mr Stewart submitted that to succeed the Plaintiffs had to establish that they had relied upon the Defendants' valuation believing it to be correct. Mr Patten QC who appeared for the Plaintiffs, accepted that the Plaintiffs had to establish that they relied upon the Defendants' valuation and that it was causative. But, relying on the judgment of Millett LJ in Bristol West Building Society v Mothew (1996) 4 AER 698 he submitted that the Plaintiffs did not have to establish that they would not have made the loan if the valuation had been different.

I do not believe there is any need to delve into the intricacies of the law of causation and therefore for the purposes of this judgment I accept the law as submitted by Mr Stewart. Thus to succeed the Plaintiffs had to establish that they relied upon the Defendants' valuation in making their decision to lend to Mr and Mrs Marsden in the sense that they would not have gone ahead without the Defendants' negligent advice and that, if a non-negligent valuation had been supplied, the Plaintiffs would not have made the loan. They also had to prove that the advice was a material cause of the damage.

Having analysed the evidence the Judge concluded:

"My conclusion on the question of causation is that the Plaintiffs did place such reliance on the Defendants' valuation, so that it played "a real and substantial part in inducing" the Plaintiffs to make the loan: see per Stephenson LJ in JEB Fasteners Ltd v Marks Bloom & Co (1983) l AER at page 589. I arrive at that conclusion as a natural inference from the unchallenged facts that the Marsdens made application to the Plaintiffs for a loan offering as security the property, that in the process of processing the Marsdens' loan application the Defendants were instructed to value the property, that they did so in the terms of their valuation report of l June, that simultaneously Messrs Bernard Thorpe were invited to value the property in accordance with the Plaintiffs' operations manual and that their report also dated l June was transmitted to the Plaintiffs who had been provided with a copy of the Yorkshire Building Society's document also appearing to give the property a value similar to that given by the Defendants, and finally, that an offer of loan in the amount requested by the Marsdens was made and was drawn down on 4 June which did not, on the Defendants' valuation involve a substantial departure from the prescribed loan to value ratio. In making the loan on security the Plaintiffs were plainly relying on a valuation of that security. It seems to me to be a clear inference that in making this loan they were relying on the Defendants' valuation possibly supported by the Yorkshire Building Society document in preference to that of Messrs Bernard Thorpe. I further conclude that at least on the balance of probabilities, in the light of the provisions of the Plaintiffs' operations manual prescribing loan to the value of security ratios that had the Plaintiffs been in possession of a competent valuation that is one at approximately the same level as the valuation given by Messrs Jackson-Stops & Staff in July l99l they would not have made the advance which they made to the Marsdens. The fact that Messrs Bernard Thorpe's valuation appears also to have been incompetent, though to a lesser degree, does not affect this conclusion. Nor is the conclusion affected by the fact that on other occasions the Plaintiffs appear to have made substantial loans without any valuable security or on terms which offend against their own operations manual. I have no evidence of the considerations which may have led the Plaintiffs to do so in those cases. It is clearly open to the Plaintiffs to vary their own internal rules where the commercial circumstances of the case in question may make it sensible for them to do so. In the case of the Marsdens' loan the Plaintiffs also departed from the strict criteria governing the loan to value ratios prescribed by the operations manual but there was not in the evidence any indication that the Plaintiffs would have been likely to lend to the Marsdens substantially unsecured."

Mr Stewart criticised the reasoning of the Judge on four grounds. First he submitted that the Judge had not paid sufficient attention to the fact that Mr Dexter had not given evidence. He was the key witness and there was no explanation put forward as to why he had not been called. In the circumstances Mr Stewart submitted that the Judge should have inferred from Mr Dexter's absence that his evidence would have been adverse to and, in any case, would not have supported the Plaintiffs' case. Further he should not have accepted that Mr Dexter would have acted in a sensible way. There was no evidence to show that he had not decided to make the loan before the Defendants' valuation was received and would have done so even if the Defendants' valuation had been correct. He submitted that the correct approach was that advocated by the full court of the Supreme Court of Victoria in O'Donnell v Reichard (1975) VR 916. That was a case in which the Plaintiff was claiming damages for psychiatric harm and the Defendants alleged that she was a malingerer. The Plaintiff failed to call three doctors who had examined her and the Judge had instructed the jury to disregard that fact. On appeal that instruction was challenged. Gillard J said page 921:

"Looking at the authorities from Blatch v Archer , supra, right up to Earle's case, supra, it may accepted that the effect of a party failing to call a witness who would be expected to be available to such a party to give evidence for such a party and who in the circumstances would have a close knowledge of the facts on a particular issue, would be to increase the weight of the proofs given on such issue by the other party and reduce the value of the proofs on such issue given by the party failing to call the witness. It should be added that direct evidence of availability of the witness is rarely adduced in evidence. Generally speaking, the proof that a witness is available is a matter of inference from all the circumstances. Sometimes evidence is given to stifle criticism by showing that a witness is not available."

Newton and Norris JJ said at page 929:

"It is sufficient to say that in our opinion for the purposes of the present case the law may be stated to be that where a person without explanation fails to call as a witness a person who he might reasonably be expected to call, if that person's evidence would be favourable to him, then, although the jury may not treat as evidence what they may as a matter of speculation think that that person would have said if he had been called as a witness, nevertheless it is open to the jury to infer that that person's evidence would not have helped that party's case; if the jury draw that inference then they may properly take it into account against the party in question for two purposes, namely:

(a) in deciding whether to accept any particular evidence, which has in fact been given, either for or against that party, and which relates to a matter with respect to which the person not called as a witness could have spoken; and

(b) in deciding whether to draw inferences of fact, which are open to them upon the evidence which has been given, again in relation to matters with respect to which the person not called as a witness could have spoken."

For myself I do not dissent from the view expressed by the Judges in O'Donnell. The Court should not speculate as to what a person would or would not have said if he had been called as a witness. It is open to the Court to draw such inferences, as on the facts before the Court, are appropriate. In doing so, and in deciding whether or not to accept evidence that was given, it is permissible to take account of a party's unexplained failure to call a witness who on the face of it could have given direct evidence on the matters in question. Beyond this, each case must depend upon its own particular facts. In the present case the Plaintiffs alleged both reliance and causation. Both were denied by the Defendants, but the only positive case pleaded by the Defendants was that the Plaintiffs had relied upon the Bernard Thorpe valuation. That positive case was not pursued and in those circumstances the Judge was right not to infer that Mr Dexter would, if he had been called to give evidence, have stated that he relied upon the Bernard Thorpe valuation. To decide the issues of reliance and causation the Judge had to look at such evidence as there was and, taking into account that he did not have the advantage of evidence from Mr Dexter as to what was his attitude, he had to decide whether the Plaintiffs had discharged the onus on them. In my view that is what the Judge did.

Second, Mr Stewart submitted that the documents before the Court could not be relied on as establishing the truth of the statements made in them and without the oral evidence of Mr Dexter there was no sufficient evidence that he had relied on any valuation, let alone the Defendants' valuation. It cannot be disputed, nor was it disputed, that the documents written by Mr Dexter were not evidence of the truth of the statements in them. However that does not mean that they were irrelevant. They showed how the transaction was made and the information passing between the parties concerned with the loan. That history had to be considered together with all the surrounding circumstances. For my part I do not believe that the Judge's judgment is open to criticism upon this ground. In fact I believe he accepted Mr Stewart's submission as correct.

Third, Mr Stewart drew attention to the fact that Mr Dexter had not in all respects carried out the requirements of the Operations Manual. First, Mr Marsden was over 60, and second the lower of the two valuations was not used. The first deviation is not of great weight in this case in view of the fact that the loan was to be repaid by long term finance which appeared to be available. The second was reported to the Norwich Union who appeared to accept the position. It also throws no light on whether the Plaintiffs relied on the Defendants' negligent valuation.

Fourth, Mr Stewart relied on the fact that on two occasions the Plaintiffs had lent without appropriate security to support his suggestion that Mr Dexter could have decided to make the loan whatever the valuation. There is little evidence before the Court on these transactions but in any case there does not appear to be any close similarity of fact which would throw any light on what Mr Dexter thought or might have thought. The Judge cannot be criticised for not relying upon them in his judgment.

There were factors before the Judge which could have been interpreted as pointing in the Defendants' favour. However the procedure in the manual was followed as the documents show. Further the history is only consistent with reliance and causation.

Mr and Mr Marsden completed an application form for a loan of £750,000 to be secured by a first mortgage on the property. It contained errors, but they do not appear to me to be relevant. A day later the Plaintiffs prepared a quotation for the mortgage brokers which was based on a value of £1.5m, stated to be subject to valuation. On the same day Mr Dexter wrote to the Norwich Union who insured the Plaintiffs against loss stating:

"Re: Client - Marsden

I confirm your agreement, subject to valuation of a loan for c. £846,000 on a property valued by the client at £1.5m and for mortgage purposes by the Yorkshire Building Society who have indicated an "in principle" willingness to lend.

You have given us approval at a loan value ratio up to 60%, ie property valuation down to £1.41m, as above subject to valuation."

That letter was required by the Operations Manual as the amount to be advanced was over £800,000.

The Defendants' valuation was supplied on l June l99l as was that of Bernard Thorpe. They must have been conveyed to Mr Dexter on that day because he wrote to the Norwich Union on the l June in these terms:

"Re: Client: Marsden

We have carried out two valuations plus we have been given a copy of a valuation carried out for the Yorkshire Building Society, the results are as follows:

Valuations for us Name FSV LMV

Bernard Thorpe £750,000 £1m

Colleys £1.342m £1.525m

Valuation for Yorkshire Buildg Socy - £1.5m

On this basis the Bernard Thorpe valuation appears out of line. We therefore propose relying on the Colleys valuation which with a loan of c. £846,000 provides for an LTV of 63.1%.

From a commercial viewpoint we would then approach Colleys in the first instance if any losses result.

The exit route appears covered as both the Yorkshire and the Bristol and West have indicated in principle willingness to lend. You have confirmed willingness to insure in the circumstances."

That, as Mr Stewart pointed out, did not, in the absence of evidence from Mr Dexter, prove the truth of what was stated. However it forms part of the history. Further the logic of the letter is clear. It informs the Norwich Union that reliance was being placed on the Defendants' valuation.

Mr Stewart accepted that the offer which was made was calculated as 63% of the Defendants' valuation, but submitted that that did not mean that the Plaintiffs relied upon the Defendants' valuation. In theory that is right as the Plaintiffs could have decided to make the loan whatever the valuation. However that seems inherently unlikely as there was no evidence of any relationship between Mr Dexter and the Marsdens and there is no evidence to suggest that this was a case where an advance would have been made whatever the valuation, particularly when the valuation by Colleys was grossly negligent. Most things are possible, but Courts are concerned with probabilities and in particular with the balance of probabilities.

On the same day, the l June, Miss Lisa Daniel of BIMS, on the instructions of Mr Dexter, completed the form to proceed with figures supplied by Mr Dexter. It indicated that the initial underwriting was satisfactory, that a solicitor had been instructed and the applicant advised. It stated that two valuations had been obtained and that the loan valuation report was satisfactory so that the solicitor should proceed with a maximum advance of £846,501-12p. with an LTV of 63%.

Using information given by Mr Dexter, Miss Daniel made the offer on l June to Mr and Mrs Marsden. That was an offer to lend Mr and Mrs Marsden a gross advance of just over £846,000 for six months which, with the payment of interest and the balance of the arrangement fee, gave a net advance of £750,000. That was to be secured by way of a first mortgage on Hatfield Manor. It was accepted that the loan was calculated at about 63% of the forced sale valuation provided by the Defendants.

That sequence of events and the documents show, on the balance of probabilities, reliance by the Plaintiffs on the Defendants' negligent advice and that the advice was a significant cause of the damage. Two valuations were obtained. They differed. As required by the Operations Manual the Plaintiffs reported to their insurers and told them that they were going to rely upon the valuation of the Defendants. That seems to have been accepted by the insurers. The Plaintiffs advised BIMS to go ahead on the basis of the Defendants' valuation. It seems incredible that Mr Dexter would have made the loan without relying on a valuation and, in particular, if he had been advised that the house was only worth about £250,000.

The conclusion which I have reached is in my view inevitable when it is realised that no document or evidence was produced to the contrary. The Judge came to the right conclusion for the right reasons.

Before the Judge the Defendants put their case in a number of ways. On appeal they limited their case to the allegations set out in paragraph 20(c) of the Defence. In that paragraph it was alleged:

"(i) The Plaintiff chose to ignore the lower valuation provided by Bernard Thorpe without making an enquiries before making the loan as to the reasons for the difference between that valuation and the one provided by the Defendants. No prudent lender should have adopted such a course which was directly contrary to the Plaintiffs' Operations Manual.

(ii) Had prior enquiries been made of Bernard Thorpe prior to the loan being made, the Plaintiff would or should have concluded that it should rely on the valuation being the lower one provided to it."

That was considered by the Judge. He said:

"The question is, therefore, whether I can be satisfied that if, on the assumption that, by reason of the marked difference between the valuations of the Defendants and Bernard Thorpe the Plaintiffs were put on inquiry and ought as a result to have reverted to their valuers for confirmation, whether they would in fact have gone ahead and made the advance, on the further assumption that the valuers would have reacted as they did in fact react when questioned by the Plaintiffs about their valuations. The result would have been that the Plaintiffs would have been deciding whether or not to lend £846,000 on the basis of a valuation by Bernard Thorpe giving an open market value of £1m and a forced sale value of £750,000 and a valuation of the Defendants recently and reluctantly reduced from £1.5m to £1.2m which would have thrown up a forced sale value of £1.05m. Bearing in mind that on this issue the burden of proof rests on the Defendants in my judgment the Defendants have failed to discharge that burden even without ascribing any weight to the Yorkshire Building Society document. On this issue I bear in mind that the Defendants elected to call no evidence and in particular not to call their expert banking witness. It follows that in my judgment the Defendants have failed to make out a case for the reduction of the Plaintiffs' damages by reason of the Plaintiffs' contributory negligence."

The judgment does not give any reason for rejecting the Defendants' submission other than the Defendants had not discharged the onus on them. In particular he does not come to any conclusion as to whether a prudent lender would have taken steps to satisfy himself that the Defendants' valuation was satisfactory.

Apportionment of liability in a case of contributory negligence is provided for in Section l of the Law Reform (Contributory Negligence) Act l945.

"1 Apportionment of liability in case of contributory negligence

(1) Where any person suffers damage as the result partly of his own fault and partly of the fault of any other person or persons, a claim in respect of that damage shall not be defeated by reason of the fault of the person suffering the damage, but the damages recoverable in respect thereof shall be reduced to such extent as the court thinks just and equitable having regard to the claimant's share in the responsibility for the damage:

Provided that -

(a) this subsection shall not operate to defeat any defence arising under a contract;

(b) where any contract or enactment providing for the limitation of liability is applicable to the claim, the amount of damages recoverable by the claimant by virtue of this subsection shall not exceed the maximum limit so applicable.

(2) Where damages are recoverable by any person by virtue of the foregoing subsection subject to such reduction as is therein mentioned, the court shall find and record the total damages which would have been recoverable if the claimant had not been at fault."

The Court's task is to decide whether any of the damage suffered by the Plaintiffs was the result of the Plaintiffs' fault. In this case Bernard Thorpe valued the house at £1m which was £500,000 less than the value of the Defendants. Moreover, they deducted 25 per cent rather than (12.5) per cent from the open market value in assessing the forced sale value. Were the Plaintiffs at fault in going ahead with the loan without further enquiries?

Mr Stewart submitted that the loan scheme being operated by the Plaintiffs was based upon the loan advanced being secured by a first mortgage on a house whose forced sale valuation was sufficient to ensure repayment. In this case the difference between the valuations supplied could not be accounted for by variation in opinion. It followed that a prudent lender, if he were going to select the higher of the two values, should have realised that further enquiries needed to be made. If so, such a lender would have consulted the Defendants who would have revised their figures thereby indicating that only a loan of between £600,000 and £700,000 was justified. (This was based on figures they gave when they were approached later in l99l). Thus, he submitted, the Plaintiffs were at fault for lending over £800,000.

Mr Patten submitted the Plaintiffs could not be blamed for using the Defendants' valuation rather than that provided by Bernard Thorpe. Despite the difference in the valuations, the loss was caused by the Defendants' valuation, not by anything the Plaintiffs had done. It was that valuation which had been relied on and had been the cause of the loss, not anything done by the Plaintiffs.

The Defendants did not call any expert evidence. The Plaintiffs' expert, Mr Bryant, did not believe that the Plaintiffs were negligent. However he accepted that in the absence of cover by the Norwich Union, it would have been prudent to check the valuations with the valuers. If that be right, I believe that the Defendants would, as they did subsequently, have reduced their valuation. Even though it is now agreed that a proper valuation was no more than £250,000, the Defendants have to accept that, even if they had been asked to reconsider their

figure they would not have reduced it below (£1.2m) as they did later.

In my view the failure to review the valuations in the light of their differences was negligent. The Plaintiffs did not act in the way a prudent lender would have acted, particularly as they were selecting the higher of the two valuations. It is reasonable to conclude because the Plaintiffs relied upon the Defendants' valuation, which upon checking would have been reduced, at least part of the damage was caused by their omission to check whether it was correct. What would have happened is a matter of speculation, but I believe that the damage was due, in part, to the Plaintiffs' fault and therefore it is necessary to

decide by how much it would be just and equitable to reduce the damages.

Bearing in mind the grossly negligent advice given by the Defendants and that, if the Defendants had been given the chance to review their valuation, their advice would still have been grossly negligent, I believe it would be just and equitable to reduce the damages by 25%. Therefore, I would vary the Judge's Order to that extent.

LORD JUSTICE WALLER :

I agree.

LORD JUSTICE EVANS :

I also agree.

Order: appeal allowed to the extent stated in judgment, i.e. judge's order varied so as to allow for 25% contributory negligence and sum of £817,048.46 substituted for the award below; no order as to the costs of the appeal. [Not part of approved judgment]