Home Information Cases Webb Resolutions Ltd v JV Ltd (T/A Shepherd Chartered Surveyors) (2013)

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Webb Resolutions Ltd v JV Ltd (T/A Shepherd Chartered Surveyors) (2013)

Summary

A property valuer's application for specific disclosure in a negligence action brought against it by a mortgagee was refused where the documents sought added nothing to its defence that the claim was champertous.

Facts

The applicant property valuer (J) applied for specific disclosure from the respondent mortgagee (W) in W's claim in negligence against J. W cross-applied to strike out parts of J's defence.

In two mortgage sale agreements, W had purchased portfolios of mortgages from a mortgage lender (G). The agreements purported to assign G's rights to sue valuers who had advised G in relation to individual mortgage transactions. W alleged that J's valuation reports on three properties negligently overstated the properties' values. J defended the claim on the basis that the assignments had not given W the right to bring the claim, making the claim champertous, and that any relevant loss could be reduced or extinguished by reason of contributory negligence. The parties gave disclosure. Shortly before expert's reports were due to be exchanged, J sought disclosure of further documents, stating that its expert would be unable to finalise his report until that was provided. W's solicitors stated that certain documents were held by G and that G had not provided them despite their requests. The court determined (i) whether the parts of the defence pleading champerty and investor contributory negligence should be struck out; (ii) whether W should be required to disclose its correspondence requesting documents from G ; (iii) whether W should be required to disclose prospectuses and information regarding the state of the portfolios circulated to W before the sale agreements, unredacted versions of the agreements, and documents evidencing due diligence; (iv) directions to be made regarding J's expert evidence.

Held

(1) It would have been open to W to apply to strike out parts of the defence at the case management conference. Such an application should have been made early and before the procedural structure for the action was settled. W had not intimated an intention to apply to strike out until nearly a year after directions had been set. It would be wrong in principle to entertain at the instant hearing the strike out application (see paras 21-22 of judgment). (2) There was no merit in J's submission regarding the correspondence. No doubt had been cast on W's statements that it did not have control of the documents, had asked G for them, and that G had not provided them. No useful purpose would be served by requiring disclosure of the correspondence between W and G. It was regrettable that clear statements by one reputable firm of solicitors to another had not been accepted at face value where there had been no sensible reason to doubt them (paras 25-26). (3) J's prime target in seeking disclosure had been information about the prices allocated to individual mortgage loans within the portfolios. As J had asserted that the portfolios had been purchased at a discount from the value that they would have had if it had been assumed that all would perform satisfactorily, it was necessary for it to show that information about individual allocations within the portfolios was likely to be relevant to its champerty defence. However, the purchase of bundles of debts and ancillary rights with a view to enforcement for the benefit of the purchaser gave the purchaser a genuine commercial interest for the purposes of the law of champerty, Camdex International Ltd v Bank of Zambia (No.1) [1998] Q.B. 22 followed. Further, in relation to each loan, the assignment of the right to sue the valuers was to provide protection against a prospective shortfall; it could therefore be regarded as making good defects in the loan transaction. That being the essential character of potential claims against valuers, nothing would be added to the argument on champerty by the disclosure of the individual prices allocated to particular loans, given that, viewed overall, they had been sold by G at a substantial discount. Similarly, unredacting the agreements would not advance the champerty argument one way or another. The nature of the transaction appeared clearly from the terms of the agreement. Whether that transaction was champertous or not was for later decision, having regard to the terms defining the assigned bundle of rights. Documents evidencing due diligence were not necessary: the transaction was defined by the agreements. J was not entitled to further disclosure (paras 33-37). (4) J was five months late for exchange of its expert evidence. Given the failure of its application for specific disclosure, there was no good reason for its non-compliance. It would be ordered to file and exchange expert evidence within 14 days of the handing down of the instant judgment, in default of which it would not be permitted to rely upon expert evidence (para.38).

Applications refused

Queen's Bench Division
Stuart-Smith J
Judgment date
15 November 2013
References

LTL 21/11/2013 : [2013] EWHC 3526 (TCC)